-i     - 


UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


LAW  LIBRARY 


K 


THE  LAW 


OF 


BANKS  AND  BANKING 


INCLUDING 


ACCEPTANCE,  DEMAND  AND  NOTICE  OF  DIS- 
HONOR  UPON  COMMERCIAL  PAPER 


WITH  AN 


APPENDIX 


CONTAINING  THE 


FEDERAL  STATUTES  APPLICABLE  TO  NATIONAL  BANKS 


BY 

JOHN  M.  ZANE 

51 

Or  THE  CHICAGO  BAB 


CHICAGO 

T.  H.  FLOOD  AND  COMPANY 

1900 


z  162 


COPYEIGHT,  1900, 
BY 

JOHN  M.  ZANEL 


STATE  JOURNAL  PRINTING  COMPANY, 

PRINTERS  AND  STERKOTYPBRS, 

MADISON,  WI3. 


PREFATORY  NOTE. 


It  is  the  aim  of  this  treatise  to  present  all  the  law  that 
can  be  properly  considered  as  applicable  to  the  business  of 
banking.  The  work  is  expected  to  be  of  use  not  only  to 
lawyers,  but  also  to  bankers;  and  on  this  account  not  only 
the  law  as  to  the  right  of  banking,  the  methods  of  carrying 
on  a  bank,  the  rights  of  stockholders  in  banking  corpora- 
tions, the  liabilities  of  bank  officers  and  their  powers,  as 
well  as  the  law  as  to  deposits,  collections,  securities,  savings 
banks  and  clearing-houses,  but  also  the  law  governing  the 
duty  of  the  holder  of  commercial  paper  as  to  demand  for 
acceptance  and  for  payment  and  notice  of  dishonor,  has  been 
included.  The  cases  have  all  been  consulted,  it  is  thought, 
and  their  results  have  been  included.  No  opportunity  for 
compression  has  been  omitted,  but  this  result  has  not  been 
sought  at  the  expense  of  fullness  of  detail.  Upon  principles 
about  which  there  has  been  no  dispute  it  has  not  been  con- 
sidered desirable  to  multiply  citations.  There  has  been  no 
hesitation  in  condemning  cases  not  properly  decided,  but 
the  case  itself  has  not  been  passed  by  on  that  account. 

The  law  as  to  national  banks  will  be  found  fully  treated 
in  the  course  of  the  work.  But  it  was  not  considered  proper 
to  divide  the  work  arbitrarily  into  two  parts,  since  the 
great  mass  of  banking  transactions,  whether  made  by  state 
or  private  banks,  or  by  national  banks,  is  governed  by  the 
same  rules.  For  example,  the  law  governing  deposits  or 


740185 


4  PREFATORY   NOTE. 

collections,  or  the  liabilities  of  bank  officers,  or  their  powers 
in  binding  the  bank,  does  not  differ,  except  in  small  details, 
whether  the  bank  be  a  national  or  a  state  bank.  The  labor 
of  the  lawyer  in  consulting  the  work  is  merely  doubled  by 
such  a  division.  But  in  order  to  save  the  practitioner  or  the 
banker  the  necessity  of  consulting  the  Federal  statutes,  the 
various  sections  of  the  Revised  Statutes  of  the  United  States 
and  the  acts  amendatory  thereof,  which  have  any  bearing 
upou  national  banks,  will  be  found  in  the  appendix. 

The  reasons  that  require  a  treatise  of  this  description, 
the  principles  which  render  this  particular  department  of 
the  law  distinctive,  will  be  dwelt  upon  in  the  Introduction, 
which  precedes  the  body  of  the  work.  In  that  connection 
the  author  will  explain  and  refer  to  the  considerations  which 
indicate  that  there  is  something  new  to  be  said  upon  the 
topics  treated.  And  while  not  desirous  of  impugning  the 
truth  of  the  wise  man's  statement  that  there  is  nothing  new 
under  the  sun,  yet  the  author  has  found  that  there  may  be 
a  new  reason  given  for  an  old  doctrine  —  a  reason,  too, 
which  solves  properly  many  a  troublesome  case  likely  to 
arise. 

CHICAGO,  January  1, 1900. 


TABLE  OF  CONTENTS. 


INTRODUCTION   .       ,       ,  .    .        .        .       .       .        .     Pages  15-25 

CHAPTER  L 

Sections. 

BANKS,  ORGANIZATION  AND  PROOF  OF  EXISTENCE   .       .       .  1-25 

In  general •        •        .  1 

General  definition       ........  2 

Definition  under  revenue  laws 3 

Under  constitutional  and  statutory  restrictions         •        .  4 

Under  charters  . 5 

Under  penal  and  forfeiture  statutes            .        .        •        .  6 

Right  of  banking     '    .V 7 

When  a  franchise .  8 

Right  of  private  banking .  9 

The  probable  constitutional  rule 10 

Question  on  principle .        .     -  .  '     •  ^      .        .        .        •  11 

Further  constitutional  questions 12 

Formation  of  a  private  bank 13 

Joint-stock  companies 14 

Corporations                . 15 

State  banks  of  issue    ........  16 

State  bank  tax    .        ."   •>    .--.        .....  17 

Delegation  of  power  in  forming  banks       .        .        .    "   .  18 

Formation  of  corporations  for  banking      ....  19 

Conversion  of  state  into  national  banks      ....  20 

Alteration  of  bank  charter          ......  21 

Power  as  to  by-laws    ........  22 

Proof  of  corporate  existence 23 

Power  under  charters  as  to  branches         ....  24 

Conflict  of  national  and  state  laws     .....  25 

CHAPTER  H 

UNAUTHORIZED  BANKING 26-36 

Scope  of  the  subject •        .        •  26 

Private  banking  unauthorized 27 

Unauthorized  partnerships  or  companies  .... 

Conflict  of  laws  as  to  private  banking        ....  29 

Corporations  formed  under  unconstitutional  law       .        .  80 

De  facto  corporations .        ......        •        •        •  81 


6  TABLE   OF   CONTENTS. 

UNAUTHORIZED  BANKING  —  Continued.  Sections. 

Statutory  prohibitions         .......  32 

Ultra  vires  acts.          ........  33 

Banking  powers •        .  34 

Liability  of  corporators  as  partners    .        .        •        •        .  35 

Direct  liability  for  unauthorized  banking .        .        •        .  36 

CHAPTER  m. 

LEGISLATIVE  REGULATION  OP  BANKING  .       .       •       .       .  87-45 

General  scope  of  the  power         ......  37 

License  taxes •        •        •        .  38 

Limitations  on  indebtedness       ......  39 

Safety  funds  and  deposits  .......  40 

Requirement  of  reports       .......  41 

Bank  examiners .        .  42 

Other  regulations  of  national  banks  .....  43 

State  regulation  of  national  banks     .        .        •        •        .  44 

State  regulation  of  foreign  banks       .        .        •        .        .  45 

CHAPTER  IV. 

STOCKHOLDERS 46-72 

In  general ..••.  46 

Increase  or  decrease  of  stock      ......  47 

Original  subscription          .......  48 

Stockholders  by  transfer     .......  49 

Stockholders  by  estoppel 50 

Executors,  administrators,  guardians  and  trustees     .        .  51 

Right  of  stockholder  to  transfer          .        .        .        .        .  53 

Unrecorded  transfers          .......  53 

Bank's  lien  on  shares  ....••••  54 

Statutory  prohibition  of  transfers               .        .        .        .  55 

Prohibition  of  transfers  by  agreement        ....  56 

Right  of  stockholders  in  bank    ......  57 

Liabilities  of  stockholders  .......  58 

Liability  on  stock  subscription  ......  59 

Statutory  modifications       .......  60 

Remedies  upon  stock  subscriptions     .....  61 

Other  questions  as  to  this  liability              .        .        .        .  61  a 

Nature  of  statutory  liability  for  debts       .        •        •        •  62 

General  character  of  liability     ......  63 

Joint  or  several  liability 64 

Who  can  enforce  liability  .......  65 

Who  are  liable 66 

Remedy,  whether  at  law  or  in  equity         ....  67 

Where  legal  remedy  obtainable          .....  68 

Suit  in  equity •  69 


TABLE   OF    CONTENTS.  7 

STOCKHOLDERS  —  Continued.  Sections. 

National  banks  .........  70 

Other  questions  as  to  this  liability     •        .        •        •        •  71 

Dividends 72 

CHAPTER  V. 

OFFICERS  AND  AGENTS 73-112 

Article  I. —  Duties  and  Liabilities      .        .        .        .        .  73-94 

In  general    ...        .        .        .        .        .        .  73 

Appointment  of  agents         ......  74 

Corporate  officers         .......  75 

Bond  of  officers 76 

Salaries 77 

Board  of  directors         .......  78 

Liability  of  officers  to  bank  ......  79 

Liability  of  officers  to  stockholders      ....  80 

Suits  by  bank  assignees  and  receivers  against  officers  81 

Statutory  liability  of  officers        .....  82 

Liability  of  officers  to  creditors            .        .        .        .  83 

Relation  of  officers  to  creditors    .        .        •        •        •  84 

Liability  to  creditors  for  fraud 85 

Liability  to  creditors  for  negligence  and  illegal  acts   .  86 

National  banks     ........  87 

Release  to  directors      .......  88 

Criminal  liability  of  bank  officers        .        .        .        •  89 

Receipt  of  deposits  in  insolvent  bank  .        .        .        •  90 

Other  offenses       ........  91 

National  bank  returns           ......  92 

Embezzlement  and  misapplication       .        .        •        .  93 

Other  offenses  against  national  banks          ...  94 

Article  II. —  Representation  of  Bank  by  Officer  .        .        .      95-112 

General  principle 95 

General  scope  of  authority  ......  96 

Board  of  directors         .......  97 

President      .........  98 

Vice-president 99 

Cashier         .       ,.' 100 

Treasurer  of  savings  banks  and  other  general  agents  101 

Tellers  and  book-keepers      .        .        .        .        .        .  102 

Place  of  acting     .        ......        .        .        .  103 

Surrendering  the  bank's  rights    .....  104 

Special  course  of  dealing 105 

Officer  agent  for  another      .        .        .        .        .        .  106 

Officer  acting  upon  his  private  affairs          ...  107 

Bona  fide  third  parties          ......  108 

Ratification           .                 ..«••••  109 


8  TABLE   OF    CONTENTS. 

OFFICERS  AND  AGENTS  —  Continued.  Sections. 

Article  II.— Representation  of  Bank  by  Officer — Continued, 

Admissions  of  bank  officers         .....  110 

Notice  to  a  bank  .........  Ill 

Agent  with  adverse  interest         .....  112 

CHAPTER  VL 

DEALINGS  OF  BANKS 113-127 

Article  L—  Influence  of  Customs  ,  .  .  .  .  113-117 

In  general  .  \.  , 113 

Usage  must  be  lawful  .       '•        .        .        .        .        .  114 

Usage  must  be  uniform,  certain  and  general       .        .  115 

Usage  must  be  reasonable    ......  116 

Usage  must  be  known  .......  117 

Article  IL — Banking  Powers 118-127 

In  general 118 

Dealing  in  its  own  stock 119 

Purchasing  stock  of  corporations  ....  120 

Other  mercantile  and  banking  transactions  .  .  121 

Dealings  in  real  estate .  122 

Dealings  in  mortgages  on  realty  .....  123 

Dealings  in  negotiable  paper 124 

Borrowing  money  .......  125 

Lending  of  credit 126 

Collections 127 

CHAPTER  VH. 

DEPOSITS 128-170 

Nature  of  relation 128 

Kinds  of  deposits        ........  129 

General  depositor's  rights  .......  130 

When  the  deposit  is  made 131 

Entries  on  books 132 

Deposit  of  other  things  than  money  .....*  133 

Ownership  of  deposit .  134 

Trust  or  partnership  funds          ......  135 

Liability  of  bank  on  trust  deposits 136 

Attachment  and  garnishment    ......  137 

Death  of  depositor 138 

Insolvency  of  depositor 139 

Bank  applying  deposit  to  its  own  claims    ....  140 

Duty  of  bank  to  apply  deposit 141 

Right  of  bank  to  apply  deposit  on  demands  not  its  own    .  142 

Payment  by  bank  of  deposit       ......  143 

Liability  to  depositor  for  set-off 144 

Liability  to  drawer  for  dishonoring  check'         ...  145 


TABLE   OF   CONTENTS.  9 

DEPOSITS  —  Continued.  Sections. 

Liability  to  holder  of  check        ..,..,  146 

Rule  in  some  states ,  147 

Order  of  payment  of  checks        .        .        .        .        .        .  148 

Refusal  of  payment     .        .        .        .        .        .        .        .  149 

Accepted  and  certified  checks    .        .        .        .        .        .  150 

Fictitious  payees 151 

Date  upon  checks        ........  152 

Revocation  of  checks 153 

Forged  or  altered  paper 154 

Forged  paper  as  between  banks          .        •        .        .        .  -  155 

Lost  or  stolen  checks  or  certificates 156 

Overpayment  and  wrongful  payment         ....  157 

Effect  of  payment 158 

Liability  of  bank  for  interest 159 

Overdrafts           .       '.       ,. 160 

Certificates  of  deposit         .  "•" ' ' .        .        .        .        .        .  161 

Special  deposits 162 

When  special  deposit  created 163 

Liability  of  bank  for  special  deposit 164 

Banks  which  may  receive  special  deposits          ...  165 

Actions  on  deposits 166 

Who  may  maintain  action 167 

Bank's  rights  when  sued 168 

Limitations  upon  actions 169 

Presumptions  and  burden  of  proof 170 

CHAPTER  VIIL 

COLLECTIONS '     .        .        .    171-190 

Nature  of  the  relation 171 

What  law  governs 172 

Collection  to  be  made  at  bank 173 

Revocation  of  power  to  collect 174 

Bank's  lien  on  collections 175 

Authority  of  collecting  bank 176 

Liability  of  bank  in  making  collection       .        .        .        •  177 

When  collection  complete           .        .        .        .        .        .  178 

Liability  upon  failure  to  collect          .        .        •        •        .  179 

Liability  for  its  own  negligence 180 

Liability  for  correspondent  bank 181 

Liability  for  notary 182 

Waiver  of  negligence          .......  183 

Actions  for  negligence 184 

Matters  of  proof 185 

Measure  of  recovery  for  negligence 186 

Proceeds  of  collection                                   .                 .  187 


10  TABLE    OF   CONTENTS. 

COLLECTIONS  —  Continued.  Sections. 

Rights  of  the  owner    ........  188 

Rights  of  banks  between  themselves           •        .        •        •  189 

Insolvency  as  affecting  proceeds         .        .        .        •        •  190 

CHAPTER  IX. 

LOANS  AND  DISCOUNTS 191-202 

Validity  of  loan 191 

Collaterals 192 

Bank's  general  lien 193 

Charging  of  interest  ........  194 

What  law  governs 195 

What  constitutes  usury 196 

Effect  of  usury 197 

Usury  under  national  bank  act  ......  198 

Who  may  set  up  usury        .......  199 

Matters  of  pleading  and  procedure 200 

Rights  and  liabilities  of  bank  in  discounting     ...  201 

Payment  of  loans        .                 .        .        .        .        .        .  202 

CHAPTER  X. 

EXCHANGES,  SECURITIES  AND  COLLECTIBLE  PAPER  ...    203-310 
Article  I. —  Exchanges  and  Securities          ....    203-204 
Powers  and  liabilities  of  banks  as  to  exchanges  and  se- 
curities        203 

Forged  paper         ........  204 

Article  IL— Acceptance 205-230 

Collectible  paper 205 

Paper  requiring  presentment  for  acceptance        .        .  206 

Paper  which  is  not  bill  of  exchange     ....  207 

Paper  not  requiring  presentment  for  acceptance         .  208 

Waiver  of  acceptance 209 

Law  governing  acceptance 210 

Sufficiency  of  presentment  for  acceptance  .        .        .  211 

Written  acceptances 212 

Oral  acceptances 213 

Implied  acceptances 214 

Promises  to  accept  and  letters  of  credit       •        .        .  215 

Sufficiency  of  promise  or  authority      ....  216 

Construction  of  promise  or  authority  ....  217 

Promise  as  to  existing  bill 218 

Reasonable  time  for  acting  on  promise  or  authority    .  219 

Conformity  of  bill  to  promise  or  authority  .        .        .  220 

Revocation  of  authority  or  promise      ....  221 

Defenses  to  promise  to  accept 222 

Revocation  of  acceptance  made 223 


TABLE    OF   CONTENTS.  II 

EXCHANGES,  SECURITIES  AND  COLLECTIBLE  PAPEE  —  Continued. 

Article  II. —  Acceptance  —  Continued.  Sections. 

Necessity  of  acceptance  as  to  drawee  ....  224 

Effect  of  non-acceptance      ......  225 

Effect  of  acceptance •        .  226 

Admissions  by  acceptance 227 

Liabilities  and  rights  of  acceptor         .        .        .*"*,,  228 

Conditional  and  variant  acceptances   ....  229 

Discharge  of  parties  to  accepted  paper         ...  230 

Article  III. — Demand  of  Payment      .        .        ...    231-268 

Presentment  for  payment  —  What  law  governs  .        .  231 

Acceptance  supra  protest     .         .        .        .        .     •    .  233 

Presentment  for  payment  of  accepted  or  non-accepted 

bills  .        .        ....        ...        .        .        .  233 

Parties  entitled  to  require  presentment  for  payment  .  234 

Drawer  and  indorser  of  bills        .        .        .        .        .  235 

Accommodation  parties  to  bills 236 

Drawer  and  indorser  of  checks    .....  237 

Maker  of  note .  238 

Indorser  of  note .  239 

Accommodation  parties  to  note  .....  240 

Guarantors  of  bills  or  notes 241 

Parties  to  non-negotiable  paper 242 

Certificates  of  deposit .  243 

Forged,  stolen  or  void  paper                  .        .        .        .  244 

Sufficiency  of  demand  of  payment       ....  245 

By  whom  demand  made  on  foreign  bills      ...  246 

By  whom  demand  made  on  domestic  paper         .        .  247 

On  whom  demand  made       ......  248 

Mode  of  presentation  for  payment        ....  249 

Hour  of  demand .  250 

Demand  upon  bills  of  exchange  .....  251 

Demand  upon  notes 252 

Demand  upon  paper  indorsed  overdue          ...  253 

Demand  upon  checks  .        .         .         .        .        .        .  254 

Demand  upon  bank  checks  and  certified  checks .        .  255 

Holidays  and  Sundays .        .       ..        .        ,  .     .        .  256 

Time  of  demand  as  affected  by  sickness  or  death        .  257 

Demand  where  place  stipulated  *  -'.-."•  '      •        »  258 

Demand  where  no  place  stipulated      .        .        .        .  259 

Demand  where  residence  or  place  of  business  unknown  260 

Customs  and  usages  upon  demand       ....  261 

Excuses  for  failure  to  make  demand   ....  262 

Insolvency  of  maker  or  drawee    .....  263 

Failure  to  provide  funds 264 

Change  of  residence     .......  265 


12  TABLE   OF    CONTENTS. 

EXCHANGES,  SECURITIES  AND  COLLECTIBLE  PAPER— Continued. 

Article  III. —  Demand  of  Payment  —  Continued.  Sections. 

Absconding  of  maker  or  drawee 266 

Pestilence  and  disease  .......  267 

War  and  interruption  of  commerce  .  .  •  .  268 

Article  IV.— Notice  of  Non-payment 269-292 

Notice  of  dishonor  in  general 269 

Form  and  recitals  of  notice 270 

Mode  of  serving  notice          .        .        .        .        ...  271 

When  service  by  mail  permitted  .  .  •  .  272 

Sufficiency  of  mailing .  273 

Personal  service  of  notice     ......  274 

Service  at  a  place  designated  .....  275 

To  whom  notice  to  be  given 276 

Notice  to  successive  obligors 277 

By  whom  notice  to  be  given  .  .  •  .  .  278 

Place  to  direct  by  mail 279 

Absence  from  home  .......  280 

Change  of  residence 281 

Due  diligence  in  finding  address 282 

Time  for  service -  .  283 

What  mail  of  the  day 284 

Time  of  service  for  successive  obligors        ...  285 

Holidays  and  Sundays          ......  286 

Notice  as  affected  by  death  or  illness  ....  287 

Customs  and  usages  ' 288 

Actual  notice *  .  289 

Excuses  for  failure  to  notify 290 

Effect  of  war  or  pestilence  ......  291 

Effect  of  failure  to  notify 292 

Article  V. —  Waiver  of  Demand  and  Notice        .        .        .    293-304 

Waiver  of  demand  and  notice      .....  293 

Wiio  may  make  waiver       ......  294 

To  whom  waiver  given       ......  295 

Express  waiver  in  writing  ......  296 

Filling  up  of  blanks 297 

Parol  waiver 298 

Promise  to  pay  before  maturity  .....  299 

Indemnity  as  a  waiver 300 

Waiver  after  maturity 301 

New  promise  after  maturity 302 

Part  payment  after  maturity  .....  303 

Acknowledgment  of  liability  .....  304 

Article  VI.— Protest  and  Certificate 805-310 

Meaning  and  form  of  protest  .  •  •  .  .  305 

Execution  of  the  certificate  •  .  .  306 


TABLE   OF   CONTENTS.  1& 

EXCHANGES,  SECURITIES  AND  COLLECTIBLE  PAPER—  Continued. 

Article  VI.  —  Protest  and  Certificate  —  Continued.  Sections. 

Certificate  as  evidence         ......  307 

Recitals  of  certificate   .......  308 

Facts  of  which  certificate  is  evidence           •        .        .  309 

Conclusiveness  of  certificate         .        .        .        •        .  310 

CHAPTER  XL 
CIRCULATING  NOTES  .........    811-316 

Power  to  issue     .....        .        .        .        .  311 

Statutory  prohibitions        .        ......  812 

State  bank  tax    .........  313 

Payment  of  notes        ......        ..  314 

Stockholders'  liability        '.        .        .        .        .  ..    .        .  815 

Remedies  for  bank's  refusal  to  pay     .....  316 


CHAPTER 

DISSOLUTION  AND  INSOLVENCY         ......    817-347 

Surrender  of  charter  ......        .        .  817 

Reorganization  and  consolidation       .....  318 

Forfeiture  of  charter  ........  819 

Waiver  on  remission  of  forfeiture       .....  320' 

Proceedings  to  forfeit         .......  321 

Declaration  of  forfeiture     .......  322 

Effect  of  forfeiture  or  expiration  of  charter       .        .        .  323 

Insolvency          .........  324 

Assignments  for  creditors  .......  325 

Preferences         .........  326 

Preferences  by  national  banks    ..«..-  327 

Receivers  or  trustees  for  state  banks  .....  828 

Rights  of  state  bank  receivers  and  trustees        ...  329 

Right  of  set-off  as  to  insolvent  bank  .....  330- 

Allowance  and  payment  of  claims     .....  331 

Holders  of  notes          ........  332 

Receivers  of  national  banks        ......  333 

Effect  of  appointment         .......  334 

Claims  and  assets        .....        .        .        .  335 

Preferences  and  attachments     ......  336 

Payment  of  interest    ........  337 

Agent  of  stockholders         .        .        .        .        .        .        .  338 

Priorities  among  creditors  and  claimants  ....  839 

General  creditors        .....        ...  340 

Trust  funds  as  a  priority     .......  841 

Special  depositor's  priority          .        .        .        .        .        .  342 

Proceeds  of  collection  as  priority        .....  843 

Deposits  in  insolvent  bank  as  a  priority      ....  844 


1-i  TABLE   OF   CONTENTS. 

DISSOLUTION  AND  INSOLVENCY  —  Continued.  Sections. 

Public  funds'       .- \.  345 

Liens  upon  particular  funds       ......  346 

Statutory  preferences        -.        .        .        .        .        .        .  347 

CHAPTER  XIIL 

ACTIONS  AND  JURISDICTION  OVER  BANKS        ....    348-352 

Summary  remedy .        .  348 

Matters  of  procedure 349 

Jurisdiction  of  courts  over  national  banks         ...  350 

What  court  has  jurisdiction 351 

Injunctions  and  attachments  against  national  banks         .  352 

CHAPTER  XIV. 

SAVINGS  BANKS 353-365 

Nature  of  savings  banks     .......  353 

Illustrative  cases 354 

Officers 355 

Stockholders 356 

Powers  of  savings  banks    .......  357 

Ultra  vires  acts . 358 

Powers  of  officers        ........  359 

Contract  of  deposit     ........  360 

Ownership  of  deposit .  361 

Transfer  of  deposit 362 

Payment  of  the  deposit       .......  363 

Actions  for  deposits 364 

Forfeiture  of  charter  and  insolvency  .....  365 

CHAPTER  XV. 

CLEARING-HOUSES 366-371 

Nature  of  clearing-house 366 

Clearing-house  certificates  .......  367 

Rules  of  clearing-houso 368 

Clearing  agent 369 

Clearing-house  settlements 370 

Clearing-house  lien 371 


APPENDIX  L  FEDERAL  STATUTES  IN  REGARD  TO  NATIONAL  BANKS. 


THE   LAW 

OF 


BANKS  AND  BANKING, 


INTRODUCTION. 

In  the  history  of  the  common  law  the  conception  of  a 
bailment  is  much  older  than  the  conception  of  agency  or 
trust.  These  three  things,  which  are  so  distinctly  differen- 
tiated at  the  present  day,  Have  one  attribute  in  common:  a 
confidence  is  reposed  by  one  man^  in  another  to  whom  he 
intrusts  property  or  property  rights.  It  is  upon  that  ground 
that  an  equitable  remedy  can  be  applied  to  each  relation. 
In  a  stage  of  society  where  the  modern  law  of  contract  and 
of  trusts  was  wholly  undeveloped,  because  there  was  no  occa- 
sion for  it,  the  remedies  given  by  the  law  for  the  enforcement 
of  such  obligations  were  bound  to  be  more  or  less  crude  and 
inadequate.  In  process  of  time  the  courts  of  equity  were  to 
seize  upon  the  idea  of  a  trust,  and  out  of  it  were  to  construct 
a  large  portion  of  their  jurisdiction.  But  the  common-law 
courts,  while  losing  their  control  over  trusts,  were  to  retain 
jurisdiction  over  those  other  trust  relations  which  are  called 
bailment  and  agency.  From  remote  times  the  notion  of  a 
bailment  was  familiar  to  the  common  law.  Bracton  had 
copied  much  of  the  Roman  law  upon  the  subject,  and  his 
borrowed  learning  was  long  afterwards  to  form  the  basis  of 
Lord  Holt's  celebrated  judgment  in  Coggs  v.  Bernard.  For 
the  relation  of  bailment  the  common  law  from  an  early 
period  furnished  a  remedy,  just  as  later  it  was  to  furnish  a 
remedy  for  that  other  case  of  trust  and  confidence  which  we 
call  agency  or  procuration.  Remote  as  this  fact  seems,  it 


10  BANKS    AND   BANKING. 

has  given  to  the  business  of  banking  certain  characteristic 
legal  features.  The  \vord  deposit,  misused  as  it  novr  is  in 
banking,  originally  expressed  the  exact  legal  function  of  the 
banker;  he  was  the  bailee  of  money  or  property  delivered  to 
him  for  safe  keeping,  to  be  returned  by  him  at  the  bailor's 
request.  This  is  one  of  the  well  known  species  of  bailments. 
But  the  English  law,  for  reasons  that  would  require  too  much 
space  to  enumerate,  gave  to  the  bailor  a  single  remedy  in  the 
alternative.  He  could  either  recover  his  property  or  its 
value.  If  the  bailee  refused  to  deliver,  he  could  obtain  only 
its  value.  The  law  did  not  undertake  to  deliver  back  to  him 
the  specific  thing.  In  banking  the  especial  propriety  of  this 
remedy  appears  where  the  thing  bailed  was  money,  for  one 
piece  of  money  was  as  good  as  another  piece  of  the  same 
denomination.  At  the  same. time  the  action  of  debt  was 
originally  for  so  much  property,  describing  it,  which  the  de- 
fendant unjustly  detained.  It  is  apparent  that  the  direct 
effect  of  both  these  remedies  was  to  transform  the  bailment 
or  deposit  of  money  with  a  banker  into  a  debt  arising  out  of 
the  relation  of  debtor  and  creditor.1  Business  convenience, 
no  doubt,  did  its  part  toward  this  result,  but  the  remedy 
must  have  greatly  assisted  in  this  transformation.  But  the 
old  idea  of  a  bailment  did  not  entirely  disappear.  The  in- 
vention of  the  action  on  the  case,  of  which  assumpsit  was  a 
species,  gave  to  the  bailor  his  action  for  damages  when  the 
bailee  refused  to  return  the  thing  bailed,  and  those  damages 
were  held  to  include  all  the  damages  arising  from  the  breach 
of  the  duty  to  return.  The  invention  of  checks  adapted  it- 
self to  the  remedies  in  existence,  and  hence  it  is  that  the 
depositor  to-day  has  his  two  remedies:  an  action  of  debt,  and 
an  action  on  the  case  for  damages  for  the  banker's  breach  of 
duty  in  not  returning  the  deposit.2  But  the  history  of  the 
bunking  relation  teaches  a  valuable  lesson  to-day.  It  com- 
pletely justifies  those  courts  which  deny  to  the  holder  of 
the  check  the  right  to  sue  the  banker  upon  the  check;  for 
suppose  the  bailor  had  delivered  to  his  bailee  twenty  horses 

» See  g  128,  post,  2  See  §  145,  post. 


INTRODUCTION:  17 

and  had  given  some  one  an  order  to  go  and  get  one  of  the 
horses,  the  common  law  and  common  sense  would  both  tell 
us  that  the  holder  of  the  order  was  simply  the  bailor's  agent 
to  demand  a  return,  and  that  the  bailor  must  sue.8 

But  this  historical  development  shows  another  thing,  and 
that  is  that  the  duty  annexed  to  the  banker's  reception  of 
the  deposit  is,  as  the  courts  are  bound  to  recognize,  wholly  a 
customary  duty,  and  is  therefore  a  duty  arising  out  of  a  cus- 
tom so  old  that  it  is  law.  It  is,  indeed,  a  customary  duty  so 
old  that  the  mind  of  man  runneth  not  to  the  contrary.  It 
is  therefore  a  duty  arising  out  of  law,  not  out  of  agreement, 
and  is  quasi  ex  contractu.  This  most  difficult  subject  in  the 
law  has  lately  received  an  able  and  long  needed  examination 
from  those  American  jurists  whose  work  has  done  so  much 
for  the  law  and  whose  labors  have  reflected  so  much  renown 
upon  our  legal  scholarship.  This  customary  duty  is  enforced 
by  the  same  action  on  the  case  that  enforces  the  customary 
duty  of  the  common  carrier,  where  the  duty  was  laid  cen- 
turies ago  always  as  founded  upon  the  custom  of  the  realm. 
This  consideration  also  proves  to  us  how  wanting  in  histor- 
ical sense  are  those  courts  and  text-writers  who  found  the 
check-holder's  right  to  sue  upon  a  customary  duty  owed  by 
the  banker  to  the  check-holder.4 

But  in  another  branch  of  banking  law  the  idea  of  bail- 
ment has  been  fruitful  of  important  consequences.  It  was 
once  well  understood  that  the  deposit  with  a  banker  of  busi- 
ness paper  requiring  collection  was  a  bailment,  to  which 
custom  had  also  annexed  certain  important  duties.  By  the 
accident  of  the  remedy  furnished  by  a  primitive  age  the 
bailor  could  hold  only  his  bailee,  while  the  bailee  was  owner 
of  the  thing  bailed  as  to  the  rest  of  the  world.  Gradually 
the  idea  of  the  bailor's  ownership  was  to  gain  ground,  and 
his  right  of  property  as  against  the  world  became  recog- 
nized. But  side  by  side  with  it  remained  the  old  conception 
of  the  bailee's  right  to  recover  the  thing  bailed  against  the 
world.  But  in  this  country  courts  and  text-writers  have 

«  See  §  147,  post.  *  See  §  147,  post. 

2 


IS  BANKS   AND   BANKING. 

become  confused,  just  as  the  lawyers  of  the  Middle  Ages 
did,  between  agency,  trust  and  bailment,  so  that  to  read  the 
lucubrations  of  courts  upon  this  question  is  like  going  back 
several  hundred  years  and  listening  to  some  Elizabethan 
Clench  or  Gawdy  ratiocinizing  over  these  superficial  resem- 
blances. "We  have  one  court  saying  the  deposit  for  collec- 
tion creates  an  agency;  we  have  another  court  saying  the 
banker  becomes  a  trustee;  yet  the  one  court  permits  the 
agent  to  sue  as  owner,  which  he  could  not  do  if  he  were  an 
agent,  and  the  other  court  permits  the  owner  of  the  collec- 
tion to  sue  his  banker  at  law  for  negligence,  which  could 
not  be  done  if  he  were  a  trustee.  But  the  English  courts 
by  an  unbroken  tradition,  and  some  of  our  courts  by  reflec- 
tion, have  been  enabled  to  see  that  the  right  of  the  banker 
to  sue  as  owner  at  law  and  the  right  of  the  owner  to  sue  the 
banker  at  law  for  negligence  belongs  only  to  the  relation 
of  bailment.5  This  historical  development  solves  easily  the 
question  which  so  unfortunately  divides  the  courts,  and  proves 
beyond  question  that  the  correspondent  banks  are  the  agents 
of  the  bailee,  the  bank  to  which  the  paper  is  intrusted  for 
collection,  where  the  owner  does  not  himself  select  and  treat 
with  the  correspondent  bank.  Astonishing  and  incredible 
as  it  may  seem,  one  court  —  the  Supreme  Court  of  Illinois  — 
at  an  early  period  held  that  a  deposit  of  paper  for  collection 
with  an  express  company  was  a  bailment  and  made  the  first 
company  responsible  for  its  correspondents;  yet  the  same 
court  is  heard  later  asserting  in  stentorian  tones  that  the 
same  deposit  with  a  banker  creates  an  agency,  when  the 
first  bank  is  not  liable  for  the  defaults  of  its  correspondents.6 
This  idea  of  a  bailment  solves,  too,  the  reasons  why  the  owner 
of  the  paper  can  reclaim  the  proceeds  from  a  correspondent 
bank.  It  shows  what  is  the  nature  of  the  title  that  passes 
from  the  bailor  to  the  bailee  upon  a  deposit  in  a  bank  of 
paper  which  requires  collection.  Grossly  erroneous,  there- 
fore, is  the  holding  of  those  courts  which  say  an  absolute  title 
passes  upon  a  deposit  for  credit  of  paper  to  be  collected,  and 

•  See  8§  171, 133,  post.  «  See  note  2,  §  186,  post. 


INTRODUCTION.  19 

of  that  other  court  which  says  that  the  banker  cannot  sue 
as  owner.7  Harsh,  indeed,  is  the  penalty  the  law  is  paying 
to-day  for  those  generations  of  lawyers  who  were  wholly 
unfamiliar  with  the  banking  business  and  thus  lost  touch 
with  the  conceptions  of  the  common  law. 

The  disregard  of  these  conceptions  of  the  common  law, 
both  by  courts  and  text-writers,  has  caused  the  many  irrec- 
oncilable differences  between  courts  upon  ordinary  ques- 
tions in  banking  law.  Those  generations  "  which  knew  not 
Jacob  "  have  entailed  the  expiation  of  their  sins  upon  us. 
And  it  is  the  idea  of  bailment  which,  properly  carried  out, 
will  render  banking  law  symmetrical  and  uniform  the  coun- 
try over.  But  in  other  spheres  of  law  banking  has  caused 
a  great  development,  especially  in  the  law  of  agency  and 
stockholders.  A  bank,  being  officered  by  men  generally  of 
wide  interests  and  of  large  business  connections,  finds  itself 
involved  in  transactions  where  its  officer  and  agent  is  fre- 
quently acting  for  himself  or  for  some  one  else.  These  ques- 
tions generally  arise  in  the  law  of  banking.  And  here  again 
the  common  law  comes  forward  with  its  principle  of  identity 
which  it  has  borrowed  from  the  Koman  law  —  a  principle 
which  an  American  juridical  scholar  has  developed  by  his 
influence  upon  one  court,  and  by  his  writings,  which  lend  to 
our  jurisprudence  some  of  the  glory  which  clings  round  an 
Ulpian  or  a  Trebonian.  In  the  blunt  phrase  of  the  Koman 
annotator  this  identity  arises  non  rei  veritate,  sedfictione;  it 
was  adopted  by  our  common  law  after  the  fullest  considera- 
tion of  its  advantages,  and  after  the  experience  of  centuries 
of  that  system  which  knew  it  not;  it  solves  many  a  trouble- 
some question  in  the  law  of  agency,  and  stamps  with  disap- 
proval the  lucubrations  of  those  courts  which  seek  for  a  basis 
of  the  identity  of  principal  and  agent,  where  the  agent  duly 
authorized  is  acting  on  the  principal's  business,  in  some  such 
presumption  as  that  the  agent  will  communicate  his  knowl- 
edge to  his  principal.  Such  reasoning,  as  we  shall  see,  is 
futile  when  applied  to  a  transaction  where  principal  and 

7  See  §§  133,  187,  188.  post. 


20  BANKS   AND   BANKING. 

agent  are  identical,  and  has  bee,n  productive  only  of  confu- 
sion.8 A  correct  appreciation  of  this  principle  is  the  only 
test  by  which  questions  of  this  character  can  be  decided: 
The  want  of  this  appreciation  has  caused  the  text-writers  to 
darken  counsel  upon  this  subject  by  words  without  knowl- 
edge. But  in  another  phase  of  the  law  of  agency  the  busi- 
ness of  banking  has  offered  much  material  for  judicial  exposi- 
tion. The  relation  of  a  director  or  officer  to  his  corporation 
has  been  involved  in  a  complete  fog  by  the  fact  that  some 
very  able  judges  have  been  blind  to  the  fact  that  the  keep- 
ing open  of  an  insolvent  bank  by  directors,  either  wilfully 
or  negligently,  is  one  thing,  and  that  negligent  management 
of  a  bank  is  a  totally  different  thing.  On  this  subject,  too, 
the  text-writers  have  not  given  us  any  light,  because  they 
have  not  taken  care  to  find  that  their  light  was  but  dark- 
ness. In  the  domain  of  the  law  of  stockholders  the  usual 
liability  of  double  the  stock  subscription  imposed  by  statute 
upon  stockholders  has  produced  a  great  development;  and 
here  again,  the  conception  of  quasi-contr&ct  explains  for  us 
that  this  liability  is  not  a  contract,  though  the  supreme  court 
of  the  United  States,  in  days  when  a  quasi-con  tract  was  not 
well  understood,  has  told  us  that  it  was.9  This  law  of  quasi- 
contract  informs  us  that  the  quasi-con  tract  imposed  by  the 
statute  is  not  a  contract  obligation;  but  nevertheless  the  ob- 
ligation and  the  duty  of  a  man  to  perform  the  quasi-con  tract 
gives  a  valuable  and  vested  right  to  the  man  to  whom  the 
duty  is  owed,  and  as  to  past  transactions  cannot  be  taken 
away  by  statute,  because  to  do  so  would  be  a  confiscation  of 
property  —  a  taking  without  due  compensation.  This  concep- 
tion proves,  as  we  shall  see,  that  the  supreme  court  of  the 
United  States  gave  a  wrong  reason  for  a  very  righteous  de- 
cision, which  is  not  an  unusual  phenomenon  in  the  progress 
of  the  law.  Again,  the  subject  of  banking  law  gives  a  wide 
sphere  for  the  action  of  the  healing  and  healthful  doctrine 
of  quasi-contrsLct  in  regard  to  acts  done  beyond  the  sphere 
of  corporate  power,  than  which  no  subject  in  the  law  has 

•  See  g§  111,  112, 106,  107,  post.  •  See  §  63,  post 


INTRODUCTION.  21 

been  examined  by  our  highest  court  with  less  perception  of 
the  effect  of  quasi-contra.ct  upon  legal  obligations.10  Fi- 
nally, the  law  of  banking  offers  a  wide  and  extended  field  for 
the  operation  of  customs  in  adding  terms  to  contracts  or 
^^m'-contracts,11  in  defining  the  duties  of  officers  of  banks  as 
well  as  their  powers,12  and  in  circumscribing  the  appropriate 
sphere  of  banking  transactions.  It  is  then  for  the  reasons 
stated  above  that  the  law  of  banking  is  distinctive.  Its  doc- 
trine o'f  bailment  runs  a  line  of  demarcation  between  it  and 
other  businesses  as  plain  as  the  division  which  separates  that 
of  common  carriers  from  other  businesses,  while  the  field  of 
operation  which  it  affords  for  an  application  of  the  doc- 
trines of  quasi-contr&ct  makes  it  no  less  distinctive.  Being 
so  distinctive,  it  is  hoped  that  a  work  upon  this  subject  may 
aid  in  showing  the  proper  application  of  general  principles 
in  a  peculiar  field. 

Where  a  business  which  is  so  important  as  that  of  bank- 
ing is  found  exposed  to  contradictory  rules  of  law,  it  is  es- 
pecially needful  to  point  out  the  better  and  safer  rule.  It 
needs  especial  emphasis  in  these  times  that  a  banker  is  of  all 
men  entitled  to  a  certain  and  fixed  rule  of  law,  because  he 
has  confided  to  him  the  pecuniary  interests  of  so  many  peo- 
ple. He  is  using  and  investing  a  fund  with  which  all  classes 
in  the  community  have  a  direct  connection.  But  when  we 
find  that  in  the  same  state  the  banker  must  conform  himself 
to  doctrines  that  are  absolutely  irreconcilable,  and,  if  he  fol- 
lows the  one  rule,  another  court  in  the  same  jurisdiction  fol- 
lowing the  opposite  rule  is  bound  to  hold  him  for  violating 
its  rule,  it  is  patent  that  the  law  needs  some  rectification  in 
those  jurisdictions.13  The  rules  of  law  applicable  to  banking 
transactions  are  not  of  the  character  of  those  principles 
which  have  become  rules  of  property.  Those  jurisdictions 
which  have  adopted  an  erroneous  rule  will  find  that  the  in- 
conveniences of  the  rule  will  cause  it  to  be  evaded  by  the 
business  world,  and  a  change  in  the  rule  would  make  the 

10  See  §  33,  post.  13  See  note  30  to  §  147,  post,  note  26 

11  See  §§  113-117,  post.  to  §  138,  post,  note  22  to  §  140,  post, 

12  See  §  105,  post.  and  note  2  to  §  139,  post. 


22  BANKS    AND   BANKING. 

law  conform  to  the  settled  business  practice,  and  would  cause 
hardship  to  no  one. 

The  examination  of  cases  upon  the  law  of  banking  will 
convince  any  lawyer  that  there  is  hardly  a  single  influential 
doctrine  connected  with  the  subject  upon  which  courts  of 
high  authority  have  not  reached  precisely  contradictory  con- 
clusions. The  evil  is  aggravated  by  the  fact  that  such  courts 
have  in  many  cases  concurrent  jurisdiction,  so  that  a  man 
who  has  followed  the  rule  of  one  court  finds  himself  in  the 
wrong,  if  his  adversary  can  bring  him  before  another  court. 
One  thing  is  certain,  and  that  is  one  of  the  courts  must  be 
wrong.  There  is  an  anecdote  which  has  been  ascribed  to 
Sidney  Bartlett,  the  great  practitioner,  although  the  original 
is  no  doubt  as  old  as  the  profession ;  it  runs  in  this  way.  He 
was  seen  one  day  reading  a  late  volume  of  his  state  reports. 
Some  one  asked  him:  "Are  you  reading  law?"  "No,"  he 
replied,  "  I  am  reading  the  decisions  of  our  Supreme  Judicial 
Court."  This  story  aptly  illustrates  the  fact,  which  the  his- 
tory of  the  law  emphasizes,  that  the  decisions  of  courts  are 
not  always  correct  expositions  of  the  law.  This  failure  in 
the  administration  of  the  law  is  aggravated,  and  in  some  in- 
stances, no  doubt,  is  due  to  the  inadequate  presentation  of  a 
case  by  the  lawyer.  Added  to  the  uncertainties  of  human 
evidence  and  the  imperfections  of  a  jury  tribunal,  the  sum 
total  of  uncertainty  becomes  almost  appalling.  Justly  or 
unjustly  the  whole  blame  for  this  condition  is  laid  upon  the 
practicing  lawyer.  In  all  ages  of  civilized  society  of  which 
we  have  any  record,  wherever  a  legal  profession  has  existed, 
there  can  be  no  doubt  that  its  members  have  been  exposed 
to  the  deepest  distrust  among  the  great  mass  of  mankind. 
Sage  and  saint,  poet  and  wit,  dramatist  and  novelist,  satirist 
and  even  lawyer,  have  all  had  their  flings  at  the  profession. 
The  picture  painted  for  us  by  Plato  of  the  working  lawyer 
and  of  his  life  of  bondage,  who  has  been  stunted  and  warped 
and  made  small  and  crooked  of  soul,  a  poor  broken  and  bent 
creature  without  a  particle  of  soundness  in  him,  although 
exceedingly  smart  and  clever  in  his  own  esteem,  gives  us 


INTRODUCTION.  23 

the  word  of  the  sage  upon  the  bar.  The  saint  exclaims: 
"  Woe  unto  you  also,  ye  lawyers,  for  ye  lade  men  with  bur- 
dens grievous  to  be  borne,  and  ye  yourselves  touch  not  the 
burdens  with  one  of  your  fingers."  But  even  to  satisfy  a 
saint  a  lawyer  'could  hardly  be  expected  to  pay  the  judg- 
ment when  he  loses  a  case.  Addressed  to  a  judge  who  has 
made  an  incorrect  decision  the  remark  has  some  relevancy. 
The  wit  tells  us  that  "the  law  is  a  hocus  pocus  science:  it 
smiles  in  your  face  while  it  picks  your  pocket;  and  the  glori- 
ous uncertainty  of  it  is  of  more  advantage  to  its  professors 
than  the  justice  of  it."  The  dramatist  talks  patronizingly 
and  pityingly  of  "old  Father  Antic,  the  law."  The  novelists 
have  exhausted  their  powers  in  picturing  the  rascal,  the  ped- 
ant or  the  buifoon  in  legal  garb.  The  satirist  adds  for  the 
benefit  of  the  client: 

"  There  take  (says  Justice),  take  ye  each  a  shell, 
We  thrive  at  Westminster  on  fools  like  you. 
'Twas  a  fat  oyster, —  live  in  peace, —  adieu." 

Sir  Thomas  More,  himself  an  example  of  professional  recti- 
tude, banished  lawyers  from  his  Utopia.  Even  the  gentle 
Melancholiast  becomes  incensed  enough  to  say :  "  Our  wrang- 
ling lawyers  are  so  litigious  and  busy  here  on  earth  that  I 
think  that  they  will  plead  their  clients'  causes  hereafter  — 
some  of  them  in  hell."  He  seems  to  insinuate  that  the  bench 
will  be  found  in  that  locality  also,  fully  prepared  to  hear  ar- 
gument. Lord  Bacon,  forgetting  the  fragile  character  of 
his  legal  residence,  somewhere  suggests  that  the  courts  are 
like  the  bush  whereunto  the  sheep  flies  for  refuge,  but  is  sure 
to  lose  a  large  part  of  his  fleece.  This  consensus  of  opinion 
is  certainly  trying  to  the  profession,  and  lawyers,  no  doubt, 
feel  this  universal  obloquy.  They  are  consoled  by  the  re- 
flection that  whenever  one  of  these  various  descriptions  of 
people  gets  into  trouble  he  invariably  resorts  to  one  of  the 
long  robe  for -protection. 

But  w.e  cannot  be  wrong  in  ascribing  much  of  this  dis~ 
esteem  to  the  uncertainties  in  the  law  created  by  erroneous 
opinions  of  courts.  It  is  not  strange  that  in  a  calling  which 
demands  the  highest  mental  powers  many  should  be  found 


24  BANKS   AND   BANKING. 

wanting.  All  men  must  recognize  that  upon  the  bench  there 
may  be  found  men  without  either  the  capacity  or  the  indus- 
try to  reconcile  the  law  with  the  demands  of  justice ;  yet  it 
is  no  less  certain  that  the  case  is  very  rare  where  such  a  re- 
sult is  impossible.  Those  judges  who  cannot  attain  this  result 
are  those  who  preach  the  absurd  doctrine  of  "less  law  and 
more  justice,"  and  commit  waste  upon  the  inheritance.  The 
good  judge  is  the  rarest  thing  in  the  world,  and  he  is  as  rare 
in  appellate  as  in  nisi  prim  tribunals.  He  must  have  not 
only  a  wide  and  profound  knowledge  of  the  law,  but  the 
capacity  to  call  all  his  knowledge  to  his  aid.  Acuteness  in 
discrimination  he  must  have,  but  it  will  not  avail  him  unless 
he  adds  to  it  the  mental  power  which  carries  general  prin- 
ciples with  their  applications  through  long  and  often  com- 
plicated matters  of  fact.  But  to  both  those  qualities  he  must 
bring  the  support  of  that  constructive  imagination  which 
enables  him  to  see  the  relation  of  particular  instances  to  the 
vast  body  of  doctrine  which  makes  up  the  science  of  law. 
Just  as  necessary  is  it  for  him  to  have  that  vivid  sense  which 
amounts  to  an  intuitive  perception  of  justice.  Yet  quick- 
ness to  apprehend,  readiness  in  discrimination,  luminosity  of 
thought,  are  alike  unavailing,  if  not  united  to  that  rarer 
power  of  suspending  judgment  until  all  the  considerations 
the  case  offers  may  be  fully  and  fairly  presented.  This  ca- 
pacity to  hear  patiently  without  prejudgment  is  not  often 
granted  to  mortals.  Eare,  indeed,  is 

"  The  calm  eye  that  seeks 
Midst  all  the  huddling  silver,  little  worth, 
The  one  thin  piece  that  conies  pure  gold." 

It  cannot  be  strange,  then,  that  there  are  many  erroneous 
decisions.  And  this  fact  imposes  upon  every  one  who  ex- 
amines the  adjudications  for  the  law,  the  duty  of  never 
passing  by  an  error.  It  may  be  that  the  exposure  of  the 
error  will  do  little  good.  It  is  a  melancholy  fact  that  the 
demolition  of  the  false  dicta  of  Nichols  v.  Eaton  in  Gray's 
Restraints  upon  Alienation  has  not  stayed  for  a  moment 
the  mistaken  decisions  of  courts,  following  that  most  erro- 
neous deliverance  of  our  highest  court.  But  in  good  time 


INTRODUCTION.  25 

we  all  must  have  faith  to  believe  that  the  sound  rule  of  law 
will  prevail.  To  aid  in  this  consummation  every  lawyer, 
and  every  law  writer,  however  humble  his  efforts  may  be, 
owes  it  to  the  science  which  he  professes,  unhesitatingly  to 
condemn  error.  ]STo  right-thinking  man,  lawyer  or  judge, 
would  wish  his  mistake  to  redound  to  the  discredit  of  this 
"  noblest  of  sciences,"  which  has  for  centuries  been  waging 
the  battle  for  human  welfare,  and  will  continue  to  wage  it 
long  after  we  are  forgotten.  Every  one  who  is  a  true  min- 
ister at  the  altar  of  justice  (justitiam  namgue  colimus  et 
sacra  jura  ministramus),  every  one  who  feeds  that  sacred 
flame,  is  doing  his  share  to  free  the  law  from  the  reproaches 
that  are  uttered  against  her,  the  sins  of  maladministration 
which  she  is  called  upon  to  expiate.  It  is  fortunate  that 
men  and  their  errors  count  for  little  in  the  life  of  the  law. 
Steadily  she  moves  on  to  her  goal,  casting  off  the  false  doc- 
trines laid  thickly  upon  her. 

"Yes,  we  arraign  her,  but  she 
The  weary  Titan,  with  deaf 
Ears  and  labor  dimm'd  eyes, 
Regarding  neither  to  right 
Nor  left,  goes  passively  by; 
Bearing  on  shoulders  immense, 
Atlantean,  the  load, 
Well  nigh  not  to  be  borne 
Of  the  too  vast  orb  of  her  fate." 


CHAPTER  I. 

BANKS,  ORGANIZATION  AND  PROOF  OF  EXISTENCE. 

§  1.  General  classification. —  The  terms  lank  and  banker 
represent  conceptions  so  commonly  understood  that  a  satis- 
factory definition  or  classification  ought  not  to  be  difficult. 
But  banks  may  be  defined  by  reference  to  their  mode  of 
organization,  their  methods  of  doing  business,  or  the  func- 
tions which  they  perform.  Thus,  with  reference  to  their 
mode  of  organization,  banks  may  be  separated  into  those 
which  have  a  corporate  form  and  those  which  have  not  such 
a  form,  *.  e.,  corporate  banks  and  private  banks.  Corporate 
banks  would  require  a  division  into  national  banks,  which 
are  organized  under  the  federal  law,  and  state  corporate 
banks,  which  are  organized  under  state  laws.  Private  banks 
would  require  division  into  individual  bankers,  partnerships 
and  joint-stock  companies.  But  such  a  division  fulfills  no 
useful  purpose  and  is  merely  formal.  Again,  with  reference 
to  their  methods  of  doing  business,  banks  may  be  divided 
into  commercial  banks  and  savings  banks;  but  this  division 
is  not  useful,  because  the  term  "  savings  bank  "  no  longer  de- 
fines a  bank  which  has  no  capital  stock  but  divides  its  profits 
among  its  depositors,  for  many  savings  banks  are  now  merely 
commercial  banks.  Other  banks  have  two  departments — a 
savings  counter  and  a  commercial  counter.  A  constantly 
increasing  type  of  bank  is  now  the  trust  company,  so  called. 
This  term  is  sometimes  applied  to  an  ordinary  commercial 
bank;  at  other  times  a  trust  company,  besides  carrying  on 
a  banking  business,  such  as  receiving  deposits  and  discount- 
ing commercial  paper  and  collecting  exchanges,  has  a  depart- 
ment wherein  it  receives  and  executes  trusts  of  various  kinds, 
which  is  not  a  banking  business  at  all.  Often  the  trust  com- 
pany adds  to  its  other  functions  a  savings  department.  But 
this  method  of  classifying  banks  fulfills  no  useful  purpose,  un- 


§  1.]  BANKS,  ORGANIZATION,  ETC.  27 

less  the  term  "  savings  bank  "  is  restricted  to  the  old  type  of 
savings  bank,  which  shows  tendencies  toward  obsolescence. 
Regarding  banks  with  reference  to  their  functions,  the  usual 
division  would  be  banks  of  issue,  banks  of  discount,  and  banks 
of  deposit.  Banks  of  deposit  would  include  savings  banks. 
But  this  division  is  not  valuable,  for  the  reason  that  there  are 
no  banks  purely  of  issue  or  purely  of  discount.  The  national 
banks  alone  are  banks  of  issue,  but  they  are  also  banks  of 
deposit  and  discount.  State  banks  of  issue  no  longer  exist, 
but  all  commercial  banks,  corporate  as  well  as  private,  are 
banks  both  of  deposit  and  discount.  Therefore  this  division 
fulfills  no  useful  purpose,  but  it  is  advantageous  as  an  aid  in 
defining  the  meaning  of  the  term  "banking  powers."  Since 
this  latter  term  is  often  used  in  statutes  in  a  general  way,  it 
becomes  absolutely  necessary  to  define  the  term  "  bank,"  and 
thus,  as  incidental  thereto,  to  define  the  phrase  "  banking 
powers."  This  definition  must  be  sought  for  in  the  decisions. 
But  in  law  as  in  every  other  science.,  where  terms  in  com- 
mon use  are  utilized,  the  meaning  of  a  word  will  often  vary 
with  reference  to  the  circumstances  in  which  it  is  used. 
From  one  point  of  view  in  the  law,  courts  have  found  it  neces- 
sary to  define  the  word  "bank"  in  terms  which  will  not  be 
satisfactory  from  another  point  of  view.  It  is  a  truism, 
frequently  disregarded,  that  the  language  of  a  court  should 
never  be  considered  apart  from  the  circumstances  of  the  par- 
ticular case  in  regard  to  which  the  language  is  used.  Espe- 
cially is  it  true  that  the  framers  of  statutes  and  constitutions 
have  used  legal  terms  without  any  accurate  judgment  of  the 
result.  The  courts,  in  consequence,  in  order  to  do  justice  to 
litigants,  have  often  been  compelled  to  do  violence  to  lan- 
guage. In  construing  a  penal  or  prohibitory  statute,  the 
word  "bank"  has  had  in  some  instances  a  different  meaning 
from  that  which  it  has  borne  to  a  court  construing  a  revenue 
or  a  license  tax  law.  It  will  therefore  be  sought  to  define 
the  words  "bank"  and  "banker"  with  reference  to  the  lan- 
guage of  decisions,  keeping  in  mind  the  particular  connec- 
tion in  which  the  language  is  used. 


28  BANKS   AND   BANKING.  [§  2. 

§  2.  General  definition. —  A  learned  and  generally  accu- 
rate judge,1  attempting  a  general  definition,  has  defined  a 
banker  to  be  "  one  who  keeps  a  place  for  the  traffic  of  money ; 
who  there  receives  it  from  others  and  keeps  it  with  his  own, 
using  the  whole  fund  as  his  own,  or  remits  it  at  request  to^ 
other  places;  who  repays  it  at  the  will  and  call  of  his  cus- 
tomer; who  furnishes  money  to  others  on  the  discount  of 
their  obligations,  or  on  securities  brought  by  them;  and  who 
buys  and  sells  bills  of  exchange.  To  these  is  sometimes 
added  the  issuing  of  his  notes  to  pass  as  money,  when  al- 
lowed by  law  to  do  so." 2  This  definition  ignores,  however, 
savings  banks  as  that  term  was  originally  understood.  In 
a  brief  of  D.  B.  Ogden,  13  Pet.  530,  and  in  Bank  v.  Collector, 
3  Wall.  495,  repeated  by  the  same  judge,3  with  a  historical 
summary,  in  Oulton  v.  Savings  Institution,  17  Wall.  118,  is 
the  usual  definition  found  in  the  encyclopedias:  "Banks,  in, 
the  commercial  sense,  are  of  three  kinds,  to  wit:  1,  of  deposit; 
2,  of  discount;  3,  of  circulation."  To  this  is  added  by  the 
court  the  statement:  "All  or  any  two  of  these  functions 
may,  and  frequently  are,  exercised  by  the  same  association, 
but  there  are  still  banks  of  deposit  without  authority  to 
make  discounts  or  issue  a  circulating  medium." 4  The  court 
also  states  that  any  one  of  the  three  functions  makes  a  bank.6 
But  this  latter  statement  is  not  accurate,  because  a  dis- 
counter of  notes,  who  is  often  called  a  "  note-shaver,"  is  not 
ordinarily  considered  a  banker,6  nor  is  one  who  loans  his 

1  Foulger,  J.    Compare  with  this  fully  as  accurate)  as  the  phrase  of 
definition  the  language  of  section  Mr.  Horn:  A  bank  is  "an  office  for 
3407,  Revised  Statutes,  and  the  de-  the  circulation  of  capital  in  the 
cision  in  Richmond  v.  Blake,  132  form  either  of  accumulated  labor 
U.  S.  592.    The  decisions  in  Bank  v.  (money  of  all  kinds),  or  of  labor 
Collector,  3  Wall  495,  and  Oulton  yet  to  be  done  (credit)."    1  Encyc. 
v.  Savings  Institution,  17  Wall  118,  Pol.  Science,  228. 

proceed  upon  the  same  general  the-  8  Clifford,  J. 

ory  of  defining  the  term  by  refer-  *  Bank  v.  Collector,  supra. 

ence   to   the    business    functions  8  Oulton  v.  Sav.  Inst.,  supra. 

which  the  banker  performs.  «  People  v.  Brewster,  4  Wend.  498. 

2  People  v.  Doty,  80  N.  Y.  225,  228.  But  this  case  is  perhaps  to  be  bet- 
This  definition  is  not  expressed  in  ter  considered  as  a  case  of  statutory 
terms  so  general  (but  which  are  construction.     See  People  v.  Bar- 


§  3.]  BANKS,  ORGANIZATION,  ETC.  20 

own  capital.  It  has  been  held  that  merely  receiving  depos- 
its was  not  banking; 7  but  another  court  has  said  that,  where 
a  couple  of  attorneys  own  a  private  bank,  which  receives 
deposits,  they  are  to  be  considered  bankers  Tinder  the  terms 
of  a  penal  statute.8 

§  3.  Under  revenue  laws. —  It  is  apparent  that  courts,  in 
construing  revenue  laws,  will  give  terms  a  wider  meaning 
than  when  construing  a  penal  statute,  or  a  statutory  or  con- 
stitutional prohibition,  when  it  is  sought  to  bring  an  indi- 
vidual within  the  terms  of  the  statute.  The  business  of 
banking,  under  the  license  tax  law,  consists,  among  other 
things,  in  having  a  place  of  business  where  money  is  re- 
ceived on  deposit  and  paid  out  upon  checks  or  loaned  upon 
security.1  But  a  so-called  loan  company  which  did  not  re- 
ceive deposits,  but  loaned  its  own  capital  on  realty  security, 
and  sold  and  guaranteed  its  mortgages,  was  not  a  bank 
under  this  statute.2  It  seems  reasonably  certain  that  a  place 
of  business  performing  either  the  banking  function  of  de- 
posit or  that  of  issue  would  be  considered  a  bank.  The  same 
cannot  safely  be  said  of  a  business  confined  wholly  to  dis- 
counting. One  court  has  held  that  a  banker  can  be  com- 
pelled to  pay  a  license  on  the  ground  that  he  is  a  "  money- 
changer." 3  This  last  decision  is  historically  correct,  because 
originally  the  sole  business  of  the  mediaeval  prototype  of  the 
modern  banker  was  exchanging  the  different  varieties  of 
money.4 

tow,  6  Cow.  290,  and  Curtis  v.  Leav-  to  deal  in  notes,  drafts  and  bonds, 

itt,  15  N.  Y.  9,  56.  and  buy  and  sell  bills  of  exchange, 

7  Corwin   v.    Insurance    Co.,    14  is  not  a  money  broker  or  exchange 
Ohio,  6.  dealer  under  a  license  statute.  State 

8  Commonwealth  v.  Sponsler,  16  v.  Field,  49  Mo.  270.    This  decision 
Pa.  Co.  Ct.  R.  116.  seems  to  be  based  upon  the  idea 

1  Warren  v.  Shook,  91  U.  S.  704.        that  it  would  be  impossible  to  im- 

2  Selden  v.  Equitable  Trust  Co.,    prison  the  corporation. 

94  U.  S.  419.    The   statute  was  13  *  1  Encyc.  PoL  Science,  232.    The 

Stat.  at  Large,  252,  carried  into  sec.  historical  excursus   in   Oultou    v. 

3407,  Rev.  Stat.  U.  S.  Sav.  Inst,  17  WalL  118,  is  hardly 

3  Hinckley  v.  Belleville,  43  111.  accurate. 
183.  But  a  savings  bank  authorized 


30  BANKS   AND   BANKING.  [§  4 

§  4.  Under  constitutional  and  statutory  restrictions.— 

The  general  restrictions  against  banking  in  constitutions 
have  been  without  exception  held  to  apply  only  to  banks  of 
issue.  Courts  have  been  compelled  to  apply  harsh  meas- 
ures to  constitutional  absurdities.  Thus  in  California  the 
constitution  (art.  4,  sec.  4)  prohibited  the  grant  of  a  char- 
ter for  banking  purposes.  A  later  section  (35)  of  the  same 
article  stated  emphatically  that  the  legislature  should  pro-- 
hibit  any  person,  association  or  corporation  from  exercis- 
ing the  privilege  of  banking  or  creating  paper  to  circulate 
as  money;  yet  these  provisions  were  held  to  mean  banks 
of  issue,  not  banks  of  deposit  or  discount.1  Similar  hold- 
ings have  been  made  in  other  states,  where  bank  charters 
were  prohibited  or  banking  laws  were  required  to  be  sub- 
mitted to  popular  vote.2  The  state  of  Illinois  in  its  last  con- 
stitution has  insisted  upon  this  species  of  referendum  as  to 
any  law  authorizing  banking  corporations,  whether  of  de- 
posit or  discount  oi'  issue,  or  amendments  thereto.3  A  prohib- 
itory statute  led  to  a  very  extraordinary  ruling.  A  statute  for- 
bade the  establishment  in  the  Territory  of  Washington  of  any 
branch  or  agency  of  a  corporation  whose  charter  granted 
it  banking  privileges.  It  was  seemingly  held  that  a  corpora- 
tion whose  charter  gave  it  the  power  to  "  draw,  accept,  in- 
dorse, guaranty  [sic],  buy,  sell  and  negotiate  drafts  and  bills 
of  exchange,  inland  and  foreign;  to  receive  coin,  money, 
silver  and  gold  in  any  form  or  other  [sic],  and  any  kind  of 
valuables  on  deposit  at  its  offices,  and  make  orders  for  the 
payment  and  delivery  of  the  same  or  an  equivalent  at  any 
place  whatsoever;  to  buy,  sell  and  dispose  of  gold  and  silver, 
coin  and  bullion,  gold  dust,  money  and  securities  for  money, 
and  to  do  a  general  exchange  and  collection  business,  and 

1  Martinez  v.  Hemme  Co.,  105  CaL    440;   People  v.  Lowenthal,  93  III 
370;  Bankv.  Fairbanks,  52  Cal.  196.     191;  Dearborn  v.  Bank,  42  Ohio  St. 
In  the  latter  case  the  corporation    617. 

was  organized  for   banking  busi-  *Art  11,  sec.  5.  Const,  of  1870. 

ness,  so  far  as  under  the  laws  of  See  also  Reed  v.  People,  125  I1L 

California  it  could  legally  exist  592;  Dupee  v.  Swigert,  127  111.  494. 

2  Pape  v.  Capital  Bank,  20  Kan. 


§  5.]  BANKS,  OKGANIZA.TION,  ETC.  31 

to  invest  its  surplus  or  unemployed  funds,"  etc.,  was  not  a 
corporation  with  banking  privileges.4  This  was  decided  in 
spite  of  the  fact  that  the  corporation  was  carrying  on  a 
very  large  banking  business  in  various  places.  It  shows 
how  far  the  courts  will  go  in  trying  to  avoid  a  seeming  in- 
justice. 

§  5.  Construction  of  charters. —  The  court,  in  the  case 
just  cited,  intimates  that  under  such  a  charter  the  associa- 
tion might  be  exceeding  its  powers  in  doing  a  general  bank- 
ing business.  Courts,  generally,  in  construing  charters,  con- 
strue them  strictly  as  against  the  state,  and  more  liberally 
where  the  objection  comes  in  a  collateral  way.  A  corpora- 
tion engaged  in  loaning  its  own  money  upon  notes  and  mort- 
gage security  was  held  not  to  be  a  banking  corporation.1 
A  company  investing  its  profits  in  loans  secured  by  mort- 
gages would  not  be  engaging  in  the  banking  business.2  In 
another  case  the  president  of  a  trust  company  was  being 
prosecuted  as  the  officer  of  a  bank  receiving  a  deposit  know- 
ing his  bank  to  be  insolvent.  The  trust  company  had  been 
in  the  habit  of  receiving  deposits  of  money  subject  to  check. 
Its  charter  gave  it  the  power  of  receiving  money  in  trust 
and  of  accumulating  the  same,  and  to  loan  money  on  real 
estate  and  collateral,  and  to  execute  and  issue  notes  and 
debentures,  and  to  buy  and  sell  all  kinds  of  negotiable  and 

4  Wells,  Fargo  &  Co.  v.  Nor.  Pac.  charter,  not  what  business  it  was 

Ry.  Co.,  23  Fed.  R.  469,  per  Deady,  actually  doing.    The  case  refers  to 

Dist.  Judge.    The  case  was  man-  an  earlier  unreported  case  of  the 

damns   to  compel  the  defendant  territorial  court, 

railroad  to  furnish  express  facili-  ]  Oregon,  etc.  Investment  Co.  v. 

ties.    The    court    apparently  lost  Rathburn,  5  Sawy.  32.    The  court 

sight  of  the  statute  altogether  and  went  so  far  as  to  assume  that  the 

held  that  it  made  no  difference  corporation  was  loaning  its  own 

that  Wells,  Fargo  &  Co.  were  doing  capital.    But  there  was  no  proof 

a  banking  business  elsewhere;  the  whatever  to  show  that  fact.    The 

test  would  be  whether  they  were  question  arose  collaterally, 

doing  such  a  business  in  Washing-  2  Life  Ass'n  v.  Levy,  33  La.  Ann. 

ton.     The  statute,  however,  made  1203.    This  case  is  apparently  one 

the  test  to  consist  of  the  powers  of  construction  of  a  charter, 
granted  to  the  corporation  by  its 


32  BANKS   AND   BANKING.  [§  6» 

non-negotiable  paper,  stocks  and  other  investment  securities. 
Yet  the  court  held  that  the  president  was  not  criminally 
liable  as  the  officer  of  a  bank.8  But  it  is  well  known  that 
many  corporations  called  trust  companies  have  banking 
powers,  and  carry  on  a  general  banking  business  thereunder. 
Such  corporations  from  any  standpoint  would  necessarily  be 
considered  simply  as  banks,  so  far  as  their  character  as 
banks  was  in  question.  But  in  quo  warranto  proceedings  it 
was  held  that  a  corporation  which  was  given  the  right  to 
grant  evidences  of  debt  to  be  issued  payable  on  demand 
would  violate  its  charter  by  the  issuance  of  evidences  of 
debt  payable  on  demand  to  circulate  as  money,  where  the 
violation  charged  was  the  illegal  exercise  of  banking  pow- 
ers.4 

§  6.  Under  penal  and  forfeiture  statutes. — The  strictest 
rule  in  favor  of  the  citizen  is  applied  in  this  class  of  cases. 
Courts  have  gone  quite  far  in  verbal  refinements  in  order  to- 
mitigate  penalties.  The  cases  mentioned  in  the  note  below 
are  more  properly  cases  of  statutory  construction,  but  they 
show  a  very  dextrous  manipulation  of  banking  statutes.1 
Coupon  notes,  where  the  coupons  were  payable  to  bearer, 
were  held  not  to  be,  when  issued,  an  act  of  banking.2  Ne- 
gotiable bonds,  as  the  case  seems  to  represent  them,  issued 

J  State  v.  Reed,  125  Mo.  43.    The  confessed  and  avoided  the  exercise 

court  in  its  opinion  refers  to  Mer.  of  banking  powers.    But  the  plea 

Bank  v.  New  York,  121  U.  S.  138,  did  set  out  just  what  the  corpora- 

as  holding  that  a  corporation  with  tion  was  doing  under  its  charter, 

such  powers  was  not  a  bank.    But  Hence  the  opinion,  though  vague 

the  illegality  of  the  act  ought  not  and  rambling,  must  be  taken  to 

to  have  been  permitted  to  be  set  hold  that  the  charter  did  not  per- 

up  by  the  defendant    The  case  is  mit  the    issuance   of   circulating 

therefore  wrongly  decided.  notes. 

4  People  v.  River  Raisin  Co.,  12  x  Bristol  v.  Barker,  Anth.  N.  P. 

Mich.  389.    There  was  a  demurrer  235;  S,  C.,  14  Johns.  204;  People  v. 

to  the  replication.    The  replication  Brewster,  4  Wend.  498.     Compare 

was  held  bad,  but,  the  plea  being  People  v.  Bartow,  6  Cow.  290;  Peo- 

bad,  judgment  went  against  the  de-  pie  v.  Doty,  80  N.  Y.  225. 

fendant    The  plea  was  considered  2  Barry  v.  Merch.  Ex.  Co.,  1  Sandf- 

bad  because  it  neither  denied  nor  Ch.  280. 


§§7,  8.]  BANKS,  ORGANIZATION,  ETC.  33 

by  a  railroad,  were  governed  by  the  same  rule.8  The  re- 
ceipt of  money  on  deposit  was  considered  no  violation  of  a 
charter  prohibiting  banking,  although  it  seems  that  the  de- 
posits were  treated  as  bank  deposits.4  Under  a  statute  mak- 
ing bank  stockholders  personally  liable  for  the  debts  of  the 
bank,  the  stockholders  were  held  not  liable  for  debts  arising 
from  a  business  of  negotiating  and  guaranteeing  mortgages.5 

§  7.  The  right  of  banking. —  At  common  law,  the  vari- 
ous kinds  of  banking,  whether  of  issuing  notes,  discounting 
paper,  or  receiving  deposits,  were  the  privileges  of  any  one 
who  chose  to  exercise  the  right.  This  would  seem  to  be 
the  necessary  conclusion  from  the  development  of  banking. 
Originally  the  relation  between  a  bank  and  its  depositor 
was  not  that  of  debtor  and  creditor.  Some  of  the  greatest 
of  the  old  European  banks  received  money  strictly  as  a  de- 
posit, to  return  the  same  money  to  its  owner.  But  early  in 
the  history  of  banking  it  came  to  be  a  received  notion  that 
the  relation  of  debtor  and  creditor  was  initiated  by  a  so- 
called  but  misnamed  deposit.  Whether  the  bank  issued  to 
its  depositor  an  evidence  of  debt  in  the  form  of  a  note  or 
notes,  the  amount  being  made  payable  on  demand,  or  whether 
the  credit  was  given  the  customer  in  his  pass  book  or  on 
the  bank  book,  the  obligation  was  precisely  the  same,  to  wit: 
a  debt  payable  on  demand.  It  therefore  seems  reasonably 
certain  that  banking  continued  to  be  at  common  law  a  priv- 
ilege open  to  all.  So  the  authorities  agree.1 

§  8.  When  a  franchise. —  All  the  courts  seem  to  have 
recognized  that  the  power  to  issue  notes  to  circulate  as 
money  could  be  made  a  franchise.1  No, one  ever  seems  to 
have  questioned  the  right  of  the  legislature  to  make  the 
power  to  issue  currency  a  franchise  grantable  by  the  state. 

a  Hubbard  v.  N.  Y.  R.  R.  Co.,  36  1  Bank  of  Augusta  v.  Earle,  13  Pet. 

Barb.  286.  519, 596;  Curtis  v.  Leavitt,  15  N.  Y.  9; 

4  Corwin    v.    Insurance    Co.,   14  Nance  v.  Hemphill,  1  Ala.  551. 

Ohio,  6.  !  Bank  of  Augusta  v.  Earle,  suprai 

6  Kiggins   v.  Munday,  19  Wash,  Myers  v.  Irvine,  2  S.  &  R  36& 
233. 

8 


31  BANKS    AND    BANKING.  [§  9. 

It  is  put  on  the  ground  that  the  government  has  the  power 
to  protect  its  subjects  from  a  worthless  currency.2  If  the 
legislature  can  take  away  one  branch  of  banking  from  pri- 
vate citizens  for  the  public  good,  it  would  seem  to  follow 
as  a  matter  of  strict  logical  deduction  that  all  branches  of 
the  business  could  be  made  franchises.* 

§  9.  Right  of  private  banking. —  Originally  banking  in 
all  its  branches  was  a  common-law  privilege,  as  we  have 
stated.  The  fearful  evils  of  unrestrained  banking  in  its 
branch  of  issuing  notes  caused  the  privilege  to  be  curtailed. 
The  New  York  statute  forbade  all  kinds  of  private  banking, 
and  restricted  the  right  to  associations  authorized  by  the 
state.  The  power  of  the  legislature  to  do  this  was  chal- 
lenged in  the  case  of  Attorney-General  v.  Utica  Ins.  Co.,  15 
Johns.  358,  in  an  ingenious  argument  by  T.  A.  Emrnett.  But 
his  argument  was  wholly  unsound  in  his  case  because  he  was 
arguing  for  a  corporation,  whose  rights  and  privileges  were 
not  those  of  individuals,  but  simply  what  the  legislature 
granted  it.  The  court  held  that,  while  banking  was  a  com- 
mon-law right,  it  had  become  a  franchise  under  the  statute. 
This  ruling  was  necessary  to  the  case,  which  was  quo  war- 
ranto.  It  should  be  noted  that  in  the  New  York  constitu- 
tion in  force  in  1818,  when  this  case  was  decided,  there  was 
no  clause  against  depriving  a  person  of  life,  liberty  or  prop« 
erty  without  due  process  of  law.  That  was  first  inserted  in 
the  constitution  of  1822.  The  clause  in  the  federal  consti- 
tution l  was  binding,  of  course,  only  on  the  general  govern- 
ment, and  the  court  assumed  the  power  of  the  legislature  by 
analogy  to  the  action  of  the  English  parliament.  But  this 
case  seems  to  have  settled  the  law  in  New  York,  and  the 
question  was  not  raised  under  the  new  constitution.  The  case 
of  Bank  of  Augusta  v.  Earle,  13  Pet.  519,  admitted  the  right 
of  the  legislature  to  make  issuing  notes  a  franchise,  but 

*  Myers  v.  Irvine,  2  S.  &  R.  368.        299;  Attorney-General  v.  Utica  Ins. 

*  State  v.  Woodmansee,  1  N.  D.    Co.,  15  John.  858. 

246;  State  v.  Stebbins,  1  Stew.  (Ala.)        l  Fifth  Amendment  to  the  Fed- 
eral Constitution. 


§  10.]  BANKS,  ORGANIZATION,  ETC.  35 

seems  to  doubt  the  right  to  make  other  branches  of  bank- 
ing a  franchise.  But  since  the  court  was  dealing  with  a  cor- 
poration's rights  in  that  case,  the  statement  would  have  been 
dictum.  The  two  earlier  Alabama  cases  seem  to  have  as- 
sumed the  right  of  the  legislature  to  make  all  banking  a 
franchise.2  The  point  at  last  came  before  the  supreme  court 
of  North  Dakota,  and  that  court,  in  an  opinion  not  very  well 
considered,  held  that  the  state  legislature  could  prohibit  all 
private  banking;3  but  a  little  later  the  supreme  court  of 
South  Dakota  held  such  an  act  to  be  unconstitutional.4 
Other  states  will  probably  settle  the  question  for  themselves 
in  the  near  future.  The  supreme  court  of  the  United  States 
will  also  be  required  to  pass  upon  the  question  under  the 
fourteenth  amendment.  If  that  court  should  decide  against 
the  legislative  right,  the  question  will  be  completely  settled 
for  the  whole  United  .States  as  to  any  law  subsequent  to  the 
fourteenth  amendment.  But  should  it  hold  in  favor  of  the 
right,  it  is  perfectly  possible  that  some  states  will,  never- 
theless, hold  that  such  an  act  would  be  repugnant  to  the 
state  constitution,  which  decision  as  to  that  point  would  be 
final  for  that  state. 

§  10.  The  probable  rule. —  The  objection  to  such  statutes 
is  that  they  deprive  the  citizen  of  a  valuable  property  right, 
to  wit:  the  right  to  pursue  a  lawful  calling.1  It  is  claimed 
to  be  in  violation  of  the  due  process  of  law  clause  of  the  state 
and  federal  constitutions,  as  well  as  the  privilege  and  immu- 
nity clause  of  the  federal  constitution.  The  sole  question  is 
this:  Is  the  evil  of  unrestricted  banking  so  great  that  the 
police  power  can  take  it  wholly  away,  or  is  the  legislature 

2  Nance  v.  Hemphill,  1  Ala.  551;  *  State  v.  Scougal,  3  S.  Dak.  55. 
State  v.  Stebbins,  1  Stew.  (Ala.)  299.  *  The  usual  authorities  are  cited 
Chief  Justice  Taney,  in  Bank  of  in  the  cases  above  noted.    For  dis- 
Augusta  v.  Earle,  says  that  the  case  cussions  of  the  general  subject,  not 
of  State  v.  Stebbins  could  only  be  confined  to  banking,  see  25  Am. 
considered  as  applying  to  banks  of  Law  Rev.  871,  and  27  Am.  Law  Rev. 
issue.  857. 

3  State  v.  Woodmausee,  1  N.  Dak. 
246. 


36  BANKS   AND   BANKING.  [§  10. 

required,  the  business  not  being  a  nuisance,2  to  prevent  the 
evil  by  proper  regulation  ?  It  is  not  impossible,  it  would 
seem,  by  requiring  the  capital  stock  of  a  private  banker  to 
be  paid  in,  and  by  providing  in  some  safe  way  for  the  double 
liability  of  that  capital  stock,  by  a  deposit  of  securities  to 
make  private  banking  as  safe  as  corporate  banking.  But  it 
is  apparent  that,  if  this  were  done,  and  the  private  banker 
required  to  deposit  securities,  to  make  his  responsibility 
equal  to  the  double  responsibility  of  the  stockholders  of  a 
corporation,  the  private  banker  would  cease  to  exist.  This 
is,  perhaps,  the  easiest  way  for  a  legislature  to  accomplish 
indirectly  such  a  result, *if  it  is  so  desired.  The  objection  of 
class  legislation,  and  of  a  discrimination  against  the  private 
banker,  would  need  to  be  met  and  overcome;  but  it  could  be 
said  that  the  law,  applying  to  all  private  bankers  alike,  could 
not  be  class  legislation.  If  the  legislation  attacked  consists, 
however,  of  a  positive  prohibition  against  private  bankers, 
the  constitutional  question  must  be  fairly  met.  It  is  likely 
that  the  decision  will  depend  upon  the  private  views  of  the 
members  of  the  court  upon  the  proper  system  of  political 
philosophy.  If  they  are  devotees  of  the  laissezfaire  doctrine 
of  government,  they  will  adopt  the  rule  of  non-prohibition. 
If,  however,  they  belong  to  the  opposing  school  of  political 
thought,  they  will  follow  the  opposite  rule,  for  the  question 
belongs  far  more  to  politics  than  it  does  to  law.  It  will  re- 
quire a  very  accurate  knowledge  of  the  general  opinions  of 
the  judges  composing  a  court  of  appeal  to  form  any  con- 
jecture as  to  the  probable  decision.  "We  are  likely  to  have 
much  judicial  exposition  upon  this  question  in  the  near 
future.1 

2  Attorney-General  v.  Bank  of  literary  taste,  has  already  begun. 
Niagara,  1  Hopk.Cn. 403;  Attorney-  "Whence,  then,"  the  justice  writ- 
General  v.  Insurance  Co.,  2  Johns,  ing  the  opinion  in  State  v.  Scougal, 
Ch.871.  Both  these  oases  held  that  supra,  indignantly  exclaims,  "did 
an  injunction  would  not  lie  at  the  the  legislature  of  this  state  derive 
suit  of  the  state  against  the  unlaw-  its  power  to  farm  out  these  priv- 
ful  exercise  of  banking  privileges.  ileges  to  corporations,  and  to  deny 

1  The  flow  of  judicial  rhetoric,  to  individual  citizens  the  right  to 

which  is  not  always  in  the  best  exercise  them,  which  he  and  hi» 


§11.]  BANKS,  ORGANIZATION,  ETC.  37 

§  11.  Question  considered  on  principle. —  It  may  be  con- 
ceded that  to  take  away  the  business  of  a  private  banker, 
who  has  for  many  years  carried  on  a  lucrative  and  hon- 
orable business,  seems  a  wholly  unwarranted  proceeding. 
Everything  that  can  be  urged  in  favor  of  the  citizen's  right 
to  enjoy  property  can  be  urged  in  his  favor.  But  many 
other  kinds  of  business  have  been  treated  in  this  way,  and 
the  step  justified  by  an  appeal  to  the  right  of  the  public  as 
against  the  individual.  It  is  claimed  with  some  reason  that 
the  history  of  private  banking  shows  no  more  failures  than 
corporate  banking;  that  the  worst  of  bank  failures  have 
been  those  of  corporations.  But  it  seems  plain  that  if  the 
right  be  conceded  to  the  legislature  to  prohibit  private  banks 
of  issue,  the  right  to  prohibit  private  banks  of  deposit  nec- 
essarily follows.  We  have  shown  that  both  businesses  are  at 
common  law  the  rights  of  the  citizen.  The  issuance  of  a  note 
payable  on  demand  in  the  place  of  a  sum  of  money  deposited 
or  borrowed  does  not  differ  in  the  least  from  a  book  account 
payable  on  demand  for  a  sum  deposited.  In  fact  the  issuing 
of  the  note  is  the  older  banking  transaction.  It  is  true  that 
the  note  can  circulate  as  money,  and  the  book  account  can- 
not. But  certificates  of  deposit  and  savings  books  can  so 
circulate  in  theory,  although  the  form  of  the  latter  is  too 
cumbrous  for  practical  use,  and  the  courts  deny  to  them 
negotiability.  Yet  the  currency  does  not  become  demoral- 
ized as  long  as  the  banker's  credit  is  perfect.  If  a  bank  of 
issue  fails,  the  notes  become,  of  course,  practically  worthless, 

ancestors  have  from  time  imme-  tively  recent  thing.  See  Anderson 
morial  possessed?  "  This  is  a  some-  v.  Alexander,  7  Am.  Law  Reg.  173. 
what  clumsy  sentence,  but  if  it  is  The  question  is  one  to  be  considered 
meant  to  assert  that  we  and  our  calmly  and  without  the  aid  of  bun- 
ancestors  from  time  immemorial  combe,  which  never  shows  in  a 
have  enjoyed  the  right  to  have  a  worse  light  than  in  the  permanence 
bank,  the  learned  justice  is  only  of  a  judicial  opinion.  The  opinion 
making  a  phrase.  It  cannot  be  seems  to  think  that  the  federal  con- 
asserted  that  from  time  immemo-  stitution  made  note-issuing  a  fran- 
rial  our  ancestors  have  reveled  in  chise,  but  that  is  a  mistake.  It 
the  unrestrained  right  of  private  merely  prohibited  state  bills  of 
note  issues.  That  is  a  compara-  credit. 


38  BANKS   AND   BANKING.  [§  12. 

unless  secured.  The  same  result  follows  upon  a  bank  failure 
as  to  the  deposit  accounts.  Just  as  much  will  be  paid  on  the 
notes  as  on  the  deposits.  Rather  fewer  people  are  affected 
by  the  depreciation  of  the  notes  than  by  the  depreciation  in 
the  value  of  the  deposits,  for  the  deposit  account  will  gen- 
erally be  much  larger  than  the  note  issue.  The  direct  and 
indirect  effects  of  a  bank  failure  on  its  depositors  would  per- 
haps be  as  large  as  the  same  effects  upon  the  note  holders. 
So,  therefore,  no  reason  can  be  urged  in  favor  of  the  legis- 
lative right  to  suppress  private  banks  of  issue  that  cannot 
also  be  urged  in  favor  of  the  right  to  suppress  private  banks 
of  deposit.  This  consideration  does  not  apply  to  private 
banks  solely  of  discount.  But  such  a  bank  cannot  in  any 
proper  sense  of  the  term  be  called  a  bank,  as  the  word  is 
understood  either  from  a  business  or  a  politico-economical 
standpoint.  We  do  not  call  a  note-shaver  or  a  pawn-broker 
a  banker,  but  both  may  be  discounters  of  paper.  Yet,  even 
pawn-broking,  it  is  conceivable,  might  be  reduced  to  a  fran- 
chise for  public  convenience.  But  every  one  must  concede 
as  to  banks  of  deposit  that  people  in  general  know  little  of 
a  private  banker's  responsibility,  and  are  prone  to  accept  the 
fact  that  a  man  is  a  banker  as  a  guaranty  of  his  perfect 
financial  responsibility.  That  may  be  their  own  fault,  but 
it  is  none  the  less  a  fact.  Much  could  be  said,  however, 
against  the  possibility  of  any  man  finding  out  anything  from 
published  bank  statements.  The  loans  and  discounts  may 
be  good  or  bad ;  the  fact  can  only  be  ascertained  with  much 
trouble.  It  is  found  that  bank  supervisions  and  examina- 
tions do  not  insure  good  banking,  and  that  the  ultimate 
guaranty  against  loss  is  the  double  responsibility  of  stock- 
holders, which  can  be  secured  from  private  bankers  only  on 
terms  that  would  lead  to  the  discontinuance  of  the  business. 
So  that  the  weight  of  reason  is  decidedly  in  favor  of  the  leg- 
islative right  to  suppress  private  banking. 

§  12.  Further  questions. —  Even  if  private  banking  be 
absolutely  prohibited  by  the  state  constitution,  the  question 
remains  whether  the  state  constitution  is  opposed  to  the  fed- 


§  13.]  BANKS,  ORGANIZATION,  ETC.  39 

eral  constitution.  If  the  state  constitution  were  older  than 
the  fourteenth  amendment,  it  is  difficult  to  see  how  that  pro- 
vision would  apply,  and  it  is  not  conceivable  that  under  the 
privilege  and  immunity  clause  of  the  original  constitution 
(art.  4,  sec.  2)  the  question  could  arise.  But  even  in  states 
with  constitutions  adopted  after  the  fourteenth  amendment 
was  passed,  if  the  act  prohibiting  private  banking  were  held 
in  consonance  with  the  federal  constitution,  the  question 
arising  under  a  state  constitution  requiring  banking  acts  to 
be  submitted  to  popular  vote,  and  the  state  court  of  final 
resort  holding  that  the  act  prohibiting  private  banking  was 
unconstitutional  under  the  state  constitution,  the  further 
consideration  would  require  decision,  whether  a  popular  vote 
gave  the  law  any  efficacy  as  against  the  state  constitution. 
Since  the  constitution  is  binding  upon  all  the  people,  it  would 
seem  to  follow  that  such  a  law  would  be  held  unconstitutional 
where  a  law  would  be  so  held  if  adoption  by  popular  vote 
were  not  required.1  It  is  possible  that  the  supreme  court  of 
the  United  States  might  hold,  even  in  the  case  of  a  constitu- 
tion adopted  prior  to  the  fourteenth  amendment,  that  an  act 
suppressing  private  banking  was  contrary  to  those  funda- 
mental principles  of  government  which  are  spoken  of  in 
Loan  Ass'n  v.  Topeka,  20  Wall.  655. 

§  13.  Formation  of  a  bank. — -Where  private  banking  is 
lawful  and  a  private  bank  is  started  by  an  individual  or  in- 
dividuals, there  appear  to  be  no  special  circumstances  requir- 
ing notice  whether  the  bank  is  formed  by  an  individual  or  a 
partnership.  But  one  question  deserves  notice.  It  seems  to 
have  been  held  that  since  a  partnership  can  be  formed  as  be- 
tween the  partners  on  other  terms  than  the  joint  and  sev- 
eral liability  of  the  partners,  it  follows  that  the  partners  will 
not  be  "jointly  and  severally  liable  as  to  third  parties  who 
have  notice  of  the  terms  of  the  partnership.1  It  would  seem 

1  State  v.  Hastings,  12  Wis.  47,  v.  Allin,  35  III  App.  336;  Riggs  v. 

seems  to  hold  otherwise,  but  is  not  Swan,  3  Cranch,  C.  C.  183;  Hess  v. 

sound.  Werts,  4  S.  &  R.  356.    And  see  §  209, 

1  Hastings  v.  Hopkinson,  28  Vt.  post,  note  2. 
108.     Contra,  Manhattan  Brass  Co. 


40  BANKS    AND    BANKING.  [§   14. 

to  follow,  if  that  be  the  law,  that  a  partnership  limited  as  to 
the  liability  of  partners  can  exist  as  to  persons  having  notice, 
even  at  common  law.  This  result  shows  the  absurdity  of  the 
rule.  But  all  the  states  that  permit  limited  partnerships  for- 
bid such  a  partnership  for  banking  purposes,2  with  few  ex- 
ceptions.3 There  seems  to  be  no  question  that  a  limited 
partnership  that  fails  because  of  a  failure  to  comply  with 
the  statute  becomes  a  general  partnership,4  or,  if  the  particu- 
lar partnership  be  not  permitted  to  be  limited,  such  a  part- 
nership, although  otherwise  formed  in  accordance  with  the 
statute,  becomes  general.5  It  is  said  that  a  limited  partner- 
ship formed  in  a  state  permitting  such  a  partnership,  but  in 
order  to  do  business  in  another  state,  would  be  a  general 
partnership  in  both  states.6  But  this  would  appear  not  to 
be  true  as  to  a  limited  partnership  formed  in  a  foreign  coun- 
try to  do  business  in  a  state  permitting  limited  partnerships.7 
The  discussion  as  to  the  conflict  of  laws  as  to  limited  part- 
nerships is  reserved  for  the  subject  of  "  Unauthorized  Bank- 
ing."8 

i 

§  14.  Joint-stock  companies. —  In  states  permitting  joint- 
stock  companies  to  be  formed  for  banking  purposes  the  stat- 
ute must  be  strictly  followed.1  If  this  be  not  done  the 
joint-stock  company  is  a  general  partnership.2  The  rule  as 
to  de  facto  corporations  cannot  be  invoked  to  make  a  de 
facto  joint-stock  company.3  If  the  liability  is  limited,  such 
joint-stock  companies  would  be  generally  considered  corpo- 
rations.4 If  they  are  to  be  so  considered,  the  fact  would 

2  See  George  on  Partnership,  424  8  See  g  29,  post. 

et  seq.,  for  full  references  to  stat-  1Maloney  v.  Bruce,  94  Pa.  249; 

utes.  Elliot  v.  Himrod,  108  Pa.  569. 

1  Expressly  permitted  in  Mary-  2  Same  cases  as  in  last  nota 

land;  by  implication  in  Illinois  by  8  Eliot  v.  Himrod,  supra. 

not  being  forbidden.  4  Liverpool  Ins.  Co.  v.  Massachu- 

4  Bates  on  Lim.  Part.  49.  setts,  10  Wall.  566.     Contra,  Curtis 

8McGehee  v.  Powell,  8  Ala.  827.  v.  Leavitt,  17  Barb.  309.    See  also 

6  George  on  Partnership,  428.  Bates  on  Lim.  Part.,  sec.  208  et  seq. ; 

7  Jacquin  v.  Brisson,  11  How.  Pr.  Robbins  Electric  Co.  v.  Weber,  172 
885.  Pa.  635. 


§  15.]  BANKS,  ORGANIZATION,  ETC.  41 

have  an  important  bearing  upon  the  conflict  of  laws  as  to 
private  banking,  which  will  be  noticed  later.5 

§  15.  Corporations. —  A  corporation  can  be  formed  only 
under  authority  from  the  sovereign  power.  In  the  divided 
sovereignty  as  between  the  general  government  and  the 
states,  it  was  early  settled  l  that  congress  had  the  power  to 
charter  a  United  States  bank.  A  state  court  has  given  en- 
couragement to  congress  by  deciding  that  it  had  power  to 
pass  the  national  bank  act.2  The  state  legislatures  have,  of 
course,  power  to  charter  banking  corporations.  This  power, 
in  the  absence  of  constitutional  restrictions,  may  be  exer- 
cised either  by  a  grant  of  a  special  charter,  a  proposition 
never  disputed,  or  by  the  passage  of  a  general  law  permit- 
ting the  formation  of  such  corporations.  .  But  the  granting 
of  special  charters  is  now  forbidden  in  almost  all  the  states, 
and  congress  has  forbidden  such  a  power  to  the  territories. 
In  some  of  the  states  the  legislature  is  forbidden  to  pass 
any  banking  law  unless  the  law  is  ratified  by  a  vote  of  the 
people.  If  the  law  is  passed,  it  ought  not  to  be  amended 
except  by  a  law  ratified  by  popular  vote.3  Under  such  a 
provision  it  is  questionable  whether  additional  powers  not 
of  a  banking  character  can  be  given  to  banks  unless  the 
law  be  referred  to  the  people  and  adopted  by  them.4 

6  See  §  29,  infra,  powers,  whether  of  issue,  deposit  or 

1  McCulloch     v.     Maryland,      4  discount,  nor  amendments  thereto, 
Wheat.  316.  shall  be  in  force  unless  ratified  by 

2  Pollard  v.  State,  65  Ala.  628.  a  vote  of  the  people.    An  act  rati- 
See  Farmers'  Bank  v.  Bearing,  91  fied    by  a  vote  of  the  people   (1 
U.  S.  29.  Starr  &  Curtis,  ch.  16a,  sec.  4)  pro- 

3  Porter   v.   State,  46  Wis.    375,  vides    that    banking   corporations 
citing  earlier  cases.    Contra,  Smith  organized  under  the  act  shall  have 
v.  Bryan,  34  111.  364,  citing  earlier  power    "  to   accept   and    execute 
cases.    These  last  decisions  have  trusts."    An  act  not  so  ratified  (1 
been  condemned  by  the  provision  Starr  &  Curtis,  ch.  32,  sec.  89  et 
in  the  Illinois  constitution  of  1870,  seq.)  authorized  all   trust  compa- 
which  applies  to  amendments.  nies,  and  all  companies  authorized 

4  The    Illinois   constitution   pro-  to  accept  trusts,  to  be  appointed  to 
vides  (art.  11,  sec.  5)  that  no  act  execute  such  trusts  as  assignee  or 
authorizing   or  creating    corpora-  trustee    by  deed,  or   executor   or 
tions  or  associations  with  banking  guardian  or  trustee  by  will;  and 


42 


BANKS    AND   BANKING. 


[§10. 


§  16.  State  banks  of  issue. —  It  is  too  plain  for  argument 
that  a  bank  note  is  a  bill  of  credit,  and  that  no  state  under 
the  federal  constitution  can  issue  a  bill  of  credit;1  yet  our 
federal  supreme  court  has  decided  that  the  state  may  do  so 
by  the  simple  expedient  of  incorporating  a  bank  with  such 
power.2  It  is  also  too  plain  for  argument  that,  under  the 
same  section  of  the  same  article  of  the  federal  constitution, 
no  state  can  make  anything  but  gold  and  silver  a  legal  ten- 
der; yet  our  highest  court  has  practically  decided  the  exact 
contrary,3  although  the  opinion  says  it  does  not.  If  the  pro- 
hibition was  to  be  made  effective,  a  state  was  enjoined  from 
creating  corporations  with  power  to  emit  bills  of  credit;  yet 
in  the  same  case  the  court  held  that  the  state  might  create 
a  corporation  with  the  power  to  issue  its  notes  as  currency.* 

claimants,  and  also  that  a  deposit 
is  required  from  trust  companies, 
nevertheless,  the  trust  claims  being 
preferred  (see  §  235,  post),  the  as- 
sets would  leave  perhaps  little  for 
the  depositors  in  case  a  crash  carna 
But  as  to  banks  organized  before 
the  constitution  of  1870  it  would 
have  no  retroactive  application. 
Henderson  Loan  Ass'n  v.  People, 
163  IlL  196.  Trust  companies  with- 
out banking  powers  would  not 
come  under  the  provision.  Roane 
Iron  Co.  v.  Wisconsin  Trust  Co.,  74 
N.  W.  R.  818.  But  as  to  banks 
with  trust  powers,  a  statute  defin- 
ing the  powers  ought  to  have  a 
popular  adoption.  See  the  princi- 
ple of  the  decision  in  Van  Steen- 
wyck  v.  Sackett,  17  Wis.  645;  Rusk 
v.  Van  Nostrand,  21  Wis.  161. 

1  Art.  1,  sec.  10,  Fed.  Const  See 
§  311,  notes  14  and  15,  post. 

2Briscoe  v.  Bank  of  Common- 
wealth, 11  Pet.  257. 

8Briscoe  v.  Bank  of  Common- 
wealth, supra. 

4Briscoe  v.   Bank   of  Common- 


the  statute  further  contained  nu- 
merous provisions  as  to  the  perform- 
ance by  such  companies  of  their 
trust  duties.  This  later  act,  so  far 
as  it  applies  to  banks  with  trust 
powers,  is  amendatory  of  the  bank- 
ing act.  The  one  statute  gives  the 
power,  the  other  defines  the  man- 
ner of  its  execution.  As  to  a  bank- 
ing corporation  given  trust  powers 
after  the  constitution  of  1870,  it 
seems  a  palpable  evasion  to  give 
the  bank  trust  powers  by  a  statute 
ratified  by  popular  vote,  and  then 
to  define  those  powers  and  the  man- 
ner of  their  execution  by  a  statute 
not  so  ratified.  There  is  reason  in 
the  idea,  because  the  trust  opera- 
tions of  a  bank  might  bring  upon 
it  liabilities  that  would  destroy  the 
security  of  the  depositors.  We 
may  suppose  a  case  where  the  capi- 
tal of  a  bank  is  $100,000.  This  with 
the  statutory  liability  would  make 
the  capital  $200,000.  Suppose  the 
bank  becomes  trustee  for  claims 
aggregating  a  much  larger  sum. 
Conceding  that  the  statutory  lia- 


bility would  not  go  to  aid  the  trust    wealth,  supra. 


§16.] 


BANKS,  ORGANIZATION,  ETC. 


4:3 


In  fact  the  state  gave  the  bank  a  franchise  to  issue  bank 
notes.  A  franchise  is  a  part  of  the  power  of  the  state  given 
to  the  corporation.  The  opinion  seemingly  concedes  that 
the  state  could  not  emit  a  bill  of  credit,  yet  it  could  give  to- 
a  corporation  part  of  the  power  which  it  did  not  have.  A 
more  perfect  non  seguitv/r  cannot  be  imagined.  Yet  this 
opinion  has  been  acquiesced  in  ever  since;5  but  the  suppres- 


5  The  decision  was  made  by  a 
packed  court,  and  overruled  Craig 
v.  Missouri,  4  Pet.  410,  a  most  pow- 
erful decision  by  Chief  Justice 
Marshall.  The  case  was  first  argued 
in  1834,  before  a  court  composed 
of  Marshall,  Story,  Thompson,  Mc- 
Lean and  Baldwin;  Duvall  and 
Johnson  were  absent.  Three  of 
those  judges  concurred  in  holding 
the  state  bank  notes  bills  of  credit, 
but  no  decision  was  pronounced, 
because  the  majority  was  not  a 
majority  of  the  whole  court.  A  re- 
argument  was  ordered.  Marshall 
and  Johnson  had  died,  and  Duvall 
had  resigned;  Wayne,  Taney  and 
P.  P.  Barbour  had  taken  their 
places,  which  made  the  last  three, 
with  McLean  and  Baldwin,  all 
Jackson's  appointees.  The  reargu- 
ment  was  had,  and  the  cause  de- 
cided in  a  singularly  foolish,  inept 
and  futile  opinion  by  Justice  Mo- 
Lean.  McLean  afterwards  died  in 
the  odor  of  sanctity  because  of  his 
action  on  the  slavery  question,  but 
this  decision  ought  never  to  be  for- 
gotten. The  evils  of  a  worthless 
paper  currency  that  cursed  this 
country  for  so  many  years  were  all 
made  possible  by  this  reckless  po- 
litical decision.  Sumner's  Jack- 
son, p.  363.  The  case  was  argued 
by  Mr.  White  and  Mr.  Southard  for 
the  plaintiff  in  error,  and  by  Mr. 
Hardin  and  Mr.  Clay  for  the  de- 


fendant. The  really  valuable  part 
of  Mr.  White's  argument  the  re- 
porter has  left  out.  Mr.  Southard 
speaks  of  the  change  of  the  per- 
sonnel of  the  court,  and  the  prob- 
able change  of  opinion,  and  says: 
"Misera  est  servitus,  ubi  lex  aut 
vaga  aut  incognita  est."  Judge 
Story's  dissenting  opinion,  with  its 
splendid  eulogy  of  the  great  Chief 
Justice,  is  a  masterpiece.  The 
"wild-cat"  banking  from  1837  to 
1860,  and  the  debauching  of  the 
public  mind  as  to  paper  money* 
would  not  have  been  possible  if 
the  opinion  of  Marshall  and  Story 
had  prevailed.  "  Jackson's  appoint- 
ments introduced  the  mode  of  ac- 
tion, by  the  executive,  through  the 
selection  of  judges,  on  the  interpre- 
tation of  the  constitution  by  the  su- 
preme court.  Briscoe's  case  marked 
the  victory  of  Kentucky  relief 
finance  and  states-right  politics 
over  the  judiciary.  The  effect  of 
political  appointments  to  the  bench 
is  always  traceable,  after  two  or 
three  years,  in  the  reports,  which 
come  to  read  like  a  collection  of 
old  stump  speeches.  The  climax 
of  the  tendency  which  Jackson  in- 
augurated was  reached  when  the- 
court  went  to  pieces  on  the  Dred 
Scott  case,  trying  to  reach  a  decis- 
ion which  should  be  politically  ex- 
pedient rather  than  one  which 
should  be  legally  sound."  Sum- 


44 


BANKS   AND   BANKING. 


[§17. 


sion  of  state  banks  of  issue  is  achieved  by  the  national  tax 
of  ten  per  centum  upon  state  bank  issues.  This  power  can- 
not be  successfully  questioned.6 

§  17.  State  bank  tax. —  The  state  bank  tax  of  ten  per 
cent,  upon  the  notes  issued  by  all  state  banks  and  private 
bankers  is  the  method  by  which  the  national  government 
preserves  the  country  from  unrestrained  note  issues.1  Our 
political  institutions,  even  when  at  their  worst,  fit  us  so 
easily  that  we  rarely  stop  to  consider  how  narrow  is  the 
barrier  which  separates  us  from  the  condition  of  "  wild-cat " 
There  are  many  constitutions  which  prevent  a 


banking.2 


net's  Jackson,  p.  363.  Later  in- 
stances of  this  sort  could  be  easily 
found,  but  the  same  result  is  often 
obtained  through  the  election  of 
judges.  The  whole  chapter  is  a 
fruitful  lesson  for  all  lawyers.  A 
case  contra  to  the  one  above  is  Linn 
v.  State  Bank,  1  Scam.  87.  where 
the  state  court  was  right.  Briscoe 
v.  Bank  has  been  affirmed  in  Wood- 
ruff v.  Trapnall,  10  How.  205;  Dar- 
rington  v.  Bank  of  Alabama,  13 
How.  12;  Curran  v.  Arkansas,  15 
How.  317.  It  has  been  overthrown 
in  Veazie  Bank  v.  Fenno,  8  Wall. 
533,  by  holding  that  the  national 
government  can  tax  the  power  out 
of  existence. 

6  Veazie  Bank  v.  Fenno,  8  Wall 
533,  holding  *that  such  a  tax  was 
not  a  direct  tax,  but  an  excise  tax. 

1  Statute  of  Feb.  8,  1875,  ch.  36. 
sees.  19-21;  18  Stat  at  Large,  811. 

J  One  of  the  curious  legacies  of 
the  days  of  vicious  banks  of  issue 
is  the  idea  that  the  issuance  of 
notes  is  a  source  of  profit  to  the 
banker.  This  idea  really  lies  at  the 
bottom  of  the  jealousy  which  exists 
among  a  certain  class  against  na- 
tional banks.  So  far  is  it  from 


being  a  source  of  profit  that  many 
national  banks  do  not  keep  their 
notes  in  circulation.  There  is  a 
school  of  continental  economists 
who  think  that  unrestricted  pri- 
vate banking  is  a  good  thing  —  that 
it  regulates  itself.  See  the  trans- 
lation of  an  article  of  Adolph  Wag- 
ner found  in  1  Encyc.  Pol.  Science, 
239.  It  is  lamentable  to  see  that 
this  idea  has  some  following  among 
bankers,  and  that  a  secretary  of 
the  treasury  has  actually  proposed 
to  allow  banks  to  issue  notes  of 
hand  against  their  assets.  The  folly 
of  this  proposition  is  that  such  is- 
sues cannot  be  successfully  super- 
vised. A  failing  bank  would  al- 
ways resort  to  note  issues  to  pre- 
vent bankruptcy.  The  ignorance 
of  legal  conditions  involved  in  the 
suggestion  is  appalling.  But  in  this 
country  we  have  seen  the  effects 
of  such  a  system,  and  it  is  not  likely 
to  be  revived.  See  29  Am.  Law 
Rev.  94,  459.  Whenever  there  has 
been  any  talk  of  reviving  it, 
"Terruit  gentes,  grave  ne  rediret 
Seculum." 

The  effects  of  such  a  system  are 
likely  to  prove  incalculably  disas- 


§§  18,  19.]  BANKS,  ORGANIZATION,  ETC.  45 

state  bank  from  issuing  notes,  or  which  provide  for  security ; 
but  there  are  many  states  wherein  there  is  no  provision  of 
law  that  would  prevent  a  private  banker3  from  flooding  the 
country  with  worthless  currency  in  the  form  of  unsecured 
notes.  Until  such  a  provision  exists  in  every  part  of  the 
United  States,  it  is  not  too  much  to  say,  even  in  a  legal  trea- 
tise, that  an  advocate  of  the  repeal  of  the  state  bank  tax  is 
a  public  enemy. 

§  18.  Delegation  of  power. —  The  national  legislature  has 
delegated  to  the  different  territorial  legislatures  the  power 
to  incorporate  banks.1  In  practice,  the  duty  of  passing  upon 
due  incorporation,  both  under  the  national  bank  act  and 
under  state  and  territorial  legislation,  is  usually  delegated 
to  ministerial  officers.2  No  good  reason  can  be  urged  why 
jurisdiction  ought  not  to  be  given  to  certain  courts  to  pass 
upon  the  question  of  the  propriety  of  the  articles  of  incorpo- 
ration and  the  regularity  of  the  steps  taken. 

§  19.  Formation  of  corporations. —  A  corporation  may 
be  formed  either  by  the  grant  of  a  special  charter,  where 
such  a  course  is  permissible,  or  by  incorporation  under  a 
general  law.  A  bank  formed  under  a  special  act  becomes, 
by  implication,  a  corporation,  although  the  term  is  not  ap- 
plied to  it  in  the  act.1  A  special  authority  or  franchise  given 

trous.    A  case  which,  when  read  them.    The  first  banker  received 

between  the  lines,  shows  the  evils  the  package,  but  let  it  lie  unopened 

of  this  system  is  Cushman  v.  Car-  for  a  week,  and  it  was    held  he 

ver.  51  111.  509.    One  banker  wrote  could  not  recover  because  it  was  a 

to  another  to  send  him  the  balance  great  act  of  negligence  to  wait  one 

due  him  at  the  other  banker's  in  week! 

bills   of   certain    kinds.    He   evi-  3  A  private  banker  is  not  a  corpo- 

dently  did  not  know  that  some  of  ration. 

those  bills  were  likely  to  depreciate.  l  People  v.  Marshall,  6  111.  672; 

The  other  banker,  who  seems  not  Bank  of  Michigan  v.  Williams,  5- 

to  have  had  a  fine  sense  of  honor,  Wend.  480.   There  are  a  number  of 

or    perhaps    it    had    become    de-  other  cases  to  the  same  effect, 

bauched    through    contact    with  2  Such  delegation  has  always  been 

wild-cat  money,  gathered  a  lot  of  upheld  whenever  attacked, 

the    bills  which   had  depreciated  1  Mahoney  v.  State  Bank,  4  Ark. 

after  receipt  of  the  letter  and  sent  620. 


46  BANKS   AND   BANKING.  [§    19. 

by  a  charter  remains  conditional  until  the  requirements  of 
the  act  are  fully  carried  out.2  Where  a  banking  corporation 
is  attempted  to  be  formed  under  a  general  law,  it  is  often 
said  that  the  requirements  of  the  law  must  be  strictly  fol- 
lowed. But  this  is  only  relatively  true.  It  will  apppear 
that  objections  of  this  character,  as  a  general  rule,  can  be 
urged  only  in  favor  of  the  state  in  a  direct  proceeding  to 
attack  the  incorporation.3  The  statutes  require  a  name  for 
the  corporation  and  forbid  the  use  of  the  same  name  by  two 
corporations,4  and  a  bank  whose  name  is  infringed  may  have 
the  remedy  of  injunction.  The  location  of  the  bank  must 
be  specified,  and  it  would  seem  to  have  been  held  that  one 
state  cannot  charter  a  banking  company  for  the  purpose  of 
doing  business  in  another  state;5  and  when  located  in  one 
county  a  bank  cannot  est-iblish  a  branch  of  itself  in  another 
county  without  authority  from  its  charter.6  An  extreme 
case  that  worked  a  great  injustice,  and  cannot  be  approved, 
will  be  found  in  the  note.7  In  the  absence  of  express  statutory 
authority  the  corporation  cannot  begin  business,  except  as  a 
de  facto  corporation,  until  the  whole  capital  stock  is  sub- 
scribed,8 but  sometimes  the  statute  permits  it.9  The  statute 
governs  as  to  how  the  capital  stock  shall  be  paid,  whether 
in  money  or  otherwise.10  If  the  statute  is  silent  on  the  sub- 

1  Williams  v.  State,  23  Tex.  264  national  bank  the  right  to  have  a 

J  See  §  31,  post.  clearing  agent 

4  International  Trust  Co.  v.  Inter-  8  See  1  Thompson  on  Corp.,  sec. 

national    Loan  &  Trust   Co.,   153  1235. 

Masa  271;  In  re  Bank  of  Attica,  12  9  Reese -v.  Bank  of  Mont.  Co.,  81 

N.  Y.  Supp.  648.    State  banks  can-  Pa.  78.   See  Gray  v.  Portland  Bank, 

not  call  themselves  national    Sec.  3  Mass.  364. 

5243,  Rev.  Stat  U.  S.  "It  seems  to  be  held  in  an  old 

6  Atterbury  v.  Knox,  4  B.  Mon.  90.  case  that  the  capital  stock  must  be 

6  People  v.  Oakland  Co.  Bank,  1  paid  in  money  (King  v.  Elliot,  5 
Doug.  282.    But  this  defense  is  not  Smedes  &  M.  428),  where  a  creditor 
pleadable   to   the   cashier's  bond,  of  the  bank    garnished    a   stock- 
Morehead  Banking  Co.  v.  Tate,  30  holder  for  his  unpaid  subscription. 
8.  E.  R.  34L  See   on    the    general    proposition, 

7  Armstrong  v.  Second  Nat  Bank,  Moses  v.  Ocoee  Bank,  1  Lea,  398; 
38  Fed.  R.  883.     The  decision  is  Marr  v.  Bank  of  West  Tennessee,  4 
wrong  because  it  would  deny  to  a  Lea,  578. 


§  20.]  BANKS,  ORGANIZATION,  ETC.  47 

jectand  the  doctrine  of  payment  "in  money's  worth  "  is  held 
in  the  particular  jurisdiction,  there  seems  to  be  no  reason  why 
payment  for  the  capital  stock  should  not  be  made  in  prop- 
erty, provided  such  property  was  proper  for  use  in  the  busi- 
ness.11 The  statutes  usuall}7  require  the  issuance  of  a  certificate 
by  proper  authority  where  the  organization  is  made  under 
general  laws,  which  certificate  is  always  evidence  of  due  in- 
corporation, but  it  will  be  seen  that  it  is  not  the  only  evi- 
dence thereof.12  The  effect  of  the  failure  to  issue  a  certificate 
will  be  noticed  in  a  later  chapter.13 

§  20.  Conversion  of  state  into  national  banks. —  The 

national  bank  act  gives  the  right  to  convert  any  bank  or- 
ganized under  a  special  act  or  general  law  of  a  state  into  a 
national  bank  upon  the  certificate  of  the  directors  that  two- 
thirds  of  the  stockholders  have  agreed  thereto.1  This  au- 
thority is  all  that  is  necessary  for  the  conversion  of  a  state 
into  a  national  bank.2  Under  another  statute,  banks  in  the 
District  of  Columbia  are  authorized  to  convert  themselves 
into  national  banks.3  The  directors  of  the  state  bank  con- 
tinue to  act  until  their  successors  are  elected,  and  they  are 
not  required  to  take  a  new  oath,  but  a  majority  of  the  old 
directors  is  required  to  perform  any  corporate  act.4  If  the 
state  bank  has  voting  and  non-voting  stock,  the  non-voting 
stock  cannot  participate  in  the  voting  upon  the  change  of 
organization,5  and  the  act  of  the  voting  stockholders  trans- 
fers the  non-voting  stock  as  well.6  The  new  bank  succeeds 
to  all  the  property  of  the  old  bank,  and  a  suit  upon  an  ob- 
ligation held  by  the  old  bank  can  be  brought  in  the  name 
of  the  new  bank,  although  a  state  law  provides  that  the  old 

H  The  Illinois  banking  act  does        1  Sec.  5154,  Rev.  Stat,  U.  S.    See 

not  require,  except  by  a  weak  im-  §  212,  post. 
plication,  the  payment  of  stock  in       2  Casey  v.  Galli,  94  U.  S.  673. 
money.  See  on  the  general  subject,        8  Act  of  Congress  June  30, 1876. 
2  Thomp.  on  Corp.,  sec.  1562  et  seq.        4  Lockwood  v.  Mechanics'   Nat 

See  also  Pacific  Trust  Co.  v.  Dorsey,  Bank,  9  R.  I.  308, 11  Am.  R  253. 
72  Cal.  55.  »  State  v.  Phoenix  Bank,  34  Conn. 

i*See  §  23,  post.  205. 

13  See  §  31,  post.  •  State  v.  Phoenix  Bank,  supra. 


> 

4:8  BANKS    AND   BANKING.  [§§  21,  22. 

incorporation  shall  continue  to  exist  for  three  years  for  the 
purpose  of  prosecuting  and  defending  suits.7  Even  if  the 
national  bank  was  not  in  form  converted  from  a  state  bank, 
yet,  if  such  was  the  fact,  the  new  national  bank  is  merely  the 
successor  of  the  former  state  bank  and  may  hold  its  assets.8 

§  21.  Alteration  of  bank  charter. —  After  a  charter  has 
been  granted  to  a  bank  the  charter  becomes  a  contract 
under  well  settled  rules,  and  is  not  subject  to  amendment 
by  a  state  legislature,  unless  the  amendment  is  immaterial 
or  of  a  remedial  character,  or  unless  the  power  to  amend 
has  been  reserved.1  Whether  the  doctrine  of  Munn  v.  Illi- 
nois, 94  U.  S.  113,  would  be  applied  to  charters  of  banks  not 
of  issue  may  well  be  doubted.  The  charter  could  not  be  re- 
pealed except  by  authority  reserved  or  by  virtue  of  the 
police  power;  but  that  subject  belongs  to  a  treatise  on  con- 
stitutional law  or  corporations  and  not  especially  to  a  work 
of  this  nature.1 

§  22.  Power  as  to  by-laws. —  The  power  of  a  banking 
corporation  to  enact  by-laws,  whether  the  right  is  granted  by 
the  charter  or  is  used  as  an  inherent  power,  does  not  differ 
from  the  rules  in  regard  thereto  governing  other  corpora- 

'  Atlantic    Bank  v.  Harris,    118  v.  Bopp,  50  N.  Y.  Supp.  676.   And  it 

Mass.  147.  applies  to  debts  thereafter  incurred. 

8  Western  Res.  Bank  v.  Mclntire,'  Barnes  v.  Arnold,  51  N.  Y.  Supp. 

40  Ohio  St  52a  1109.    A  by-law  that  requires  the 

1  See  2  Cook  on  Corp.,  sec.  492  et  consent  of  the  directors  to  a  trans- 
seq.;  1  Thompson  on  Corp.,  sees.  66-  fer  of  the  stock  is  void.  McNulta 
105;  4  Thompson  on  Corp.,  sec.  v.  Corn  Belt  Bank,  164  111.  427. 
5380.  See  also  Wheeler  v.  Frontier  2  One  case  holds  squarely  that  a 
Bank,  23  Ma  303;  In  re  Reciprocity  bank  is  a  corporation  charged  with 
Bank,  22  N.  Y.  9;  In  re  Oliver  Lee  public  duties  (Mechanics'  Bank  v. 
Bank,  21  N.  Y.  9.  Compare  United  Debolt,  1  Ohio  St  591;  reversed,  18 
States  Trust  Co.  v.  Fire  Ins.  Co.,  18  How.  380);  but  it  can  choose  its  de> 
N.  Y.  199;  Lowry  v.  Inman,  46  N.  positors  (Thacher  v.  State  Bank,  5 
Y.  119;  Marr  v.  Bank,  4  Lea,  578;  Sandf.  121),  and  its  charter  is  a  con- 
Owen  v.  Purdy,  12  Ohio  St.  73;  tract.  See  Planters'  Bank  v.  Sharp, 
Sherman  v.  Smith,  1  Black,  587.  A  6  How.  801;  Claghorn  v.  Cullen,  1£ 
charter  was  altered  to  impose  a  Pa,  133;  People  v.  Manhattan  Co.,. 
stockholder's  liability.  Hirshfield  9  Wend.  351. 


§  23.]  BANKS,  ORGANIZATION,  ETC.  49 

tions.1  But  certain  implied  limitations  arise  from  the  char- 
ter or  genera]  law.  A  national  bank  which  is  forbidden 
by  law  from  loaning  on  the  security  of  its  own  shares  can- 
not create  a  lien  in  its  own  favor  upon  the  shares  of  its  stock- 
holders.2 The  same  rule  applies  to  state  banks  similarly 
restricted.8  The  passage  of  such  a  law  repeals  a  by-law 
creating  the  lien,  although  the  by-law  was  legal  when  made.4 
The  rules  governing  the  relations  of  depositors  to  a  savings 
bank  as  affected  by  the  by-laws  of  the  bank  will  be  found 
discussed  under  a  later  chapter  on  Savings  Banks.5 

§  23.  Proof  of  corporate  existence. —  The  corporate  ex- 
istence may  come  directly  in  question  or  indirectly.  It 
comes  directly  in  question  when  a  suit  is  brought  by  the 
state  to  forfeit  the  charter.  In  such  case,  nothing  being  pre- 
sumed against  the  state,  the  proof  of  the  performance  of 
every  act  required,  whether  by  the  special  charter  or  gen- 
eral law,  must  be  strictly  made.  None  of  the  decisions  which 
follow  applies  to  such  a  case.  But  when  the  due  incorpo- 
ration of  a  bank  comes  collaterally  in  question  a  very  differ- 
ent rule  applies.  As  to  a  shareholder  or  officer  of  the  cor- 
poration, or  as  to  any  one  who  has  contracted  with  the 
corporation  as  such,  the  fact  of  due  incorporation  is  conclu- 
sively presumed.1  Even  in  a  criminal  case  the  defendant 
could  not  urge  the  non-existence  of  the  bank,  where  he  had 
performed  acts  as  president  thereof.2  When  collaterally 
attacked  the  existence  of  the  corporation  may  be  proved  in 
favor  of  the  corporation  by  the  certificate  of  proper  author- 
ity, and  this  certificate  is  conclusive.8  It  may  also  be  proved 

1  See  1  Thompson  on  Corp.,  sees.  l  Casey  v.  Galli,  94  U.  S.  673,  cit- 
935-1053.  ing  a  number  of  cases.    Indiana 

2  Bullard  v.  Bank,  18  Wall  589,  permits  a  bill  in  equity  by  a  stock- 
overruling  a  number  of  cases.    See  holder  against  the  corporation,  in 
§  54,  post.  order  to  test  the  due  incorporation. 

s  Nicollet  Nat.  Bank  v.  City  Bank,  Albert  v.  State,  65  Ind.  413. 

38  Minn.  85.  2In  re  Van  Campen,  2  Ben.  419; 

4  See  Nicollet  Nat  Bank  v.  City  Fed.  Cas.  No.  16,835. 

Bank,  supra.  3  Casey  v.  Galli,  94    U.   S.   673; 

6  See  §  234,  post.  Keyser   v.   Hitz,    2   Mackey,  473; 
4 


50  BANKS   AND   BANKING.  [§  23. 

either  by  the  special  charter  or  a  general  law  authorizing 
the  incorporation  with  proof  of  user  under  the  charter.4 
Even  if  the  charter  is  conditional,  the  proof  of  user  is  suffi- 
cient proof  of  the  performance  of  the  condition.5  If  a  double 
certificate  is  required,  for  instance,  one  by  the  county  clerk 
and  another  by  the  secretary  of  state,  proof  of  the  first  cer- 
tificate with  evidence  of  the  transaction  of  business  as  a  cor- 
poration is  sufficient.6  Parol  proof  that  the  bank  was  actu- 
ally in  existence  by  doing  acts  of  business,7  or  was  generally 
reputed  to  be  a  bank,8  has  been  held  sufficient  proof  in  favor 
of  the  bank.  "Where  proof  of  due  incorporation  is  made  by 
a  grant  of  a  charter,  it  is  not  necessary  to  show  that  the  bank 
commenced  business.9  But  it  may  be  that  the  general  law 
or.  the  charter  forbids  the  doing  of  business  by  the  bank 
until  some  certain  act  or  acts  have  been  done.  If  proof 
were  offered  that  such  an  act  had  not  been  performed,  where 
the  objection  is  made  by  a  third  party  as  against  the  bank, 
it  would  seem  that  the  person  who  had  contracted  with  the 
bank,  or  a  shareholder  or  officer  who  had  acted  in  the  cor- 
poration, would  nevertheless  be  held  responsible  to  the  asso- 
ciation.10 But  if  the  objection  be  made  by  the  corporation 

Thacker  v.  West  River  Bank,  19  7  Way  v.  Butterworth,  106  Mass. 

Mich.  196.   It  seems  to  be  intimated  75;  Farmers',  etc.  Bank  v.  William- 

that  if  proof  were  made  that  the  son,  61  Mo.  259;  Yakima  Nat.  Bank 

law  did  not  authorize  the  granting  v.  Knipe,  6  Wash.  848. 

of  the  certificate  in  such  a  case,  the  8  State  v.   Fitzsimmons,  30  Mo. 

proof  would  not  be  sufficient,  in  236.    Under  a  statute  see  the  same 

Agnew  v.  Bank  of  Gettysburg,  2  case  and  Jennings  v.  People,  8  Mich. 

Har.&G.478.   On  principle  the  cer-  81.    Proof  is  sometimes  dispensed 

tificate  would  be  sufficient,  even  if  with  by  statute,  unless  the  incor- 

obtained  by  fraud.  poration  be  denied  under  oath.    It 

4  Henderson  v.  Union    Bank,  6  seems  that  a  different  rule  than 

Smedes  &  M.  314;   Farmers',  etc.  that  stated  in  the  text  was  laid 

Bank  v.  Jenks,  7  Met  (Mass.)  592;  down  in  United  States    Bank.  v. 

Bank  of  Manchester  v.  Allen,  11  Vt  Stearns,  15  Wend.  314,  as  to  the 

302.  United  States  Bank. 

»  Williams   v.   Union    Bank,  21  9  People  v.  Peabody,  25  Wend.  472. 

Tenn.  339.  10  Berkshire  v.  Evans,  4  Leigh,  22a 

6  Leonardsville  Bank  v.  Willard,  And  see  §  32,  post. 
25  N.  Y.  574. 


§§  24,  25.]  BANKS,  ORGANIZATION,  ETC.  51 

as  against  a  third  party,  there  is  some  confusion  in  the  de- 
cisions. In  the  case  of  national  banks  it  is  settled  that  the 
proof  would  be  good.11  This  subject  is,  however,  more  prop- 
erly a  part  of  the  discussion  upon  Unauthorized  Banking.12 

§  24:.  Power  under  charters  as  to  branches.—  If  the  law 

or  the  charter  of  a  bank  prohibits  the  establishment  of 
branches,  it  of  course  cannot  do  so;  but  if  the  law  of  the 
state  prohibits  branches  of  a  bank,  whether  of  the  state  or 
a  foreign  bank,  and  the  penalty  provided  is  a  forfeiture  of 
the  charter,  it  is  inoperative  as  to  foreign  banks.1  If  private 
banking  is  permitted,  there  is  no  reason,  in  the  absence  of  legal 
prohibition,  why  a  private  bank  should  not  have  branches; 
but  a  corporation  has  only  the  powers  granted  it,  and  it  can- 
not establish  branches  unless  the  power  to  do  so  is  granted 
to  it.2  If  the  law  permits  it  and  branches  are  established, 
whether  the  branch  bank  is  a  separate  or  the  same  corpora- 
tion depends  wholly  upon  the  effect  to  be  given  to  the  pro- 
visions of  the  statute.3  A  bank  may  do  business  anywhere 
unless  prohibited,4  but  it  cannot  change  its  place  of  location.5 

§  25.  Conflict  of  national  and  state  laws. —  A  corpora- 
tion chartered  as  a  bank  by  the  national  government  cannot 
be  controlled  in  any  way  by  state  laws  in  the  exercise  of 
the  rights  granted  by  congress.1  It  is  wholly  exempt  from 

11  McCormickv. Market  Nat. Bank  <334;  Trezevant  v.  Bank  of  Tennes- 
165  U.  S.  538;  but  in  this  case  there  see,  1  Rob.  (La.)  465;  Branch  Bank 
was  no  proof  of  user  or  of  doing  v.   Rhew,  37    Miss.   110;    Bank  v. 
business  beyond  the  contract  sued  Smith,    33    Mo.    364;    Merchants' 
upon.  Bank  v.  Farmer,  43  Mo.  214;  Bank 

12  See  §  33,  post.  v.  Goddard,  5  Mason,  366;  Fed.  Gas. 

1  Bowman  v.  Cecil  Bank,  3  Grant  No.  917;  Mason  v.  Farmers'  Bank, 
Gas.  33.  12  Leigh,  84. 

2  People  v.  Oakland  Co.  Bank,  1  4  Bank  of  Augusta  v.  Earle,  13 
Doug.  282.  See  Atterbury  v.  Knox,  Pet.  588. 

4  B.  Mon.  90.  «  Ex  parte  Schollenberger,  96  U.  S. 

3  State  v.  Ashley,  1  Ark.  513;  El-  369.    A  state  statute  as  to  service 
Hot  v.  Branch  Bank,  4  Ark.  424;  upon  foreign  corporations  gives  the 
Bower  v.  State,  5  Ark.  234;  Farm-  same  right  of  service  to  United 
era'  Bank  v.  Calk,  4  Ky.  Law  R  States  courts. 

617;  Union  Bank  v.  Denere,  17  La,        l  Farmers'  Nat.  Bank  v.  Bearing, 


52  BANKS   AND   BANKING.  [§  25. 

state  control  or  state  taxation,  except  as  to  the  taxing  of  its 
real  estate  or  the  shares  of  individual  stockholders,  or  as 
such  right  is  granted  by  congress.2  Congress  may  grant 
to  the  states  the  right  to  tax  such  banks.3  Congress  has 
granted  to  the  states  the  right  to  tax  the  shares  of  individ- 
ual stockholders  and  the  right  to  tax  the  real  estate  of  the 
bank.  The  power  granted  is  limited  by  the  two  restrictions, 
first,  that  the  taxation  shall  not  be  at  a  greater  rate  than  is 
assessed  upon  other  moneyed  capital  in  the  hands  of  indi- 
vidual citizens;  and  second,  that  the  shares  of  non-residents 
shall  be  taxed  in  the  city  or  town,  where  the  bank  is  located 
and  not  elsewhere.4  Under  this  law  the  bank  may  be  re- 
quired to  pay  the  tax  on  its  shares  and  charge  the  same 
against  its  stockholders,5  even  though  state  banks  are  not 
required  to  do  the  same  thing  for  their  shareholders.6  A 
deduction  allowed  from  some  moneyed  capital,  but  not  ap- 
parently directed  against  national  banks,  is  not  an  unlawful 
discrimination.7  The  release  from  taxation  of  certain  kinds 
of  moneyed  capital  in  the  hands  of  individual  citizens  is 
an  unfair  discrimination  only  when  the  particular  kind  of 
moneyed  capital  exempted  comes  into  competition  with  that 
of  national  banks.8  A  discrimination  among  national  banks 
is  permissible  where  the  discrimination  affects  all  banks, 
state  and  national  alike,  and  is  not  directed  against  national 
banks  as  such.9  A  state  cannot  tax  the  franchises  or  intan- 

91  U.  S.  29;  National  Bank  v.  Com-  <Sec  5219,  Rev.  Stat  U.  S. 
mon wealth,  9  Wall.  333;  Railroad  8  Aberdeen  Bank  v.  Chehalis  Co., 
Co.  v.  Peniston,  18  Wall  5;  Doty  v.  166  U.  S.  440 ;  National  Bank  v.  Corn- 
First  Nat.  Bank,  8  N.  Dak.  9;  Pitts-  monwealth,  9  Wall  35a 
burgh  v.  First  Nat.  Bank,  55  Pa.  45.  6  Merchants'  Nat.  Bank  v.  Penn- 
The   limitation  is  suggested  that  sylvania,  167  U.  S.  461. 
the  control  may  be  good  if  it  does  7  First  Nat  Bank  v.  Ayers,  160 
not  impair  the  efficiency  of  the  na-  U.  S.  660.   State  banks  were  treated 
tional  banks  in  Thomas  v.  Farmers'  as  were  national  banks. 
Bank,  46  Md.  43.    Compare  In  re  8  Aberdeen  Bank  v.  Chehalis  Co., 
Braden,  165  Pa.  184;  Newman  v.  supra;  Nat.  Bank  of  Commerce  v. 
Wait,  46  Vt  689.  Seattle,  166  U.  S.  463. 
1  Cases  cited  in  preceding  note.  »  Merchants'  Nat.  Bank  v.  Penn- 
1  Van  Allen  v.  Assessors,  3  WalL  sylvania,  supra.    The  meaning  and 

purpose  of  the  statute  and  the  dis- 


§25.] 


BANKS,  OKGANIZATION,  ETC. 


53 


gible  property  of  the  national  banks,  and  a  tax  upon  the 
corporation  or  its  property  is  not  the  legal  equivalent  of  a 
tax  on  the  shares  of  stock  in  the  names  of  shareholders.10 


crimination  prohibited  will  be 
found  clearly  stated  by  Matthews, 
J.,  in  Mercantile  Bank  v.  New 
York,  121  U.  S.  138.  The  object  of 
the  statute  is  stated  to  be  the  pre- 
vention of  the  state  from  levying 
"  a  tax  on  such  shares  to  create 
and  foster  an  unequal  and  un- 
friendly competition  by  favoring 
institutions  or  individuals  carrying 


on  a  similar  business  and  opera- 
tions and  investments  of  a  like 
character."  In  other  words,  the 
phrase  "moneyed  capital"  in  the 
statute  by  construction  becomes 
"  moneyed  capital  engaged  in  bank- 
ing." 

10  Owensboro  Bank  v.  Owensboro, 
173  U.  S.  636,  reviewing  former 
cases. 


CHAPTER  IL 

UNAUTHORIZED  BANKING. 

§  26.  Scope  of  the  subject. —  The  act  of  banking  maybe 
unauthorized  for  the  reason  that  it  is  done  by  a  person  or 
corporation  prohibited  from  doing  the  act.  A  private  per- 
son, or  a  partnership  of  private  persons,  may  be  forbidden 
to  carry  on  a  banking  business.  A  limited  partnership  may 
be  forbidden  from  carrying  on  a  banking  business  in  a  partic- 
ular locality.  In  either  case  the  act  may  be  forbidden  in  one 
locality  and  may  be  lawful  in  another.  A  corporation  may 
do  unauthorized  banking  either  because  the  act  is  forbidden 
by  law,  or  because  the  corporation  is  not  properly  formed, 
or  formed  under  an  unconstitutional  law,  or  because  the  act 
is  beyond  the  powers  granted  to  the  corporation.  The  re- 
sults of  such  acts  of  banking  have  a  twofold  aspect  —  one 
with  reference  to  the  civil  liability,  the  other  with  reference 
to  a  criminal  liability.  The  results  of  the  act  from  a  civil 
standpoint  will  vary  with  reference  to  the  party  by  whom 
the  objection  is  made.  The  act  done  as  a  corporate  act 
may  render  the  doers  thereof  personally  liable  in  a  civil  ac- 
tion, or  may  expose  them  to  a  criminal  prosecution.  Diffi- 
culties may  arise  as  the  varying  effect  of  diverse  laws  of 
different  states.  The  subject  is  one  full  of  difficulty,  and  it 
requires  careful  discrimination. 

§  27.  Private  banking  unauthorized. —  Confining  our- 
selves to  a  particular  locality,  without  reference  to  the  ques- 
tion of  conflict  of  laws,  if  an  act  of  private  banking  is  abso- 
lutely forbidden  by  a  legal  prohibition,  which  contains  the 
assumption  that  the  legislative  or  other  prohibition  is  held 
to  be  lawful,  it  follows  that,  if  the  persons  doing  the  act  of 
private  banking  are  equally  culpable,  no  civil  obligation 


§  27.]  UNAUTHOKIZED    BANKING.  55 

whatever  can  arise  to  perform  the  contract.1  The  rule  of 
law  would  be  the  one  applied  to  any  other  illegal  transac- 
tion. But  while  the  courts  will  not  enforce  an  executory 
illegal  contract,  nevertheless,  where  one  party  has  received 
a  benefit  which  he  ought  not  in  justice  to  retain,  as  where 
the  parties  are  not  inpari  delicto,  an  action  to  recover  that 
goes  in  disaffirmance  of  the  contract  will  be  sustained,2  al- 
though if  the  parties  are  equally  culpable  no  recovery  can 
be  had.3  If  a  fraud  was  practiced  by  one  party  to  ob- 
tain the  benefit,  the  other  party  may  recover;4  or  if  the 
fact  that  causes  the  illegality  were  not  known  to  the  party 
who  has  parted  with  money  or  property  on  the  faith  of  a 
contract,  he  may  recover.5  Some  courts  have  held  that, 
where  the  prohibited  act  was  simply  malum prohibitum,  and 
not  malum  in  se,  and  prohibited  private  banking  is  such  an 
act,6  a  recovery  may  be  had,  provided  a  suit  disaffirming  the 
contract  be  brought  while  it  remains  executory.7  But  after 
a  default  has  been  made  on  the  contract,  or  after  a  breach 
of  the  contract,  where  the  same  amounts  to  a  discharge,8  no 
recovery  can  be  had,  unless  the  parties  were  not  in  pari 
delicto?  Parties  are  not  in  pari  delicto  where  a  penalty  is 
imposed  upon  the  one  and  not  upon  the  other; 10  and  as  pro- 

1  Walker  v.   United  States,   100  7  Keener  on  Quasi-Con  tract,  259; 
U.  S.  418;   Hanauer  v.  Doane,  12  Utica  Ins.  Co.  v.  Kip,  8  Cow.  20; 
Wall.  342;  Hunt  v.  Knickerbocker,  White  v.  Franklin  Bank,  22  Pick. 
5  Johns.  327;  Hamtramck  v.  Selden,  181.    If  the  business  for  which  a 
12  Grat.  28;   Craig  v.  Missouri,  4  corporation  is  formed  is  illegal,  the 
Pet.  410.    And  see  g  312,  post,  notes  corporators  may  be  sued  as  part- 
11  and  12,  for  the  general  principle,  ners.    McGrew  v.  Produce  Ex.,  85 

2  See  note  7  to  this  section.  Tenn.  572. 

1  Tracy  v.  Tallmage,  14  N.  Y.  162.  sciark  on  Contracts,  643  et  seq.; 

4  Catts  v.  Phalen,  2  How.  376.       *  Anson  on  Contracts,  349. 

8Hentig  v.  Staniforth,  5  M.  &  6.  9  Keener  on  Quasi-Contract,  274; 

122;  Northern  Bank  v.  Zipp,  28  III  Tracy  v.  Tallmage,  14  N.  Y.  162; 

180;  City  Bank  v.  Perkins,  4  Bosw.  Thomas  v.  Richmond,  12  Wall.  349. 

420.  10  Keener  on  Quasi-Contract,  274 

6  State  v.  Williams,  8  Tex.  255.  But  where  the  penalty  is  imposed 

This  distinction,  however,  between  on  both  parties,  they  are  in  pari 

acts  prohibita  and  acts  mala  in  se  delicto.  Thomas  v.  Richmond, 

is  not  sound  from  any  rational  supra.  For  cases  where  the  par- 

standpoint.  ties  were  held  not  to  be  in  pari 


56  BANKS   AND   BANKING.  [§§  28,  29. 

\ 

hibited  private  banking  is  usually  accompanied  with  a  pen- 
alty upon  the  banker,  this  fact  will  generally  be  a  control- 
ling consideration ll  where  the  banker  is  sued. 

§28.  Unauthorized  partnerships  or  companies. —  The 

effect  of  the  formation  of  a  limited  partnership,  where  the 
same  is  made  for  a  business  not  permitted  by  statute,  is  to 
make  the  parties  liable  as  general  partners.1  The  same  rule 
would  apply  to  unauthorized  joint-stock  companies,2  with  the 
limitation  already  pointed  out,  that  in  some  jurisdictions  the 
joint-stock  company  might  be  held  to  be  a  corporation.3 
But  the  latter  question  would  not  arise  except  in  another 
state,  and  the  courts  of  such  a  state  would  probably  apply  the 
law  of  the  place  of  formation  of  the  joint  stock  company. 

§  29.  Conflict  of  laws  as  to  private  banking. —  The  gen- 
eral rule  as  to  contracts  is  that  the  law  of  the  place  where 
the  contract  is  entered  into  governs  the  contract,  unless  it 
was  to  be  performed  in  another  place,  .when  the  law  of  the 
latter  place  would  govern.1  The  remedy  is  controlled  by 
the  law  of  the  locality  where  the  remedy  is  sought.2  If  a 

delicto,  see  Brown  v.  Killian,  11  Ind.  would  get  no  title.    See  Albert  v. 

449;  Buffalo  Bank  v.  Codd,  25  N.  Y.  Bank,  2  Md.  159,  which  holds  that 

163.  a  third  party  may  set  up  want  of 

11  Even  though  the  act  should  be  title  resulting  in  this  way  —  a  very  - 

illegal  as  a  banking  transaction  be-  questionable  ruling, 

cause  absolutely  forbidden  by  law,  J  McGehee  v.  Powell,  8  Ala.  827. 

yet  if  a  private  banker  should,  as  a  2Maloney  v.  Bruce,  94  Pa.  249; 

banker,  make  a  loan  by  discount-  Eliot  v.  Himrod,  108  Pa.  569. 

ing  paper,  or  by  purchasing  paper  3  Liverpool  Ins.  Co.  v.  Massachu- 

at  a  discount,  there  would  be  no  setts,  10  Wall  566. 

illegality  in  the  loan    itself,  and  '    l  Rosenberg  v.   Block,  50  N.  Y. 

hence  a  recovery  would  probably  be  Super.  Ct.  357;  Jacquin  v.  Brisson, 

permitted  of  the  amount  actually  11  How.  Pr.  385;  Hogg  v.  Orgill,  34 

loaned,  unless  the  statute  provided  Pa.  344;  Gray  v.  Gibson,  6  Mich, 

that  the  loan  itself  should  not  be  300;   Lawrence  v.   Batchellor,  131 

recovered.    The  same  rule  would  Mass.  504.    Contra,  sem6?e,Penning- 

apply  against  the  banker  as  to  de-  ton  v.  Townsend,  7  Wend.  276. 

posits.    As  to  paper  deposited  for  2  Cases  cited  in  preceding  and 

collection,  the  effect  would  be  not  next  note. 
to  destroy  the  paper;  the  banker 


§  29.]  UNAUTHORIZED   BANKING.  57 

contract  be  illegal  where  it  is  agreed  to  be  performed  or 
where  made,  if  it  is  to  be  performed  where  made,  it  is  ille- 
gal everywhere.3    But  if  it  is  legal  under  the  law  to  be  ap- 
plied as  governing  its  performance,  even  if  prohibited  where 
the  remedy  be  sought,  it  yet  seems  that  it  would  be  enforced 
unless  the  citizens  of  the  state  where  the  remedy  is  sought 
would  be  injured  or  unless  a  pernicious  example  would  be 
set.4    The  application  of  these  principles  to  prohibited  pri- 
vate banking,  or  to  prohibited  limited  partnerships  or  joint- 
stock  companies  for  banking,  would  seem  to  be  as  follows: 
If  a  private  banker  makes  a  contract  in  a  state  where  pri- 
vate banking  is  prohibited,  and  the  contract  is  to  be  per- 
formed in  that  state,  it  would  not  be  enforced  in  any  other 
state;  but  if  such  a  contract  was  to  be  performed  in  a  state 
where  private  banking  was  legal,  it  would  be  enforced  not 
only  in  any  other  state,  but  even  in  the  state  where  it  was 
made.     If  the  contract  was  made  to  be  performed  in  a  state 
where  private  banking  was  illegal,  it  would  not  be  enforced 
in  any  state,  even  in  those  recognizing  private  banking.   The 
same  considerations  apply  to  partnerships,  general  or  limited, 
and  to  joint-stock  companies  which  are  not  corporations. 
But  where  a  limited  partnership  or  a  joint-stock  company  is 
formed  in  a  state  where  the  formation  of  the  same  is  legal, 
the  courts  of  another  state  would  apply  the  rules  of  law  in 
force  in  the  state  where  the  firm  was  located  in  determin- 
ing the  duties,  powers  and  liabilities  of  the  partners  under 
the  contract  of  partnership  or  joint  association.     Yet  if  the 
firm  was  formed  in  one  state  to  do  business  in  another  state, 
where  limited  partnerships  or  joint-stock  companies  were  not 
permitted,  it  would  become  a  general  partnership  every- 
where.    These  results  are  based  on  the  assumption  that  such 
limited  partnerships  or  joint-stock  associations  are  not  mala 
in  86? 

'  McAllister  v.  Smith,  17  III.  328 ;  6  With  the  cases  cited  in  the  notes 

Titus  v.  Scantling,  4  Blackf.  89;  to  this  section  it  will  be  necessary 

Rezner  v.  Hatch,  2  Handy,  42.  to  compare  Barrows  v.  Downs,  9 

*  Greenwood  v.  Curtis,  6  Mass.  R.  I.  446;  King  v.  Sarria,  69  N.  Y. 

858.  32,  34;  Trasher  v.  Everhardt,  3  Gill 


08  BANKS   AND   BANKING.  [§  30. 

§  30.  Corporations  formed  under  unconstitutional  law. 

An  unconstitutional  law  is  really  a  contradiction  in  terms; 
a  more  correct  phrase  is  an  attempt  to  pass  an  unconstitu- 
tional enactment.  The  unconstitutionally  may  arise  from 
various  reasons,  such  as  a  failure  to  observe  constitutional 
forms,  a  subject  which  is  not  germane  to  this  work.  Such 
a  law  is  no  law  at  all.  It  follows  logically  that' a  corpora- 
tion formed  under  an  unconstitutional  enactment  is  not  a 
corporation  either  dejure  or  de  facto,  because  a  de  facto  cor- 
poration can  only  exist  under  circumstances  where  a  dejure 
corporation  could  be  formed.  It  follows  then  that  the  cor- 
porate acts  of  such  a  corporation  are  absolutely  void  as  cor- 
porate acts.  So  the  authorities  hold.1  But  there  would 
seem  to  be  no  reason  why  the  incorporators  could  not  both 
sue  and  be  sued  as  partners,  unless  private  banking  were 
prohibited;  but  even  then  recovery  might  be  had  in  quasi- 
contract  on  the  ground  that  the  fact  causing  the  unconsti- 
tutionally was  not  known  at  the  time,  or  that  the  parties 
were  not  inpari  delicto.  Yet  this  latter  proposition  is*  im- 
pliedly  denied  in  State  v.  How,  1  Mich.  512,  which  cannot 
be  considered  an  authority  on  account  of  the  fact  that  the 
point  is  not  suggested  to  the  court,  and  because  the  case  was 
a  bill  in  equity  to  enforce  the  contract,  not  an  action  in 
quasi-contr&ct  in  disaffirmance  of  the  contract.8 

&  J.  234;  Phinney  v.  Baldwin,  16  1  III  161.    This  ruling  is  extraordi- 

111.   108;   Commonwealth  v.  Bass-  nary. 

ford,  6  Hill,  526;  Madrazo  v.  Wells,        ^The  law  was  held  unconstitu- 

3  Barn.  &  Aid.  353;   Mclntyre  v.  tional  by  a  queer  vagary  of  the  ju- 

Parks,  3  Met  207.  dicial  intellect  in  Green  v.  Graves, 

^urlbut  v.  Britain,  2  Doug.  191;  1  Doug.  351,  disapproving  Thomas 

State  v.  How,  1  Mich.  512;    Nes-  v.  Dakin,  22  WendL  76,  and  Fal- 

siuith  v.  Shelden,  4  McLean,  375,  coner  v.  Campbell,  2  McLean,  195. 

Fed.    Cas.    No.    10,125.     Compare  It  followed   necessarily  that   the 

Smith    v.   Barstow,  2    Doug.    155,  corporate  acts,  as  corporate  acts, 

where  the  court  enforced  a  con-  were   nullities.    And  in  State   v. 

tract  whose  sole  consideration  was  How,  supra,  it  was  correctly  held 

illegal  and  void  debts.    But  it  is  that  they  were  nullities,  and  that 

held  that  a  debtor  cannot  set  up  the  unconstitutional  act  could  not 

this  defense.  Snyder  v.  State  Bank,  be  appealed  to  in  order  to  create 


§  31.]  UNAUTHOKIZED   BANKING.  591 

§  31.  De  facto  corporations. —  By  a  curative  act  the  leg- 
islature, if  otherwise  empowered  to  pass  the  act,  can  cure  a 
defective  organization  and  thus  remove  all  question  of  the 
validity  of  past  as  well  as  future  acts  of  the  corporation.1 
Such  an  act  would  not  be  special  legislation.2  But  whenever 
defects  in  the  organization  of  a  corporation  exist,  and  the 
objection  is  urged  in  a  collateral  way  by  a  person  who  has 
contracted  with  the  bank,  or  is  urged  by  the  bank  in  order 
to  escape  liability,  careful  discrimination  is  necessary  to 
ascertain  whether  the  defect  is  something  which  is  made  a 
condition  precedent  to  the  organization  of  the  corporationr 
without  which  it  is  provided  by  law  that  no  business  shall 
be  done,  or  whether  the  defect  is  one  which  is  made  a  step 
in  the  method  of  incorporation.  The  first  condition  will  be 
examined  in  the  next  section;  but  as  to  any  other  kind  of 
an  act  required  by  law  to  be  performed  by  the  corporators, 
the  rule  is  that  advantage  of  it  can  be  taken  only  in  a  direct 
proceeding  against  the  corporation  in  favor  of  the  state. 
No  other  party  has  the  right  to  set  up  the  objection  in  a 
collateral  way,  neither  one  who  has  contracted  with  the 
corporation  nor  one  who  has  participated  in  it.3  Nor  can 
the  corporation  set  up  such  a  defect  in  order  to  escape  lia- 
bility.4 The  very  statement  of  the  proposition  involves  the 

any  liability  against  the  corpora-  not  in  part  delicto  because  a  pen- 
tors  as  individuals.  Since  the  suit  alty  was  attached  to  the  persons 
was  brought  upon  the  contracts  of  doing  private  banking.  Had  this 
the  bank,  that  disposed  of  the  case,  been  done,  a  most  iniquitous  result 
Then  it  was  held  that  the  associa-  would  have  been  avoided, 
tion,  being  a  private  association  for  l  People  v.  Perrin,  56  Cal.  345. 
banking  (bank  of  issue),  the  notes  But  see  Sykes  v.  People,  132  III  32. 
were  illegal  and  void  by  reason  of  2  Syracuse  Bank  v.  Davis,  16 
the  positive  prohibition  of  the  stat-  Barb.  188. 

ute  against  private  banks  of  issue,  3  Bank  of  Port  Jervis  v.  Darling, 

citing  Pennington  v.  Townsend,  7  91  Hun,  236;  Pine  River  Bank  v. 

Wend.  276;  Bank  of  U.  S.  v.  Os-  Hodson,  46  N.  H.  114;  Kellogg  v. 

born,  2  Pet.  527.    But  no  attempt  Douglas  Co.  Bank,  58  Kan.  43. 

was  made  to  recover  in  quasi-con-  <  McDougald  v.  Bellamy,  18  Ga. 

tract  on  the  ground  that  the  fact  411;    Bartholomew    v.  Bentley,    1 

of    unconstitutionally    was     un-  Ohio  St.  37. 

known,  or  that  the  parties  were  t, 


<)0  BANKS   AND   BANKING.  [§  32. 

assumption  that  if  the  defective  step  in  the  organization  had 
been  properly  taken,  a  de  jure  corporation  would  have  re- 
sulted; in  fact,  as  against  every  party  but  the  state,  such  a 
corporation  is  de  jure. 

§  32.  Statutory  prohibitions. —  But  where  the  act  re- 
quired to  be  performed  is  a  condition  precedent,  without 
which  ,the  bank  is  enjoined  from  doing  any  business,  the 
failure  to  perform  the  act  is  fatal,  whether  urged  in  favor 
of  the  bank  or  against  it.1  The  same  rule  applies  where  the 
law  expressly  says  that  the  corporation  shall  not  exist  with- 
out the  performance  of  a  certain  act  or  shall  not  do  a  cer- 
tain act.  The  remedy  of  the  person  injured  in  such  a  case 
can  only  be  to  disregard  the  alleged  corporation,  and  in  case 
of  a  contract  bring  an  action  of  deceit  against  the  corpora- 
tors,2 or  on  their  warranty  of  authority  as  agents,3  or  for 
both  contracts  and  torts  hold  the  corporators  liable  as  part- 
ners.4 The  right  to  recover  in  such  a  case  would  depend 
upon  the  fact  whether  the  person  suing  was  an  active  par- 
ticipant in  a  violation  of  the  statute,5  or  had  knowledge  of 
facts  that  put  him  upon  inquiry  as  to  the  illegality ; 6  in 
other  words,  whether  he  was  in  pari  delicto.  The  same 
rules  govern  as  to  violations  of  positive  provisions  of  law  in 
case  of  the  organization  of  corporations,  or  of  the  acts  of 
corporations  positively  forbidden  by  law,  that  would  govern 
any  other  illegal  transaction,  a  subject  which  has  been  al- 
ready noticed.7 

1  McCormick  v.  Market  National  says  that  the  liability  as  partners 

Bank,  165  U.  S.  538;  Utica  Ins.  Co.  cannot  exist  where  a  corporation 

v.  Scott,  19  Johns.  1 ;  Attorney-Gen-  actually  comes  into  existence, 

eral  v.  Life  Ins.  Co.,  9  Paige,  470;  <See  §  35,    infra,    and   Empire 

Myers  v.  Manhattan  Bank,  26  Ohio,  Mills  v.  Allston  Grocery  Co.,  15  S. 

283;  Medill  v.  Collier,  16  Ohio  St.  W.R,  505;  McGrew  v.  Produce  Ex., 

599;    Armstrong   v.    Second    Nat.  35  Tenn.  572. 

Bank,  38  Fed.  R,  883.  »  Davidson  v.  Lanier,  4  Wall.  447; 

2Trowbridge  v.  Scudder,  11  Cush.  Thomas  v.  Richmond,  12  Wall.  349. 

83,  and  cases  cited.  6  Attorney-General   v.  Life  Ins. 

•  Seeberger  v.  McCormick,  178  III  Co.,  9  Paige,  470. 

404,  73  III  App.  87,  where  the  court  7  See  §  27,  ante,  and  Brown  v.  Kil- 


§  33.]  UNAUTHORIZED   BANKING.  61 

§  33.  Ultra  vires  acts. —  The  words  ultra  vires  have  been 
unfortunately  used  to  describe  very  different  things,  and  in 
consequence  great  confusion  in  the  law  has  resulted.  It 
means  beyond  the  powers,  and  when  applied  to  a  corpora- 
tion means  beyond  the  powers  of  the  corporation.  But  an 
act  may  be  beyond  the  powers  of  a  corporation  because  it 
is  forbidden  by  an  express  rule  of  the  statute  or  common 
law,  and  it  would  be  beyond  the  powers  of  any  corporation 
or  individual  to  which  the  rule  of  the  statute  or  the  com- 
mon law  was  applicable.  The  reason  why  the  act  is  illegal 
is  not  because  the  power  is  not  granted  to  the  corporation, 
but  because  the  act  is  positively  and  expressly  forbidden. 
Thus,  where  an  act  is  expressly  forbidden  by  a  statute,  or  is 
contrary  to  the  rules  of  the  common  law,  the  transaction  is- 
illegal,  just  as  any  transaction  in  violation  of  statute  law 
or  the  rules  of  public  policy  is  illegal.  Such  a  transaction 
is  erroneously  called  ultra  vires.1  The  courts  persist  in  ap- 
plying this  phrase  to  such  a  transaction,  and  the  capital  sin- 
ner in  this  respect  is  unfortunately  the  Supreme  Court  of 
the  United  States.  It  is  admitted  that  such  a  transaction 
cannot  be  made  the  basis  of  any  express  contract  rights 
against  the  corporation  or  in  favor  of  the  corporation,2  but 

lian,  11  Ind.  449;  Buffalo  Bank  v.  tiou  has  received  a  benefit,  or  has 

Codd,  25  N.  Y.  168.    And  see  §  312,  conferred  a  benefit  upon  another, 

post,  notes  11  and  12.  either  the  corporation  or  that  other 

1  See  McCormick  v.  Market  Na-  person,  as  the  case  may  be,  must 

tional  Bank,  165  U.  S.  538,  where  respond  in  gwasi-contract.    But  in 

the  act  done  was  expressly  forbid-  the  cases  above  the  futile  attempts 

den  by  a  statute;  Central  Transp.  made  by  the  court  to  discriminate 

Co.  v.  Pullman's  Car  Co.,  139  U.  S.  cases  would  have    been  unneces- 

24,  where  the  act  done  was  in  vio-  sary  if  it  had  observed  the  distinc- 

lation  of  an  express  rule  of  the  tions  pointed  out  in  the  text  above, 

common  law;  Thomas  v.  Railroad  The  law  will  generally  be  found  to 

Co.,  101  U.  S.  71,  which  shows  an  be  much  more  reasonable  than  the 

act  forbidden  by  the  express  rules  reasoning  of  courts  upon  it.  A  man 

of  the  common  law.    In  such  cases  can  often   see  a  just   conclusion 

the  agreement,  being  illegal,  cannot  without  being  able  to  give  a  good 

be  made  the  basis  of  an  action  on  reason  for  it. 

the  contract ;  but,  at  the  same  time,  2  The  text  expressly  applies  to  con- 

if,  under  such  a  contract,  as  pointed  tract  rights.    Otherwise  it  would 

out  under  §  27,  ante,  the  corpora-  be  incorrect,  because  a  corporation 


€2  BANKS    AND   BANKING.  [§  33. 

at  the  same  time  the  act  of  the  corporation  may  make  it 
liable  for  a  tort  done  in  carrying  on  the  corporation's  busi- 
ness. Such  is  one  mistaken  meaning  given  to  the  words 
ultra  vires.  Its  true  meaning  is  an  act  beyond  the  powers 
of  a  corporation,  because  the  act  is  not  within  the  corporate 
power,  such  a  power  not  being  granted  to  the  corporation, 
although  the  act  is  innocent  in  itself.  The  reason  for  not 
enforcing  such  an  act  is  merely  one  for  the  protection  of 
the  corporation  or  the  state.  But  if  it  be  for  the  interest 
of  the  corporation  to  enforce  it,  or  if  it  would  be  unjust 
to  other  persons  not  to  do  so,  the  corporation  in  the  first 
case,  and  the  state  in  either  case,  can  feel  no  necessity  for 
opposing  a  mere  rule  of  convenience  against  the  manifest 
dictates  of  justice.  In  the  case  of  acts  expressly  contrary 
to  law  this  consideration  does  not  apply,  because  the  statute 
or  rule  of  law  is  general,  and  no  court  could  make  itself  a 
party  to  the  enforcement  of  such  an  agreement  without 
abdicating  its  function  of  administering  the  law.  There- 
fore as  to  the  latter  kind  of  acts  it  is  properly  said  that  they 
cannot  be  made  the  basis  of  an  estoppel  on  behalf  of  or 
against  the  corporation,  where  such  an  estoppel  goes  in  af- 
firmance of  the  contract.3  But  the  other  kind  of  an  act, 
which  is  purely  ultra  vires  or  beyond  the  corporate  power, 
but  otherwise  innocent,  may  become  the  basis  of  contract 
rights  both  in  favor  of  and  against  the  corporation.4  In 

is  responsible  for  its  torts.  National  not  really  so.    Thus,  a  forbidden 

Bank  v.  Graham,  100  U.  S.  699:  Salt  loan  to  a  director  may  be  recovered 

Lake  City  v.  Hollister,  118  U.  S.  236.  in  a  suit  on  the  nota    But  the  note 

But  Weekler  v.  First  Nat.  Bank,  42  is  treated  simply  as  evidence  of  the 

Md.  581,  holds  different  languaga  loan.    And  the  law  being  for  the 

See  §  120,  note  9,  post.  protection  of  the  bank,  it  is  not  in 

3  Central  Transp.  Co.  v.  Pullman's  pari  delicto  with  the  person  who 

Car  Co.,  139  U.  S.  24,  55  et  seq.    But  wrongfully  obtained  the  loan,  and 

all  the  cases  recognize  the  right  to  a  recovery  is  permitted  under  the 

recover    in   gwasi-contract,    on   a  rule  in  §  27,  ante, 
quantum  meruit,  or  for  money  had        *  Union  Trust  Co.  v.  Illinois  Mid- 

and  received.    See  White  v.  Frank-  land  Co.,  117  U.  S.   434;  Bank  v. 

lin  Bank,  39  Mass.  181 ;  Oneida  Bank  Matthews,  98  U.  S.   621;   Volz  v. 

v.  Ontario  Bank,  21  N.  Y.  490.  Some  National  Bank,  158  I1L  532;  Ander- 

cases  which  seem  exceptions  are  son  v.  First  Nat.  Bank.  67  N.  W.  R 


§  33.]  UNAUTIIOKIZED    BANKING.  63 

any  case  a  recovery  may  be  had  in  quasi-contr&ct,  where 
the  contract  has  been  even  fully  performed  on  one  side,5 
and  even  though  there  be  nothing  to  show  that  the  par- 
ties were  not  equally  culpable.6  Herein  the  rule  applied 
to  the  suit  on  a  contract  merely  ultra  vires,  but  other- 
wise innocent,  differs  toto  coelo  from  a  suit  upon  a  contract 
positively  illegal.  In  the  last  section  it  appeared  that  the 
latter  kind  of  a  contract  would  not  be  enforced,  but  quasi- 
contract  lay  for  a  benefit  that  would  be  wrongly  retained, 
provided  the  parties  were  not  in  pari  delicto.  But  as  to  a 
contract  purely  ultra  vires,  the  contract  itself  may  be  en- 
forced, where  the  result  of  its  non-enforcement  will  be  to 
perpetrate  a  legal  wrong.7  This  matter  is  of  the  greatest 
importance  in  questions  of  ratification,  and  here  too  a  distinc- 
tion must  be  made.  If  the  agent's  act,  which  is  sometimes 
also  called  ultra  vires  because  it  is  not  within  the  scope  of 
the  agent's  authority,  is  within  the  power  of  the  corporation, 
the  corporation  may  always  ratify  it.  But  if  the  act  is  one 
not  within  the  agent's  authority  because  it  is  denied  to  the 
corporation  by  reason  of  the  fact  that  it  is  contrary  to  an 
express  rule  of  law,  such  an  act  cannot  of  course  be  ratified 
so  as  to  create  a  contract.  If  the  act  be  purely  ultra  vires 

821;  First  Nat.  Bank  v.  Smith,  65  Bridge,  131  U.  S.  371,  389;  Whitney 

N.  W.  R  437;  Ayres  Co.  v.  Dorsey  Arms  Co.  v.  Barlow,  63  N.  Y.  62; 

Co.,  70  N.  W.  R.  Ill;  Town  Council  Pratt  v.  Short,  79  N.  Y.  437;  Ward 

v.  Union  Nat  Bank,  22  S.  R.  291;  v.  Johnson,   95  111.  215;  Memphis 

Cameron  v.  First  Nat.  Bank,  34  S.  Ry.    Co.   v.    Dow,  22   Blatch.  48; 

W.  R  178;  Utica  Ins.  Co.  v.  Scott,  Holt  v.  Winfield  Bank,  25  Fed.  R 

19  Johns.   1;  Barrow  v.  Bank  of  812;  Grant  v.  Coal  Co.,  80  Pa.  208; 

La.,  2  La.  Ann.  453;  Mt.  Vernon  First  Nat.   Bank  v.  Stewart,   107 

Bank  v.  Porter,  52  Mo.  App.  244;  U.    S.    678;  Sieber   v.    Com.    Nat. 

Sioux    Falls   Bank    v.  First    Nat.  Bank,  77  Fed.  R  957. 
Bank,  6  Dak.  113;  Northern  Bank       "Compare  §  25,  ante,  and  Louisi- 

v.  Zipp,  28  111.  180;  Foster  v.  Essex  ana  v.  Wood,  102  U.  S.  294. 
Bank,    17    Mass.    479;    Safford    v.        7  Ridgway  Co.  v.  McCarthay,  96 

Wyckoff,  4  Hill,  472;  Tootle  v.  First  U.  S.  258,  267;  San  Antonio  v.  Me- 

Nat.  Bank.  6  Wash.  181;  Smith  v.  haffy,  96  U.  S.  312,  315;  Whitney 

Philadelphia  Bank,  34  Leg.  Int.  86;  Arms  Co.  v.  Barlow,  63  N.  Y.  62. 

Williams  v.  American  Nat.   Bank,  This  last  case  contains  the   best 

85  Fed.  R  376.  statement  of  the  principle  in  any 

5  Pittsburgh  Ry.  Co.  v.  Keokuk  of  the  decisions. 


64  BANKS   AND   BANKING.  [§  33. 

it  can  be  ratified  by  the  corporation.  The  liability  in  tort 
depends  solely  upon  the  question  whether  the  agent  was 
acting  upon  the  corporation's  affairs.  The  question  will  be 
noticed  in  section  105,  post,  notes  2,  3  and  5,  and  section  120, 
post,  note  9.  The  principle  will  be  found  applied  under 
varying  circumstances.  Typical  cases  are  loans  upon  real- 
estate  security,  or  loans  in  excess  of  corporate  power  or  to 
inhibited  individuals.  All  such  contracts  as  well  as  the  secu- 
rity therefor  may  be  enforced.  But  where  the  ultra  vires 
transaction  has  been  carried  out  and  is  consummated  upon 
both  sides,  the  law  leaves  the  party  where  it  finds  him  and 
grants  no  relief.8  A  case  of  this  kind  was  ruled  upon  where 
a  man  sold  to  a  national  bank  certain  bonds,  the  bank  agree- 
ing to  replace  them  at  a  certain  price.  After  a  demand  and 
tender  of  the  price,  and  a  refusal  by  the  bank  to  deliver, 
suit  was  brought  for  the  value  of  the  bonds  less  the  price. 
The  defense  was  that  the  contract  was  ultra  vires,  as  it  un- 
questionably was,  but  a  recovery  was  upheld  in  an  able 
opinion.9 

A  very  able  court  of  appeal  held  that  a  bank  by  an  ultra 
vires  transaction  having  acquired  stock  in  another  national 
bank  could  be  held  for  the  statutory  liability  upon  the  stock.1* 
The  decision  was  perfectly  sound,  because,  the  ultra  vires 
transaction  having  been  consummated,  it  was  closed ;  neither 
party  could  obtain  relief,  and  the  bank,  being  able  to  hold 
the  stock,  could  be  held  as  a  stockholder,  because  the  stat- 
ute makes  no  exceptions,  and  the  statute  imposing  the  stock 
liability  creates  a  quasi-contract,  to  which  the  defense  of 
ultra  vires  is  wholly  immaterial.  But  in  California  Bank 
v.  Kennedy,  167  U.  S.  362,  the  court,  reversing  101  Cal.  495, 
where  there  is  an  able  opinion,  held  that  there  was  no  liabil- 

8  See  note  18  to  this  section.  Nat.  Bank  v.  Hawkins,  174  U.  S. 

9  Logan  Co.  Nat  Bank  v.  Town-  364.    But  see  McDonald  v.  Will- 
send,  139  U.  S.  67.    See  First  Nat.  iams,  174  U.  S.  397,  where  the  court 
Bank  v.  Anderson,  172  U.  S.  573.  seems  to  recognize  the  distinction 

'°  First  Nat.  Bank  v.  Hawkins,  79  of  the  text.  See  also  Goodland  v. 
Fed.  R.  61,  reversed  in  the  Supreme  Bank  of  Darlington,  74  Mo.  App. 
Court  of  the  United  States  in  First  365. 


§  33.]  UNAUTHORIZED    BANKING.  65 

ity  upon  the  stock.11  This  decision  can  only  be  justified  on 
the  erroneous  theory  that  no  title  in  the  stock  passed,  and 
the  transferror  could  be  held,  and  the  bank  had  obtained 
nothing.  But  the  court  had  held  over  and  over  again  that 
such  a  transaction  could  be  ratified.  It  surely  would  not 
undertake  to  hold  the  ridiculous  doctrine  that  the  bank  could 
not  confer  title  by  a  sale.  The  bank  was  claiming  the  stock, 
but  was  denying  its  liability  as  a  stockholder.  The  court 
also  overlooked  the  fact  that  the  ultra  vires  transaction  hav- 
ing been  consummated,  neither  party  was  entitled  to  relief, 
and  the  further  fact  that  the  statutory  liability  was  not  im- 
posed by  contract,  but  by  statute,  and  was  a  quasi-contrsict. 
In  this  opinion  the  court  quotes,  with  a  seeming  lack  of 
comprehension,  the  language  of  Selwyn,  L.  J.,  in  Royal 
\Bantfs  Case,  L.  K.  4  Ch.  252,  261:  "If  it  could  have  been 
shown  that  it  was  an  act  absolutely  prohibited,  ...  a 
different  question  would  have  arisen."  The  distinction  was 
brought  to  the  court's  attention,  but  in  both  the  two  cases 
stated  from  our  highest  court  the  judges  seem  not  to  have 
understood  the  two  meanings  of  the  phrase  ultra  vires,  nor 
to  have  comprehended  the  essential  and  fundamental  differ- 
ence between  a  contract  and  a  ^mm-contract.12  If  the  dis- 

11  It  should  be  noted  that  Judge  12  The  language  of  the  decis- 
Harlan  dissented.  It  is  unfortu-  ions  of  the  United  States  Supreme 
nate  that  he  wrote  no  opinion.  If  a  Court  upon  this  question  is  a  hope- 
lawyer  will  compare  the  first  case  less  muddle.  Since  that  court 
in  note  10,  supra,  with  this  Cali-  rarely  expressly  overrules  itselfV 
fornia  Bank  case,  he  will  notice  the  practitioner  is  left  struggling 
the  difference  between  a  judge  through  a  perf ect  "Serbonian  bog." 
who  is  an  accurate  and  scientific  But  it  is  confidently  believed  that 
lawyer,  and  another  judge,  whose  if  the  distinction  suggested  in  the 
life  having  been  passed  in  other  text  be  applied,  almost  all  the  cases 
distracting  pursuits,  does  not  bring  can  be  reconciled.  General  expres- 
to  the  service  of  the  law  that  un-  sions  in  the  form  of  those  easy  and 
divided  attention  which  this  most  fluent  dicta,  which  give  the  pro- 
difficult  of  all  human  sciences  de-  fession  so  much  trouble,  will  need 
mands.  No  man  can  be  a  lawyer  to  be  disregarded,  and  the  case  de- 
in  the  intervals  of  being  something  cided  confined  strictly  to  the  facts 
else.  It  was  said  of  Lord  Brougham  as  they  appear  in  the  case.  Such 
that  "  he  knew  a  little  of  every-  general  and  sweeping  declarations 
thing,  even  of  law."  as  are  found  in  Union  Pacific  Ry_ 
5 


66 


BANKS    AND   BANKING. 


[§33. 


tinction  here  made  is  applied,  it  will  explain  a  greater  part  of 
the  decisions  of  courts  as  to  ultra  vires  banking  transactions ; I3 
but  as  many  of  the  cases  stand,  recognizing  all  acts,  whether 
ultra  vires  in  the  proper  sense,  or  forbidden  by  other  rules  of 
law,  as  on  the  same  level,  the  dicta  of  the  decisions  are  hope- 
lessly irreconcilable,  and  the  confusion  is  rapidly  growing 
worse.  The  actual  decisions  are  not  in  conflict,  except  the 
decisions  pointed  out  in  this  section  upon  ultra  vires  pur- 
chases of  stock.  There  is  a  large  number  of  cases  in  addi- 
tion to  those  cited  in  the  preceding  notes,  where,  the  act 
being  forbidden  by  a  statute  or  an  express*  rule  of  law  of 
general  application,  the  contract  sought  to  be  created  has 
been  held  wholly  void,  and  the  party  seeking  recovery,  if  he 
is  entitled  to  recover,  has  been  relegated  to  ^mm'-contract 
for  relief.14  There  are  numerous  other  cases  where  the  con- 
tract was  merely  in  excess  of  the  corporate  powers,  though 
otherwise  innocent,  where  the  contract  has  been  enforced.15 


Co.  v.  Chicago,  etc.  Ry.  Co.,  163 
U.  S.  564, 581,  will  need  to  be  passed 
over.  The  distinction  is  not  new. 
It  is  explained  in  Whitney  Arms 
Co.  v.  Barlow,  63  N.  Y.  62.  It  is 
noticed,  without  any  apparent  ap- 
preciation of  its  effect,  in  McCor- 
mick  v.  Market  Nat.  Bank,  165 
U.  S.,  at  p.  553.  Lord  Selborne,  in 
Attorney-General  v.  Railway  Co.,  5 
A  pp.  Cas.  473,  478,  almost  enforces 
the  distinction.  Another  judge 
practically  recognizes  it  in  Seeber 
v.  Comm.  Nat  Bank,  77  Fed.  R.  957, 
but  he  does  not  make  the  distinc- 
tion plain,  if  he  had  it  in  mind. 

13  Compare  the  cases  cited  in  the 
preceding  and  the  next  note. 

14  Allen  v.  Freedmen's  Bank,  14 
Fla.  418;  Western  Bank  v.  Mills,  7 
Gush.  539;  Richmond  Bank  v.  Rob- 
inson, 42  Me.  489;  Johnson  v.  Char- 
lottesville  Nat   Bank,  3  Hughes, 
657;  &  c.,  Fed.  Cas.  No.  7425;  Whet- 
stone v.  Bank  of  Montgomery,  9 


Ala.  875;  Fridley  v.  Bo  wen,  87  111. 
151  (wrong).  It  is  held  that  no  re- 
covery can  be  had  if  the  parties  are 
in  pari  delicto.  Bank  v.  Robinson, 
24  Me.  274;  Phila.  Loan  Co.  v.  Tow- 
ner,  13  Conn.  249.  See  also  Weber 
v.  Spokane  Nat  Bank,  64  Fed.  R. 
208,  29  U.  S.  App.  97. 

»  Bond  v.  Central  Bank,  2  Kelly, 
92;  Richmond  Bank  v.  Robinson,  42 
Me.  489;  Pratt  v.  Short,  79  N.  Y. 
437;  Rome  Savings  Bank  v.  Kra- 
mer, 102  N.  Y.  331;  St.  Jos.  Ins.  Co. 
v.  Hauck,  71  Mo.  465;  Smith  v.  First 
Nat  Bank,  45  Neb.  444;  Noble  v. 
Cornell,  1  Hilt  98;  Bank  of  Middle- 
bury  v.  Bingham,  33  Vt  621;  Rich- 
ards v.  Kountze,  4  Neb.  200;  Walden 
Nat.  Bank  v.  Birch,  130  N.  Y.  221; 
Nat  Pemberton  Bank  v.  Porter, 
125  Mass.  333;  Atlas  Nat  Bank  v. 
Savery,  127  Mass.  75;  Prescott  Nat. 
Bank  v.  Butler,  157  Mass.  548;  Mer- 
chants' Nat  Bank  v.  Hanson,  33 
Minn.  40;  First  Nat  Bank  v.  Gil- 


§33.] 


UNAUTHOKIZED    BANKING. 


There  is  a  number  of  other  cases,  which  might  at  a  first 
glance  seem  to  be  opposed  to  this  distinction,  yet,  if  they  are 
carefully  examined,  it  will  be  seen  they  are  correctly  de- 
cided, since  each  case  can  be  treated  as  one  on  the  loan  and 
not  on  the  contract.16  But  as  the  law  stands,  the  safest  rule 
to  follow,  where  the  contract  is  likely  to  meet  the  objection 
of  being  beyond  the  corporate  power,  is  to  sue  in  quasi-coii- 
tract  on  the  common  count  joined  with  a  count  on  the  con- 
tract. If  for  any  reason  that  course  is  not  safe,  the  cause  of 
action,  if  the  act  be  merely  beyond  the  corporate  power  and 
not  otherwise  illegal,  as  has  been  heretofore  pointed  out,  by 
the  great  weight  of  authority,  with  the  exception  of  a  pur- 
chase of  stock,  will  be  upheld,  if  from  holding  otherwise  an 
injustice  would  result  by  a  party  obtaining  a  benefit  with- 


lilan,  72  Mo.  77;  First  Nat.  Bank  v. 
Smith,  8  S.  Dak.  7;  Warner  v.  De 
Witt  Co.  Bank,  4  Brad.  305;  First 
Nat.  Bank  v.  Elmore,  52  Iowa,  541; 
State  Nat.  Bank  v.  Flathers,  45  La. 
Ann.  75;  Thornton  v.  Ex.  Nat. 
Bank,  71  Mo.  221;  Graham  v.  Na- 
tional Bank,  5  Stew.  804;  Oldham  v. 
First  Nat.  Bank,  85  N.  C.  240;  Elmer 
v.  Bank,  12  Kan.  238;  Am.  Nat. 
Bank  v.  Nat.  Wall  Paper  Co.,  77 
Fed.  R.  85;  First  Nat.  Bank  v.  Ele- 
vator Co.,  10  S.  Dak.  167;  Nielsville 
Bank  v.  Tuthill,  4  Dak.  295;  St. 
Paul  Trust  Co.  v.  Jenks,  57  Minn. 
248;  Bates  v.  State,  2  Ala.  451.  See 
§§  181,  191,  338,pos£. 

16  Gold  Min.  Co.  v.  National  Bank, 
96  U.  S.  640;  Wyman  v.  Citizens' 
Bank,  29  Fed.  R.  734;  Corcoran  v. 
Batchelder,  147  Mass.  541.  Some  of 
these  cases  were  where  an  express 
prohibition  had  been  violated.  The 
recovery  was  on  the  loan.  The  case 
of  Workingmen's  Banking  Co.  v. 
Eautenberg,  103  III  460,  could  have 
been  treated  as  one  on  the  loan. 
In  other  words,  it  can  be  said  that 
the  suit  is  really  on  the  loan,  and 


the  written  contract  is  simply 
treated  as  evidence  of  the  receipt 
of  the  money.  The  parties  were 
not  in  pari  delicto  because  in  many 
instances  the  corporation  was  the 
party  for  whose  benefit  the  statute 
was  passed,  just  as,  on  the  contrary, 
the  borrower  under  an  usurious  con- 
tract with  the  bank  is  considered 
the  one  for  whose  benefit  the  stat- 
ute was  passed.  The  corporation 
was  certainly  in  a  better  position 
than  a  man  who  had  united  with 
its  officers  to  do  an  act  prejudicial 
to  it.  These  cases  illustrate  the 
proposition.  Shoemaker  v.  Nat.  Me- 
chanics' Bank,  Fed.  Cas.  No.  12,801; 
Mills  Co.  Nat.  Bank  v.  Perry,  72 
Iowa,  15;  Portland  Nat.  Bank  v. 
Scott,  20  Oreg.  421;  O'Hare  v.  Sec- 
ond Nat.  Bank,  77  Pa.  96;  Rich  v. 
State  Nat.  Bank,  7  Neb.  201 ;  Norton 
v.  Derry  Nat.  Bank,  61  N.  H.  249; 
Thompson  v.  St.  Nicholas  Nat.  Bank, 
113  N.  Y.  325;  Thompson  v.  St. 
Nicholas  Nat.  Bank,  146  U.  S.  240; 
Williams  v.  Am.  Nat.  Bank,  85  Fedi 
R.  376,  56  U.  S.  App.  316. 


68  BANKS    AND   BANKING.  [§  34. 

out  compensation.  But  under  the  decisions  of  the  Supreme 
Court  of  the  United  States  the  principle  so  often  laid  down 
in  decisions,  that  the  objection  of  ultra  vires  can  only  be 
urged  by  the  government,  is  not  a  safe  rule  to  follow.  Where 
it  is  sought  to  rescind  an  ultra  vires  contract,  or  an  illegal 
contract,  whose  illegality  depends  on  an  express  rule  of  law, 
if  the  contract  has  been  fully  executed  on  both  sides,  and 
the  only  ground  for  rescission  is  that  the  act  was  either  con- 
trary to  law  or  ultra  vires  in  the  proper  sense,  the  law  leaves 
the  party  where  it  finds  him  and  denies  a  recovery.17  If  a 
party  seeks  for  equitable  relief  against  such  a  contract,  the 
law  compels  him  to  do  equity  by  paying  back  what  he  has 
obtained,  before  granting  him  any  relief.18  The  presump- 
tion in  all  cases  is  that  the  corporate  acts  are  within  the  cor- 
porate powers.19 

§  34.  Banking  powers. —  The  charter  of  a  banking  corpo- 
ration usually  confers  upon  it  general  banking  powers,  with 
a  prohibition,  very  often  inserted,  against  exercising  the 
power  of  issuing  notes.  The  meaning  of  this  phrase  "bank- 
ing powers  "  has  been  noticed  incidentally  in  the  considera- 
tion of  the  definition  of  banking.1  The  meaning  of  the  phrase 
varies  under  different  statutory  enactments.2  The  cases  cited 

17  First  Nat.  Bank  v.  Stewart,  107  ciple  ought  to  have  applied  in  an 
U.  S.  676;  Mapes  v.  Scott,  91  III  action  at  law. 
379;    Attleborough  Nat.   Bank  v.  » Morris  R  R  Co.  v.  Sussex  R  R 
Rogers,  125  Mass.  339;  Hennessy  v.  Co.,  21  N.  J.  Eq.  542;  South.  Exp.  Co. 
City   of  St.  Paul,  54   Minn.  219;  v.  Western  R.  R.  Co.,  99  U.S.  191; 
Wherry  v.  Hale,  77  Ma  20;  Chapin  Baker  v.  N.  W.  Loan  Co.,  36  Minn. 
v.  Merchants'  Nat  Bank,  14  N.  Y.  185;  Rider  Raft  Co.  v.  Roach,  97 
St.  R  272.    But  in  the  case  of  Bur-  N.  Y.  378. 
rows  v.  Niblack.  84  Fed.  Rill,  the  1  See  §  2,  ante. 
court  utterly  forgot  this  principle,  2  See  §§  3,  4,  5,  ante,  and  Blair  v. 
and  held  that  a  national  bank  could  Perpet.  Ins.  Co.,  10  Mo.  559;  Huber 
recover  what  it  had  paid  for  its  v.  Germ.   Cong.,  16  Ohio  St.  371; 
own  stock,  and  that  too  without  State  v.Stebbins,!  Stew. 299;  Smith 
tendering  back  the  stock.  The  opin-  v.  State,  21  Ark.  294;  People  v.  Man- 
ion  is  incomprehensible.  hattan  Bank,  9  Wend.  351;  State  v. 

is  Elder  v.  First   Nat  Bank,   12  Granville  Alex.  Soc.,  11  Ohio,  1; 

Kan.  238.    But  see  the  case  cited  in  People  v.  Insurance  Co.,  15  Johns, 

the  last  note,  where  the  same  prin-  358. 


§  35.]  UNAUTHORIZED   BANKING.  69 

in  the  preceding  section  necessarily  are  concerned  with  bank- 
ing powers.  The  subject  will  be  examined  at  length  in  a 
subsequent  portion  of  this  work.8  "We  mention  now  that 
while  the  powers  of  discounting  and  depositing  are  always 
conferred  upon  banks,  there  has  been  considerable  difference 
of  opinion  as  to  whether  the  power  of  discounting  included 
the  power  of  purchasing  commercial  paper.4  The  better 
opinion  is  that  it  does. 

§  35.  Liability  of  corporators  as  partners. —  Sometimes 
it  will  happen  that  a  number  of  persons  will  assume  to  in- 
stitute a  corporation  without  having  received  any  charter 
whatever.  If  a  corporation  be  afterwards  formed  and  the 
act  be  lawfully  ratified,  either  expressly  or  by  receiving  a 
benefit,  the  corporation  may  be  held  upon  the  act  done  be- 
fore the  formation  of  the  corporation.1  The  corporation  may 
claim  the  benefit  of  an  act  done  on  its  behalf  before  the  in- 
corporation.2 But  if  there  be  no  ratification,  because  no  cor- 
poration results,  the  promoters  or  alleged  corporators  incur 
the  responsibility  of  partners  and  may  be  held  liable  as 
such.8  If  a  ratification  has  taken  place,  it  would  seem  to  be 
true  that  where  the  other  party  has  contracted  with  the 
corporation  he  ought  not  to  be  permitted  to  hold  the  corpo- 
rators liable  as  partners.4  Yet  if  the  act  was  one  incapable 
of  ratification,5  the  corporation  afterwards  formed  cannot 
be  held ;  as,  for  instance,  where  the  act  was  prohibited  by 
an  express  rule  of  law.6  If  no  corporation  be  afterwards 

'See  §  118  et  seq.,post.  BThis  statement  applies  only  to 

4  The  cases  may  be  found  col-  those  acts  which  are  beyond  the 

lected  in  9  Am.  &  Eng.  Encyc.  Law  scope  of  the  corporate  powers  be- 

(2d  ed.),  471,  notes  1  and  2.  cause    forbidden    by   law,  as   ex- 

1 1  Thorn  p.  on  Corp.,  sec.  480.  plained  in  §  32,  ante.    But  all  torts 

2  4  Thorn  p.  on  Corp.,  sec.  5321.  and  contracts  merely  beyond  cor- 

3  Kaiser  v.  Lawrence  Sav.  Bank,  porate  powers  may  be  ratified.  See 
56  Iowa,  104;  Pettis  v.  Atkins,  60  next  note. 

IlL  454;  Allen  v.  Pegram,  16  Iowa,  6  California    Bank   v.  Kennedy, 

163;   McLennan   v.    Anspaugh,    2  167  U.  S.  362,  368,  contains  a  cor- 

Kan.  App.  269;  Hauser  v.  Tate,  85  rect  statement  of  the  rule,  but  it  is 

N.  C.  81.  wrongly  applied  in  that  casa    But 

4  See  Huff cutt,  Agency,  44.  it  is  properly  applied  in  Central 


70  BANKS    AND   BANKING.  [§  36. 

formed,  he  may  hold  the  parties  liable  on  the  theory  of  an 
implied  warranty  of  authority,7  under  the  general  principles 
of  the  law  of  agency. 

§36.  Direct  liability  for  unauthorized  banting. — We 

have  in  the  preceding  sections  noticed  the  result  of  acts  of 
unauthorized  banking  as  between  other  parties  than  the 
bank  and  the  state.  How  far  the  state  may  go  in  forfeiting 
the  charter  of  the  bank  for  illegal  banking  in  quo  warra/nto  or 
in  actions  in  the  nature  of  quo  warranto  will  be  considered 
later  in  this  work.1  The  statutes  often  prescribe  a  criminal 
responsibility  for  illegal  acts  by  the  various  officers  of  the 
bank.  This  subject  will  be  considered  in  connection  with 
officers.2  There  have  been  statutes  of  various  states  which 
impose  a  penalty  upon  individuals  for  illegal  banking,  and  in 
other  cases  define  the  conduct  as  a  crime.  The  cases  will  be 
found  referred  to  in  the  note  below.3 

Transp.  Co.  v.  Pullman's  Car  Co.,  '  See  §  319  et  seq.,  post. 

139  U.  S.  24,  59,  and  in  McCormick  2  See  §  81  et  seq.,  post. 

v.  Market  Nat  Bank,  165  U.  S.  538,  8  State  v.  Williams,  8  Tex.  255; 

549.     In  Jacksonville  Ry.   Co.  v.  Williams  v.  State,  23  Tex.  264;  State 

Hooper,  160  U.  S.  514,  524,  the  prin-  v.  Presbury,  13  Mo.  342;  Brown  v. 

ciple  is  correctly  applied  as  to  an  State,  11  Ohio,  276;  Commonwealth 

innocent  act  ultra  vires,  but  put  v.  Scott,  4  Rand.  143;  Mills  v.  State, 

upon  a  slightly  different  ground  23  Tex.  295;  Burkett  v.  Lanata,  15 

than  the  one  above.  La.  Ann.  337;  People  v.  Bartow,  6 

7 1  Thompson  on  Corp.  41 6;  Medill  Cow.  290;   People  v.  Brewster,  4 

v.  Collier,  16  Ohio  St.  599;  Seeber-  Wend.  498;  People  v.  Doty,  80  N.  Y. 

ger  v.  McCormick,  178  III  404,73  225;  Commonwealth  v.  Sponsler,  16 

III  App.  87,  although  in  the  latter  Pa.  Co.  Ct.  R.  116;  State  v.  Scougal, 

case  a  corporation  was  formed.  3  S.  Dak.  55. 


CHAPTER  III. 

LEGISLATIVE  REGULATION  OF  BANKING. 

§  37.  General  scope  of  power. —  It  has  already  been  stated 
that  the  state  in  the  exercise  of  its  legislative  power  can  pro- 
hibit private  banking  altogether.1  A  very  different  question 
would  arise  if  the  state  should  attempt  to  abolish  banking 
altogether.  The  question  has  not  presented  itself,  nor  can 
any  one  conceive  that  a  legislature  would  attempt  so  to  do. 
Such  an  act  would  unquestionably  be  not  a  valid  exercise 
of  the  police  power.  But  the  state  has  always  the  power  to 
regulate  the  business  of  banking,2  and  has  done  so  in  many 
ways.  How  far  the  state  governments  can  regulate  national 
banks  by  taxation  has  been  already  noticed.3  The  purpose 
of  this  chapter  is  to  state  those  regulations  that  have  been 
made  both  as  to  state  banks,  corporate  or  private,  and  to 
national  banks. 

§  38.  License  taxes. —  A  preliminary  question  as  to  a 
license  fee  by  a  municipality  will  always  be  whether  the 
power  to  license  has  been  granted.  This  is  simply  a  ques- 
tion of  statutory  construction.1  When  a  national  or  state 
license  is  in  question  the  sole  inquiry  is  whether  the  person, 
natural  or  artificial,  falls  within  the  terms  of  the  act.  This 
is  also  a  question  of  statutory  construction.2  As  to  licenses 

1  See  §  9,  ante,  and  §  45,  post.  La.  Ann.  1029;  City  of  New  Orleans 
2Blaker  v.  Hood,  53  Kan.  499;    v.  New  Orleans  Sav.  Inst.,  32  La. 

Cummings  v.  Spannhorst,  5  Mo.  Ann.  527;  State  v.  Southern  Bank, 

App.  21.  31  La.  Ann.  519;  State  v.  Columbia, 

3  See  §  25,  ante,  and  see  further  6  Rich.  495;  City  of  New  Orleans 

§  44,  post.  v.  New  Orleans  Banking  Co.,  32  La. 

*  Macon  v.  Macon  Sav.  Bank,  60  Ann.  104;  Warren  v.  Shook,  91  U.  S. 

Ga.  133;  Hinckley  v.  Belleville,  43  704;  Selden  v.  Equitable  Trust  Co., 

Ill  483.  94  U.  S.  419. 

2  State  v.  Bank  of  Mansfield,  48 


72  BANKS    AND   BANKING.  [§§  39,  40. 

granted  by  cities,  towns  or  counties,  the  implied  limitation 
is  that  they  shall  be  reasonable,8  in  view  of  the  fact  that  the 
power  to  license  does  not  in  such  a  case  include  the  power 
to  tax  for  revenue,  unless  expressly  granted.4  The  limitation 
on  state  licenses  or  taxation  is  that  they  may  tax  national 
banks  only  to  the  extent  permitted  by  the  national  govern- 
ment,9 and  foreign  corporations,  if  they  are  not  engaged  in 
foreign  or  interstate  commerce.6  The  rule  as  to  banks  would 

O 

be  the  same  as  to  other  corporations,  but  it  is  difficult  to  see 
how  a  bank  could  be  engaged  in  interstate  commerce. 

§  39.  Limitations  on  indebtedness. —  Various  laws  pro- 
vide limitations  as  to  the  indebtedness  of  banks,  both  state 
and  national,  and  limitations  upon  the  indebtedness  of  indi- 
viduals toward  the  bank.  These  regulations  are  no  doubt 
perfectly  legal.  The  effect  of  them,  when  violated,  upon  con- 
tracts has  been  shown,1  and  their  effect  as  fixing  a  civil 
responsibility  upon  the  officers,2  as  well  as  exposing  the  char- 
ter to  forfeiture,  will  be  later  examined.8 

§  40.  Safety  funds  and  deposits. —  The  questions  that 
arose  under  the  state  laws  in  the  days  of  "  wild-cat "  bank- 
ing as  to  the  funds  deposited  to  secure  circulation  are  now 
obsolete.  A  reference  to  cases  will  be  found  in  the  notes.1 
The  requirement  was  made  as  to  banks  engaged  both  in  issu- 
ing notes  and  in  receiving  deposits,2  and  the  state  was  merely 

1  See  the  next  note.  obsolete  law:  Young  v.  Hughes,  12 

4  1  Dillon  on  Mun.  Corp.  (4th  ed.),  Smedes   &    M.    93;    Townsend    v. 
sec.  357.  Smith,  12  N.  J.  Eq.  350;  Bank  v. 

5  See  §  25,  ante.  Downer,  28  Vt.  635;  Commissioners 

6  See  6  Thompson  on  Corp.,  sec.  v.  Walker,  6  How.  143;  In  re  Dyott, 
8108  et  seq.  2  Watts  &  S.  463;  Flagg  v.  Munger, 

!See  §§  32,  33,  ante.  9  N.  Y.  483;  People  v.  Holmes,  3 

2  See  §  81,  post,  et  seq.,  §  89,  post,    Mich.  544;   Willard  v.  Dubois,  29 
et  seq.,  and  §  355,  post.  Ill  48. 

»  See  §  319,  post.  2  Marion  Sav.  Bank  v.  Dunkin,  54 

'A  curious  attempt  to  prevent  Ala.  471;  Marine  Bank  v.  State  Au- 
redemption  of  notes  will  be  found  ditor,  14  111.  185;  Ewing  v.  Robe- 
in  case  of  People  v.  Whittemore,  4  son,  15  Ind.  26.  But  in  other  cases 
Mich.  27.  See  for  various  phases  of  _  the  security  was  for  the  depositors 


§§  41 3  42.]      LEGISLATIVE   REGULATION    OF   BANKING.  73 

the  custodian  of  the  fund  and  not  a  guarantor  against  loss 
by  the  note-holders.3  The  fund  seems  to  have  been  in  some 
cases 'a  general  fund  contributed  by  all  the  banks,  and  the 
whole  fund  was  liable  for  the  notes  of  each  bank.4  The  idea 
that  underlay  all  these  provisions  has  been  incorporated  into 
the  national  banking  law,  by  providing  for  a  deposit  of  bonds 
to  secure  circulation.  The  government  is  a  trustee  of  this 
deposit,  not  only  for  the  note-holders,  but  for  all  the  credit- 
ors,5 in  the  sense  that  after  payment  of  the  notes  the  surplus 
must  be  restored  to  the  creditors  of  the  bank.  The  govern- 
ment can  claim  no  priority  for  its  own  debts.6 

§  41.  Requirement  of  reports. — Under  the  national  bank- 
ing act  those  banking  institutions  therein  provided  for  are 
required  to  make  five  reports  each  year,  at  times  to  be  desig- 
nated by  the  comptroller,  and  special  reports  as  may  be  called 
for.1  The  penalty  provided  is  a  fine  for  each  day's  failure 
to  report.  State  laws  require  reports  from  banking  institu- 
tions organized  under  state  laws.  They  may  also  be  required, 
from  private  bankers.  The  penalty  provided  in  some  of  the 
states  is  a  prohibition  against  bringing  a  suit  in  the  state 
courts.  This  prohibition  the  state  courts  will  enforce  against 
a  foreign  corporation,2  but  the  United  States  courts  will  not. 
The  state  courts  require  a  strict  compliance  with  the  law.4 

§  42.  Bank  examiners. —  State  statutes  provide  for  public 
bank  examiners,  who  may  be  given  a  right  of  visitation  and 

as  well    People  v.  Walker,  17  N.  Y.  1  Sec.  5211,  Rev.  Stat.  U.  S. 

-502;  s.  c.,  21  Barb.  630;  Medill  v.  2  Bank  of  British  N.  A.  v.  Alaska 

Collier,  16  Ohio  St.  599.  Imp.  Co.,  97  Cal.  28. 

3  Clark  v.  State,  7  Cold.  306;  State  3  Barling  v.  Bank  of  British  N.  A., 

v.  Eusk,  21  Wis.  212;  Citizens'  Bank  50  Fed.  E.  260,  1  C.  C.  A,  510;  S.  G, 

v.  Gay,  47  La.  Ann.  551.  44  Fed.  E.  641. 

*  Elwood  v.  State  Treasurer,  23  4  Bank  of  British  N.  A.  v.  Alaska 

Vt  701;  Eeceiver  of  Danby  Bank  Imp.  Co.,  97  Cal.  28;  People  v.  Camp- 

v.  State  Treasurer,  39  Vt  92.  bell,  14  111.  400.    See  also  Bank  of 

5  Cook  Co.  Nat.  Bank  v.  United  British  N.  A.  v.  Madison,  99  Cal.  125; 
States,  107  U.  S.  445.  State  v.  Union  Bank,  4  Eobt.  499; 

6  United  States  v.  Cook  Co.  Nat.  Boisregard  v.  New  York  Banking 
Bank,  9  Biss.  55,  was  reversed  by  Co.,  2  Sandf.  Ch.  23. 

the  above  case. 


74  BANKS   AND   BANKING.  [§§  43,  44. 

of  full  inquiry  into  the  condition  of  the  bank,  of  examining 
all  the  officers  or  agents  thereof,  with  power  to  institute  pro- 
ceedings to  close  the  bank.1  The  examiners  provided  for 
under  the  national  banking  law  have  practically  the  same 
powers,2  except  that  the  exercise  of  power  is  primarily  with 
the  comptroller  of  the  currency,  who  is  also  given  ample 
powers,  under  the  act,  to  take  possession  of  the  bank  by  an 
examiner  or  a  receiver,  and  close  it  up  when  satisfied  that 
the  bank  is  insolvent,3  or  where  it  has  failed  to  redeem  any 
of  its  circulating  notes.4  The  action  of  the  comptroller  is 
presumed  to  be  that  of  the  secretary  of  the  treasury 5  and  is 
conclusive  as  to  the  receiver's  authority.6  Yet  it  has  been 
held  that  his  decision  is  not  evidence  of  insolvency  in  a  suit 
by  the  receiver  against  the  stockholders  for  contribution.7 

§  43.  Other  regulations  of  national  banks. —  Section 
5190  and  the  following  sections  of  the  Ee vised  Statutes  con- 
tain other  regulations  of  national  banks.  The  requirement 
.that  a  national  bank  shall  transact  its  usual  business  at  its 
banking  house,  the  requirements  as  to  "lawful  money  re- 
serves," l  the  regulations  as  to  usurious  rates  of  interest,  as  to 
discounts  and  loans,  are  all  within  the  power  of  congress. 
The  effect  of  a  violation  of  these  regulations  will  be  examined 
under  various  cR visions  in  this  work.2 

* 

§  44.  Regulation  of  national  banks  by  states. —  It  has 

already  been  pointed  out  that  the  state  governments  have 
no  control  over  national  banks  except  what  has  been  granted 
to  them  by  the  federal  government.1  Yet  the  state  govern- 
ment may  prohibit  certain  conveyances,  and  a  national  bank 

1  Commonwealth     v.     Farmers'       6  Washington  Nat.  Bank  v.  Eckels, 
Bank,  21  Pick.  542;  State  v.  Union    57  Fed.  R.  870. 

Bank,  4  Rob.  (La.)  499.  7  Bowden  v.  Morris,  1  Hughes,  378, 

2  Sec.  5240,  Rev.  Stat,  amended    Fed.  Cas.  No.  1715.    But  the  case  is 
18  Stat  329.  wrong. 

»  Act  of  Congress,  June  30, 1876,  1  Amended  by  24  Stat.  559. 

sec.  1, 19  Stat.  63.  2  See  §§  32,  33,  ante,  and  §§  191 

«  Sees.  5226  et  seq.,  Rev.  Stat  U.  S.  and  201,  post. 

•Price  v.  Abbott,  17  Fed.  R.  506.  iSee  §  25,  ante. 


§  4:5.]  LEGISLATIVE   BEGULATION   OF   BANKING.  75- 

will  be  subject  to  the  general  law;2  but  national  banks  are 
not  covered  by  an  act  of  the  state  which  requires  all  corpora- 
tions to  file  with  a  certain  officer  the  name  of  a  designated 
agent.3  Indirectly,  too,  the  state  governments  can  control 
national  banks  by  their  criminal  laws  where  congress  has 
not  done  so ; 4  and  the  highest  authority  has  held  that  both 
the  state  government  and  the  federal  government  can  make 
the  same  act  of  a  national  banker  a  crime  as  to  each  sover- 
eignty.5 But  it  is  held  that  the  statute  of  the  national  gov- 
ernment as  to  usurious  dealings  of  national  banks  is  exclu- 
sive of  any  state  legislation,6  as  to  a  civil  liability. 

§  45.  State  regulation  of  foreign  banks. —  It  is  hardly 
necessary  to  state  that  a  state  statute  as  to  foreign  banks 
will  not  affect  national  banks,  which  are  chartered  for  the 
whole  nation.  A  foreign  bank  is  permitted  by  comity  to 
make  a  contract  in  a  state  other  than  its  charterer  if  the  act 
is  not  forbidden  by  the  law  of  its  creation,  but  its  general 
franchises,  it  has  been  said,  can  be  exercised  only  in  the  state 
of  its  origin.1  This  must  be  understood  with  the  qualifica- 
tions that  the  act  be  not  forbidden  by  law  in  the  state  where 

2  Traders'  Nat.  Bank  v.  Chipman,  apply  to  a  cashier  of  a  national 
164  U.  S.  347 ;  Chipman  v.  McClellan,  bank.    Allen  v.  Carter,  119  Pa.  192. 
159  Mass.  363.  6  Farmers'  Bank  v.  Bearing,  91  U. 

3  First   Nat.   Bank  v.   Common-  S.  29;  Peterborough  Nat.  Bank  v. 
wealth,  33  S.  W.  R.  1105.  Childs,  133  Mass.  248;  Imp.  &  Trad- 

4  State  v.  Fuller,  34  Conn.  280,  as  ers'  Nat.  Bank  v.  Littell,  46  N.  J. 
to  embezzlement;  State  v.  Fields,  Law,  506;  First  Nat.  Bank  v.  Dun- 
98  Iowa,  748,  and  State  v.  Bardwell,  can,  Fed.  Cas.  No.  4804;  Slaughter 
72  Miss.  535,  as  to  receiving  deposit  v.  First  Nat.  Bank,  109  Ala.  157; 
knowing  the  bank  to  be  insolvent.  Parker  v.  Rochester  Nat.  Bank,  59 
Compare  State  v.Menke,  56  Kan.  77.  N.  EL  310;  First  Nat.  Bank  v.  Gar- 

» Cross  v.  State,  132  U.  S.  131;  linghouse,  22  Ohio  St.  492.    Contra, 

Hoke  v.  People,  122  III  511;  State  First  Nat.  Bank  v.  Lamb,  50  N.  Y. 

v.  White,  101  N.  C.  770;  Common-  95.   But  as  to  the  law  of  crimes,  see 

wealth  v.  Seeberg,  94  Pa.  85;  State  §  191,  post. 

v.  National  Bank,  2  S.  Dak.  568.  JLanev.  Bank  of  West  Tennessee, 
Contra,  Commonwealth  v.  Felton,  9  Heisk.  419.   Contra,  Bank  of  Mari- 
101  Mass.  204,  But  the  state  statute  etta  v.  Pindall,  2  Rand.  485.    See- 
prohibiting  a  cashier  from  engag-  City  Bank  v.  Beach,  1  Blatch.  425 
ing  in  any  other  business  does  not 


76  BANKS   AND   BANKING.  [§  4:5. 

the  act  is  done,  and,  as  some  courts  say,  if  the  act  be  not 
malum  in  se.  There  have  been  cases  where  foreign  banks 
have  been  forbidden  to  carry  on  a  banking  business  by  an 
agent  located  in  the  state.2  Foreign  banks  are  within  state 
statutes  against  unauthorized  banking,3  and  statutes  have 
been  upheld  which  prohibit  the  circulation  of  notes  of  for- 
eign banks,4  although  in  the  absence  of  statutory  prohibition 
foreign  currency  may  be  put  into  circulation.5  The  general 
rule,  of  course,  is  that  a  state  may  prescribe  what  terms  it 
pleases  to  foreign  banks  doing  business  in  the  state. 

2  Conn.  Mut.  Life  Ins.  Co.  v.  Al-  N.  Y.  53;  Sackett's  Harbor  Bftnk  v. 
bert,  39  Mo.  181.   See  the  next  note.  Codd,  18  N.  Y.  240. 

3  Bank  of  New  berry  v.  Stegall,  41  6Ballston   Spa  Bank  v.  Marine 
Miss.  143.  Bank,  16  Wis.  125. 

*  Merchants'  Bank  v.  Spalding,  9 


CHAPTER  IT. 
STOCKHOLDER 

§  46.  In  general. —  The  subject  of  stockholders  in  corpo- 
rations is  so  large  that  no  attempt  will  be  made  to  examine 
the  general  subject  except  as  the  subject  has  been  peculiarly 
illustrated  by  decisions  as  to  banks.  It  will  be  assumed  that 
the  general  principles  applicable  do  not  need  citations  to 
establish  their  existence.  It  will  be  necessary,  however,  to- 
state  those  general  principles  in  order  to  show  the  connec- 
tions of  this  subject.  It  is  settled  that  a  person  may  become- 
a  stockholder  in  a  banking  corporation  just  as  he  becomes  a 
stockholder  in  any  other  corporation :  (1)  by  a  valid  subscrip- 
tion to  the  capital  stock ;  (2)  by  a  transfer  of  shares  to  himself;. 
(3)  by  estoppel.  For  the  purpose  of  liability  on  stock  it  will 
appear  that  two  different  persons  may  be  considered  as  the 
owners  of  the  same  shares.  Any  person  competent  to  become 
a  stockholder  will  be  so  held.  Even  if  the  stockholder  be  a 
married  woman  laboring  under  the  disability  of  coverture,1 
and  in  case  of  national  banks,  any  person  permitted  by  the 
laws  of  the  place  where  the  bank  is  situated  may  be  con- 
sidered a  stockholder.2 

§  47.  Increase  or  decrease  of  stock.— The  original  cap- 
ital stock  cannot  be  increased  or  decreased  without  legisla- 
tive authority.1  Such  authority  in  case  of  national  banks  is 
given  by  sections  5142  and  5143  of  the  Revised  Statutes  with 
the  act  of  May  6, 1886.  Where  the  constitution  requires  every 
banking  act  to  be  submitted  to  a  vote  of  the  people,  a  bank 

i  In  re  Eeciprocity  Bank,  22  N.  Y.  Hobart  v.  Johnson,  8  Fed  R  493; 

9;  Simmons  v.  Dent,  16  Mo.  App.  Witters  v.  Sowles,  32  Fed.  R  767. 
288.  l  Bank  of  Kentucky  v.  Schuylkill 

2Keyser  v.  Hitz,  133  U.  S.  138;  Bank,  1  Pars.  Eq.Cas.  180.   See  also 

Anderson  v.  Line,  14  Fed.  R  405;  Byrne  v.  Union  Bank,  9  Robt  433. 


78 


BANKS    AND    BANKING. 


[§±7 


cannot  increase  or  decrease  its  capital  stock  without  the  per- 
mission of  an  act  ratified  by  popular  vote.2  "When  an  in- 
crease in  the  capital  stock  has  been  permitted  by  the  proper 
authority,  the  holder  of  the  increased  stock  cannot  set  up 
irregularities  in  the  making  of  the  increase  to  defeat  his  lia- 
bility as  a  stockholder.3  In  the  case  of  national  banks  when 
the  increase  has  been  allowed  by  competent  authority,  to  wit, 
the  comptroller  of  the  currency,  who  has  issued  his  certifi- 
cate, a  subscriber  to  the  increase  cannot  claim  to  be  not  a 
stockholder  because  the  original  increase  has  been  reduced 
before  the  issuance  of  the  certificate.4  But  no  one  becomes 
a  stockholder  in  the  increased  stock  until  the  comptroller 
issues  his  certificate,  even  though  the  amount  has  been  paid 
into  the  bank  for  the  new  stock.5  In  such  a  case  the  bank 
holds  the  amount  paid  in  as  a  trustee,6  and,  if  the  increase  of 
stock  be  not  allowed  by  the  comptroller,  the  amount  paid  in 
must  be  restored.7  When  the  capital  stock  is  reduced  on 


2  People  v.  Nat  Sav.  Bank,  129 
111.  618;  McNulta  v.  Corn  Belt  Bank, 
164  111.  427. 

3  Veeder  v.  Mudgett,  95  N.  Y.  295. 
But  Palmer  v.  Bank  of  Zumbrota, 
75  N.  W.  R.  380,  says  the  stockholder 
is   not  estopped  as   against    past 
creditors. 

4  Delano  v.  Butler,  118  U.  S.  634; 
Aspinwall  v.  Butler,  133  U.  S.  595. 
The  certificate  is  conclusive.    Co- 
lumbia Nat  Bank  v.  Matthews,  85 
Fed.  R.  934,  56  U.  S.  App.  636.    The 
subscription  is   binding  although 
the  whole  amount  is  not  subscribed. 
Scott  v.  Latimer,  89  Fed.  R  843,  but 
it  is  a  strained  construction  of  the 
statute.    The  dissenting  opinion  is 
much  better  law. 

8Charleston  v.  People's  Nat  Bank, 
6  S.  C.  103;  Winters  v.  Armstrong, 
37  Fed.  R  508;  McFarlin  v.  First 
Nat.  Bank,  68  Fed.  R  868;  8.  a,  16  C. 
C.  A.  46;  Schierenberg  v.  Stephens, 


32  Mo.  App.  314;  Stephens  v.  Fol- 
lett,  43  Fed.  R  842.  In  the  last  case 
the  bank  officers  had  transferred 
old  stock  on  the  books  to  the  sub- 
scriber. 

6  Armstrong  v.  Law,  27  Wkly. 
Law  Bui.  100. 

7  Schierenberg  v.  Stephens,  32  Mo. 
App.  314;  Winters  v.  Armstrong.  37 
Fed.  R  508.    These  last  two  cases 
need  careful  reading;  the  syllabus 
is  misleading;  they  will  show  that 
the  bank  was  in  fact  held  trustee. 
But  in  a  case  where  the  comptroller 
seems  to  have  been 'guilty  of  ques- 
tionable conduct,  it  was  held  that 
the  comptroller  could  not  first  re- 
fuse to  authorize  the  increase,  and 
then,  after  insolvency  of  the  bank, 
issue  his  certificate  of  the  increase 
and  thus  hold  the  subscribers  to 
the  increased  capital.    Mathews  v. 
Columbia  Nat.  Bank,  77  Fed.  R  372; 
but  see  note  4,  supra,  on  this  case. 


§  48.]  STOCKHOLDERS.  79 

account  of  bad  debts,  but  the  debts  are  afterwards  realized, 
a  stockholder  cannot  claim  his  proportion  of  the  amount 
realized;8  yet  after  the  capital  is  actually  reduced,  the  bank 
cannot  retain  as  surplus  the  portion  of  the  capital  which 
remains  over  and  above  the  reduced  capital.9  The  stock- 
holder who  has  subscribed  to  the  increase  and  paid  in  his 
subscription  and  has  been  entered  on  the  books  as  a  stock- 
holder of  a  national  bank  is  a  stockholder  in  spite  of  the 
fact  that  his  certificates  of  stock  have  never  been  issued  to 
him.10  The  increased  capital  is  not  void  although  through 
fraud  it  has  not  all  been  paid  in,11  as  required  by  law. 

§  48.  Original  subscription. —  As  a  general  rule  any 
paper  which  shows  a  purpose  to  subscribe  to  the  stock  of  a 
corporation  will  be  binding.1  Whether  an  oral  subscription 
be  valid  or  not  must  depend  on  the  provisions  of  the  govern- 
ing statute,2  or  in  the  absence  of  such  provisions  on  the 
general  principles  governing  the  law  of  corporations.  The 
whole  subject  of  the  binding  force  of  a  subscription,3  as  well 
as  the  remedy  of  the  subscriber  to  avoid  the  same  for  fraud 4 
or  for  an  alteration  in  the  charter,5  are  not  properly  a  part 
of  this  particular  treatise.  The  rights  of  parties  under  stat- 
utes in  over-subscriptions  have  received  some  consideration 
from  courts  in  the  cases  cited  in  the  note.6  The  state  was 

8  McCann  v.  First  Nat.  Bank,  112  3  See  1  Thomp.  on  Corp.,  sec.  1216 
Ind.  354.  et  seq. 

9  Seeley  v.  Nat.  Ex.  Bank,  78  N.  4  See  1  Thomp.  on  Corp.,  sec.  1360 
Y.  608;  s.  c.,  8  Daly,  400.  et  seq.    A  subscription  or  a  pur- 

10  Pac.  Nat.  Bank  v.  Eaton,  141  U.  chase  of  stock  may  be  rescinded 
S.  227.    The  laches  of  a  subscriber  for  fraud    even   after   insolvency 
may  defeat  his   right  to   object*  where  there  is  no  negligence  or  es- 
Olson  v.  State  Bank,  67  Minn.  267.  toppel.  Wallace  v.  Bacon,  86  Fed.  R. 

11  Latimer  v.  Bard,  76  Fed.  R.  536.  553;  Stufflebeam  v.  De  Lashmutt, 
See  note  4,  supra.  83  Fed.   R.  449.    But  Wallace  v. 

1  See  next  note.    This  binding  ef-    Hood,  89  Fed.  R.  11,  holds  that  the 
feet  the  board  of  directors  cannot    receiver  cannot  agree  to  a  rescis- 
release.     McNutta   v.    Corn    Belt    sion. 

Bank,  164  III  427.  5  See  1  Thomp.  on  Corp.,  sees.  1267- 

2  Seel  Thomp.  on  Corp.,  sees.  1136-    1299. 

1194.  6  Meads  v.  Walker,  Hopk.  Ch.  587; 


80  BANKS   AND   BANKING.  [§  49. 

held  not  liable  as  a  stockholder  for  personal  liability,7  but 
was  held  liable  as  a  trustee  for  diverting  capital.8 

§  49.  Stockholders  by  transfer.—  Shares  of  stock  are 
from  their  nature  alienable,  and,  subject  to  the  limitations 
lawfully  imposed  upon  their  alienability  by  law,  or  by  the 
corporation  or  by  the  holder,  are  transferred  by  indorsement 
and  delivery  of  the  certificate.  Ordinarily  such  a  transfer 
makes  the  transferee  a  stockholder  and  the  transf error 
ceases  to  be  such,  where  the  transfer  is  in  good  faith  and  re- 
corded on  the  books  of  the  company.1  The  books  of  the 
corporation  are  the  controlling  evidence  as  to  the  ownership 
of  shares ; 2  but  if  the  transf  error  in  good  faith  has  done  all 
that  he  is  required  to  do  to  make  the  transfer  complete  on 
the  books  of  the  company,  the  failure  of  the  proper  officers 
to  record  the  transfer  will  not  continue  him  as  a  stock- 
holder.3 It  seems  to  be  sufficient  even  if  the  officers  knew 
of  the  transfer.4  If,  however,  the  transfer  is  collusive  or  for 
the  purpose  of  escaping  liability,  the  transferror  as  well  as 
the  transferee  will  be  held  as  a  stockholder;  certainly  in  the 
case  of  national  banks,5  and  on  principle  under  state  stat- 
utes.6 An  apparent  exception  seems  to  be  that  of  a  pledgee, 

Clarke  v.  Brooklyn  Bank,  1  Edw.  In  re  Emp.  City  Bank,  18  N.  Y.  199. 
Ch.  361 ;  State  v.  Lehre,  7  Rich.  They  make  the  transferee  liable  as 
Law,  234  A  subscription  in  an-  stockholder  even  in  case  of  collu- 
other's  natne  was  not  permitted  sive  transfers.  Foster  v.  Lincoln, 
to  escape  a  scaling-down  statute.  74  Fed.  R  382,  79  Fed.  R  170;  Rob- 
Union  Bank  v.  McDonough,  5  La.  63.  inson  v.  Beall,  26  Ga.  17. 

7  Consolidated  Bank  v.  State,  5  3Snyder  v.  Foster,  73  Fed.  R  136, 
La.  Ann.  44    This  opinion  is  a  sin-  19  C.  G.  A.  406;  Hayes  v.  Shoemaker, 
gular"  exhibition  of  folly.  39  Fed.  R  319.    Compare  Price  v. 

8  Dabney  v.  State  Bank,  3  S.  C.  124  Whitney,  28  Fed.  R  297. 

1  Johnson  v.  Laflin,  103  U.  S.  800;  *  Whitney  v.  Butler,  118  U.  S.  655. 
S.  C,  5  Dili  65.    But  statutes  some-  s  National  Bank  v.  Case,  99  U.  S. 
times  prescribe   a    different  rule.  628;  Barden  v.  Johnson,  107  U.  S. 
Chatam  Bank  v.  Brobston,  99  Ga.  251;  Stuart  v.  Hay  den,  169  U.  S.  1; 
801;  Harper  v.  Carroll,  69  N.  W.  R  S.  C.,  72  Fed.  R  402;    Witters  v. 
610.  Sowles,  32  Fed.  R  130;   Foster  v. 

2  Man  v.  Cheeseman,  Fed.  Cas.  No.  Lincoln,  74  Fed.  R  382;  s.  G,  79 
9002a;  Irons  v.  Manuf.  Nat  Bank,  Fed.  R  170. 

121  U.  S.  27;  8.  G,  27  Fed.  R  591;        6So  held  in  case  of  a  transfer  to 


STOCKHOLDEKS. 


81 


who  takes  stock  merely  as  collateral  security,  and  does  not 
receive  title  himself  but  has  the  stock  stand  in  the  name  of 
some  irresponsible  third  party.  In  such  a  case  the  pledgee  is 
not  liable  as  a  stockholder.7  The  same  result  is  obtained  by 
the  entry  of  the  pledgee's  name  on  the  books  "  as  pledgee," 8 
and,  on  principle,  with  any  other  words  which  showed  the 
holding  as  a  trustee,  if  the  fact  was  as  represented.  If  the 
transfer  be  collusive,  both  the  trans f error  and  the  transferee 
are  liable  as  stockholders,9  and  the  same  result  follows  if  the 
transfer  be  made  after  insolvency  of  the  bank  with  notice  of 
the  fact.10  In  some  of  the  states  statutes  render  bank  stock- 
holders liable  for  all  debts  created  while  they  were  stockhold- 
ers and  require  all  transfers  of  stock  to  be  recorded  in  some 
proper  office.11  This  liability  is  unaffected  by  a  transfer. 
One  may  become  a  stockholder  if  he  is  the  real  owner  of  the 


the  bank  itself,  which  would  as- 
sume no  liability  to  answer  to  the 
statute.  In  re  Reciprocity  Bank, 
22  N.  Y.  9. 

7  Anderson  v.  Phila.  Warehouse 
Co.,  Ill  U.  S.  479.    This  case  is  ab- 
solutely   irreconcilable    with    Na- 
tional Bank  v.  Case,  99  U.  S.  628. 
In  the  latter  case  the  transfer  was 
made  to  the  corporation  and  then 
to  the  dummy.    In  the  other  case 
the  transfer  was  to  the  president  of 
the  corporation  for  the  corporation 
and  then  to  the  dummy.    In  the 
Anderson    case    the   two     ablest 
judges  in  the  court  dissented.   Nat. 
Park  Bank  v.  Harmon,  79  Fed.  R 
891,  follows  the  case.    See  Chatam 
Bank  v.  Brobston,  99  Ga.  801,  under 
a  state  law,  contra. 

8  Pauly  v.  State  Loan  &  Trust  Co., 
165  U.  S.  606.    The  law  therefore 
ought  to  be  that  unless  the  pledgee 
causes  the  proper  entry  to  be  made 
on  the  books,  he  will  be  liable  as 
stockholder.  Chatam  Bank  v.  Brob- 
ston, 99  Ga.  801;  State  v.  Bank  of 

6 


New  England,  78  N.  W.  R  153;  Har- 
per v.  Carroll,  69  N.  W.  R  610; 
Moore  v.  Jones,  3  Woods,  53 ;  Bow- 
den  v.  Farmers'  Bank,  1  Hughes, 
307;  Hale  v.  Walker,  31  Iowa,  344; 
Magruder  v.  Colston,  44  Md.  349. 
But  the  rule  is  said  to  be  that  the 
pledgee  may  show  he  is  not  the 
holder  (Williams  v.  Am.  Nat.  Bank, 
85  Fed.  R  376),  and  that  he  is  liable 
only  by  estoppel.  Baker  v.  Nat. 
Bank,  86  Fed.  R  1006.  But  if  the 
pledgee  proved  that  he  ordered  the 
entry  correctly  made,  would  he  es- 
cape? See  cases  in  notes  3  and  4  of 
this  section. 

9  Foster  v.  Lincoln,  supra,  note  2. 
See  Laing  v.  Burley,  101  III  591, 
which  holds  the  transferee  liable 
when  the  transfer  was  not  recorded. 

1°  Robinson  v.  Beall,  26  Ga.  17; 
Cox  v.  Montague,  78  Fed.  R  845; 
but  see  Sykes  v.  Halloway,  81  Fed. 
R432. 

11  See  Illinois  statutes,  1  Starr  & 
Curtis,  ch.  16a,  sec.  9,  and  see  note, 
1  to  this  section. 


82  BANKS   AND    BANKING.  [§  50. 

shares  regardless  of  what  the  books  show  or  the  apparent 
form  of  the  transfer.12  A  father  who  bought  shares  for  his 
minor  children  and  put  them  in  their  names  was  held  to  be 
a  stockholder.13 

§50.  Stockholder  by  estoppel. —  It  has  been  said  that 
"those  persons  who  hold  themselves  or  allow  themselves  to 
be  held  out  as  owners  of  stock  are  liable  whether  they  own 
stock  or  not,"  and  that  the  rules  applying  to  ownership  of 
national  bank  stock  are  about  the  same  as  those  which  apply 
to  partnerships.1  But  the  more  correct  statement  is  this: 
One  who  allows  himself  to  be  represented  as  owner  by  the 
books  of  the  corporation,  when  he  has  knowledge  of  facts 
that  put  him  upon  notice  that  he  is  so  held  out,  will  not  be 
heard  to  dispute  his  liability.  Certain  instances  of  this  rule 
were  noticed  in  the  last  section.  In  accordance  with  this 
rule,  one  who  receives  checks  for  dividends  upon  the  stock, 
even  though  she  merely  indorses  them  without  knowledge 
of  their  contents,  will  not  be  heard  to  deny  her  liability.2 
One  who  acts  as  an  officer  of  a  national  bank,  with  con- 
structive knowledge  of  the  fact  that  to  act  as  officer  he  must 
be  the  owner  of  at  least  ten  shares,  will  not  be  heard  to  dis- 
pute knowledge  of  the  fact  that  the  books  represented  him 
to  be  the  owner  of  fifty  shares,  even  though  he  were  in  fact 
ignorant  of  the  matter.8  One  who  acts  as  a  stockholder 
with  the  knowledge  that  is  imputed  to  him  by  the  receipt 
of  dividends  will  be  held  as  a  stockholder.4  He  is  none 
the  less  a  stockholder,  though  as  officer  of  the  bank  he 

12  Da  vis  v.  Stevens,  17  Blatch.  259;  The  point  of  holding  out  was  not 

Horton  v.  Mercer,  71  Fed.  R  153;  involved  at  all,  but  the  case  was 

Case  v.  Small,  10  Fed.  R.  722;  Hub-  decided  on  the  point  that  a  man 

bell  v.  Houghton,  86  Fed.  R  547.  was  liable  as  stockholder,  because 

"Foster  v.  Chase,  75  Fed.  R.  797.  while  the  stock  was  held  in  the 

It  was  put  on  the  ground  that  the  name  of  another,  which  other  was 

minors  could  not  consent.    See  also  held  out  as  owner,  he  was  yet  the 

Kerr  v.  Urie,  87  AtL  R.  789.  real  owner. 

1  Pardee,  Cir.  Judge,  in  Case  v.  2  Keyser  v.  Hitz,  133  U.  S.  138. 

Small,  10  Fed.  R  722.    This  case  is  3Finn  v.  Brown,  143  U.  S.  56. 

a  very  good  instance  of  the  reck-  *  Stephens  v.  Follett,  43  Fed.  R 

lessness  of  judges  in  using  language.  842. 


§  51.]  STOCKHOLDERS.  83 

took  the  stock  in  order  to  protect  the  bank ; 5  nor  is  he  ex- 
onerated by  an  agreement  of  the  bank  officer  that  if  the  stock 
would  be  taken  by  the  stockholder  the  bank  would  buy  the 
shares  at  any  time  he  wished.6  So  a  man  will  not  be  heard 
to  say  that  he  was  a  trustee  of  the  stock  and  thus  exempt 
from  liability,  if  he  knowingly  permit  the  books  to  show 
him  to  be  the  owner; 7  but  even  if  the  books  show  him  to  be 
a  trustee,  he  will  be  liable  if  he  be  the  real  owner.  "Where 
there  was  an  over-issue  of  stock,  a  party  having  bought 
stock  of  the  president  of  a  bank,  who  issued  to  the  party 
new  certificates,  and,  having  retained  the  old  certificates, 
hypothecated  them,  thus  over-issuing  the  stock,  it  was  held 
that  the  new  stockholder  was  liable  as  such.8  As  to  trans- 
fer by  descent  or  by  will,  see  the  next  section. 

§  51.  Executors,  administrators,  guardians  and  trust- 
ees.—  As  already  seen,  section  5152,  Revised  Statutes  of  the 
United  States,  exempts  from  personal  liability  as  national 
bank  stockholders  persons  holding  stock  as  executors,  ad- 
ministrators, guardians  or  trustees.  The  statute  does  not 
in  express  terms  require  the  books  to  show  the  trust  relation 
of  the  stockholder  toward  his  beneficiary.  No  case  has  yet 
held  that  the  fact  cannot  be  shown  contrary  to  the  books  of 
the  bank.  In  one  case  it  is  implied  that  such  fact  could  be 
shown.1  It  follows  that  if  the  proper  orders  as  to  the  trans- 
fer have  been  given  to  the  bank  officers  and  the  trustee  is 

ftBundy  v.  Jackson,  24  Fed.  R  «Burt  v.  Bailey,  73  Fed.  R  693,  36 

€28.    But  stock  held  by  the  cash-  U.  S.  App.  676.    This  case  seems  to 

ier  as  cashier  is   not  chargeable  be  correct,  for  the  canceled  stock 

against  him  personally.    Baker  v.  ceased  to  be  stock,  its  place  being 

Old  Nat.   Bank,  86  Fed.   R  1003.  taken  by  the  new  stock.    If  the  old 

This  case  is  clearly  wrong  unless  certificates  had  been  sold  to  a  bona 

the  words  "as  cashier"  would  be  fide  purchaser,  he  would  not  have 

notice  of  the  trusteeship.  obtained  stock  by  the  over-issue. 

6Bowden  v.  Santos,  1  Hughes,  It  seems  plain,  too,  that  he  could 

158,  Fed.  Cas.  No.  1716.  not  have  been  held  as  a  stockholder. 

?  Lewis  v.  Switz,  74  Fed.  R  381;  Scovil  v.  Thayer,  105  U.  S.  143. 

Davis  v.  First  Baptist  Society,  Fed.  1  Horton  v.  Mercer,  71  Fed.  R  153. 

Cas.  No.  3633;  Welles  v.  Larrabee,  A  pledgee  is  personally  liable  only 

36  Fed.  R  866.  on   the  ground  of  negligence   or 


84  BANKS   AND   BANKING.  [§  52. 

* 

not  otherwise  estopped,  or  if  he  has  not  known  of  the  trans- 
fer to  himself,  in  neither  case  could  he  be  held  liable.2  The 
same  section  5152  of  the  Ke vised  Statutes  of  the  United 
States  makes  the  trust  estate  liable.8  Where  the-  deceased 
died,  being  a  stockholder,  it  would  seem  to  be  certain  that, 
under  this  statute,  the  executor  would  be  liable  as  an  executor 
out  of  the  funds  of  the  estate.4  It  has  been  held  that  the 
executor  would  be  so  liable  even  though  the  deceased  in 
his  life-time  had  made  a  transfer  but  the  transfer  had  not 
been  registered.5  But  where  the  executor  has  made  a  trans- 
fer of  the  bequeathed  stock  to  the  devisee  the  estate  can  no 
longer  be  held  liable.6  But  a  legatee  who  has  received  a 
legacy  ordered  to  be  paid  to  her  before  but  actually  deliv- 
ered after  the  insolvency  of  the  bank  is  liable  on  the  testa- 
tor's shares  to  the  amount  of  the  assets  received ; 7  but  the 
same  case  holds  that  in  an  action  to  charge  the  legatee  with 
assets,  the  legatee  would  not  be  held  where  the  delivery  of 
the  legacy  was  made  before  the  liability  of  the  estate  as 
stockholder  was  incurred.8  In  the  case  of  a  guardianship 
under  a  state  statute  it  was  held  that  the  estate  of  those 
minors  who  had  reached  majority  at  the  time  of  the  decree 
could  not  be  held  in  an  action  against  the  guardian.9 

§52.  Right  of  stockholder  to  transfer. —  The  right  of 
the  stockholder  to  have  a  transfer  made  on  the  books  is  ab- 
solute, unless  the  bank  has  a  lawful  claim  on  the  shares,  or 

fraud  or  estoppel    Lucas  v.  Coe,  86  Nat  Bank,  21  Fed.  R  197;  Wick- 
Fed.  R.  973.    But  see  Kerr  v.  Urie,  ham  y.  Hull,  60  Fed.  R  326. 
37  AtL  R  789.  » Davis  v.  Weed,  Fed.  Gas.  No. 

2  See  3  Thompson  on  Corp.,  sees.  3658. 

3194,  3198;  Lucas  v.  Coe,  86  Fed.  R.       »  Blackmore  v.  Woodward,  71  Fed. 

972.  R.  321,  18  C.  C.  A.  57;  Witters  v. 

'See  also  Stedman  v.  Eveleth,  6  Sowles,  32  Fed.  R  130.    Where  the 

Met.  114;  Mauser  v.  Pratt,  101  Mass,  executor  failed  to  make  a  transfer 

60;  Sayles  v.  Bates,  15  R  L  342,  as  to  himself  he  was  held  liable  as  ex- 

to  state  statutes.  ecutor.    Baker  v.  Beach,  85  Fed.  R 

<  Richmond  v.  Irons,  121  U.  a  27;  836. 

Parker  v.  Robinson,  71  Fed.  R  256,       7  Witters  v.  Sowles,  supra, 
83  U.  8.  App.  868;  Irons  v.  Manuf.       8  Witters  v.  Sowles,  supra, 

•  Mansur  v.  Pratt,  101  Mass.  60. 


§  53.]  STOCKHOLDERS.  85 

unless  the  law  forbids  the  transfer,  or  unless  the  parties  have 
by  agreement  made  the  stock  not  transferable.1  The  bank 
may  have  an  opportunity  to  satisfy  itself  of  the  genuineness 
of  the  transfer  and  of  the  capacity  of  the  parties.2  The 
bank  is  liable  for  permitting  a  transfer  upon  a  forged  power 
of  attorney  or  upon  one  executed  by  a  person  not  having 
the  capacity,  if  the  bank  has  notice  of  the  want  of  capacity.3 
The  usual  mode  of  transfer  is  by  indorsement  of  the  certifi- 
cate by  signing  the  power  of  attorney  usually  printed  on 
the  back  of  the  certificate.  The  usual  practice  recognized 
as  valid  is  to  sign  in  blank,  and  the  transferee  fills  in  the 
power  of  attorney.4  The  transfer  is  complete  when  made 
on  the  books  whether  a  certificate  be  issued  or  not.5  If  the 
articles  of  agreement  permit  a  transfer  and  no  legal  prohi- 
bition thereof  exists,  the  bank  cannot  require  its  own  claim 
to  be  paid  as  preliminary  to  a  transfer.6  If  a  transfer  be 
enjoined  by  a  proper  court  the  bank  cannot  permit  it.7  The 
national  banks  are  not  governed  by  the  laws  of  the  state  as 
to  transfers.8 

§  53.  Unrecorded  transfers. —  No  question  causes  more 
difficulty  than  the  effect  of  a  transfer  not  entered  on  the 
bank's  stock  book,  but  completed  as  between  the  parties  by 
indorsement  and  delivery  of  the  certificate.  In  the  absence 

1  Purchase    v.    New    York   Ex.    wright,  22  Wend.  348;  Lee  v.  Citi- 
Bank,  3  Robt.  164;  Helm  v.  Swig-    zens'  Bank,  5  Ohio  Dec.  21. 

gett,  12  Ind.  194;   Byne  v.  Union  8  Agricultural  Bank  v.  Wilson,  24 

Bank,  9  Robt.  433;  Johnson  v.  Laf-  Me.  273;  Keyser  v.  Hitz,  133  U.  8. 

lin,  5  Dill.  65,  103  U.  S.  800.  138;  National  Bank  v.  Watsontown 

2  Chew  v.  Bank  of  Baltimore,  14  Bank,  105  U.  S.  217. 

Md.  299.  «  Bank  of  Attica  v.Manuf.&  Trad. 

3  Chew  v.  Bank  of  Baltimore,  14  Bank,  20  N.  Y.  501.    The  same  rule 
Md.  299 ;  Pollock  v.  National  Bank,  7  applies  to  national  banks.    Bullard 
N.  Y.  274;  Peck  v.  Bank  of  Amer-  v.  Bank,  18  Wall.  589,  overruling 
ica,  16  R  I.  710.    It  has  been  held  several  circuit  courts. 

that  a  bank    is  not  liable  for  a  7  Purchase    v.    New   York    Ex. 

guardian's  transfer  in  fraud  of  his  Bank,  3  Robt.  164. 

ward's  rights.      Bank    of  Vir.  v.  8  Scott  v.  Pequonnock  Nat.  Bank, 

Craig,  6  Leigh,  399.  15  Fed.  R  494.     Contra,  Hobbs  v. 

4  Commercial    Bank     v.      Cart-  Western  Nat.  Bank,  Fed.  Cas.  6551o. 


86  BANKS   AND   BANKING.  [§  53. 

of  any  regulation  as  to  recording  transfers,  the  transfer  is 
complete  when  completed  between  the  parties.  But  where 
the  statute  provides  for  a  registration  of  the  transfer  on  the 
books  of  the  company,  as  in  the  national  bank  act,  or  when 
the  by-laws  provide  for  a  registration,  or,  what  is  the  same 
thing,1  when  the  certificates  on  their  face  are  made  trans- 
ferable on  the  books  of  the  company,  it  is  conceded  that  as 
between  the  parties  a  complete  title  passes  by  an  unrecorded 
transfer.  On  principle  the  legal  title  would  not  pass  until 
the  entry  was  recorded,  because  of  the  effect  of  the  provision 
for  registering.  An  execution  or  attachment  lien  put  upon 
the  shares  standing  in  the  name  of  the  transferror  would, 
Avhen  completed  by  a  sale,  relate  back  to  the  date  of  the 
levy.  And  the  question  is,  would  it  take  precedence  of  the 
rights  of  the  unrecorded  transferee  ?  Now  it  is  conceded  that 
the  certificates  are  not  negotiable  under  the  law  merchant 
by  all  the  well-considered  authorities.  Therefore  the  attach- 
ment or  execution  lien  being  entered  on  the  books,  when 
completed  by  sale  makes  a  legal  title  as  of  the  date  of  the 
levy,  when  the  prior  transfer  being  unrecorded  the  trans- 
feree had  but  an  equitable  title.  The  purchaser  at  the  exe- 
cution sale  becomes  a  bona  fide  purchaser  for  value  if  the 
creditor  and  the  bank  had  no  notice  of  the  unrecorded  trans- 
fer at  the  date  of  the  l^vy.  If  the  creditor  or  the  bank  had 
notice  of  the  equity  of  the  unrecorded  transferee,  neither 
the  creditor  as  purchaser  at  the  sale  nor  any  other  purchaser 
at  the  sale  would  be  a  bonafide  purchaser.2  Assuming,  then, 
that  the  creditor  and  the  bank  had  no  notice,  the  purchaser 
obtains  a  legal  title  by  the  sale,  which  legal  title  is  that  of  a 
lojiafide  purchaser.  The  conclusion  follows  that  when  equi- 
ties are  equal,  as  they  are  in  case  of  bonafide  purchasers,  the 
legal  title  will  prevail.  There  is  no  escape,  then,  from  the 

'State  v.  Mclver,  2  S.  C.  25;  Me-  court.  The  latter  is  a  verbatim  copy 
chanics'  Bank.  Asso.  v,  Mariposa  of  the  former,  but  there  are  no  quo- 
Co.,  3  Robt.  395.  In  this  case  it  is  tation  marks, 
amusing  to  compare  the  brief  of  the  2  Farmers'  Gold  Bank  v.  Wilson, 
attorney  for  the  defendant,  Wm.  M.  58  CaL  600;  Telford  Co.  v.  Gerhab, 
Evarts,  with  the  opinion  of  the  13  AtL  R  90. 


§  53.]  STOCKHOLDERS.  87 

conclusion,  on  principle,  that  a  levy  made  without  notice 
of  an  unrecorded  transfer,  either  by  the  creditor  or  the  bank, 
gives  a  good  title  as  against  an  unrecorded  transfer,  where 
the  statute  does  not  make  the  legal  and  equitable  title  in 
bank  stock  to  pass  upon  an  unrecorded  transfer,  but  where 
a  transfer  to  complete  the  title  is  provided  for  by  the  stat- 
ute or  a  by-law  or  by  the  certificates.  But  many  courts 
have  refused  to  recognize  this  plain  conclusion  out  of  a  de- 
sire to  make  corporate  stock  more  readily  transferable.  So 
that  two  very  competent  text  writers  have  taken  absolutely 
contrary  ground  upon  this  question.3  The  author  believes 
the  one  right  in  his  conclusion  as  a  legal  proposition,  al- 
though he  does  not  state  the  true  grounds;  but  the  weight 
of  the  authority,  or  dictum  at  least,  seems  to  be  with  the 
other.  The  cases  relating  to  banks  will  be  found  stated  in 
the  note  appended  below.4  A  transfer,  of  course,  after  a  levy 
would  confer  no  title  on  the  transferee.5  The  corporation 
has  sometimes  a  difficult  duty  to  perform  when  a  certificate 
for  shares  is  outstanding  and  the  purchaser  presents  a  cer- 
tificate of  sale  under  an  execution.  Unless  the  corporate 

3  See  2  Thompson  on  Corporations,  Fisher  v.  Essex  Bank,  5  Gray,  373; 
sees.  2397,  2409-2421;  also  30  Am.  People's  Bank  v.  Gridley,  91  III  457; 
Law  Rev.  223,  and  2  Cook  on  Cor-  Berney  Nat.  Bank  v.  Pinckard,  87 
porations,  seca  486,  491;  also  see  12  Ala.  577.    Against  the  attachment 
Ry.  &  Corp.  L.  J.  145.  or    execution:    Continental    Nat. 

4  In  favor  of  the  attachment  or  Bank  v.  Eliot  Nat.  Bank,  17  Fed.  R. 
execution :    Koons   v.    First   Nat.  369.    This  case  makes  the  mistake 
Bank,  89  Ind.  178,  semble;  J  ohnson  of  not  seeingthat  a  legal  title  passes 
v.  Laflin,  103  U.  S.  800,  semble.    Na-  by  the  execution  sale.    If  it  does, 
tional  Bank  v.  Watsontown  Bank,  the  legal  title  without  notice  is  bet- 
105  U.  8.  217,  and  Union  Bank  v.  ter  than   a  prior   equitable  title. 
Laird,  2  Wheat.  390,  recognize  legal  Hazard  v.  Nat.  Ex.  Bank,  26  Fed. 
title  passes  by  transfer  on '  books.  R.  94;  Doty  v.  First  Nat.  Bank,  3 
Under  prohibitory  statute  see  Pen-  N.  Dak.  9;  Nicollet  Nat.  Bank  v. 
dergast    v.   Bank   of   Stockton,   2  City  Bank,  38  Minn.  85;  Broadway 
Sawy.   116;    Skowhegan  Bank    v.  Bank  v.  McElrath,  13  N.  J.  Eq.  24; 
Cutter, 49  Me.  315.  See  also  Fort  Mad-  Clark  v.  German  Security  Bank,  61 
ison  Co.  v.  Batavian  Bank,  71  Iowa,  Miss.   611;    Bank   v.  Richards,  74 
270;   Comm.  Nat  Bank   v.  Farm-  Mo.  77,  semble;  6  Mo.  App.  454 

era'   Bank,   82   Iowa,  192;  Dutton       6  2  Cook  on  Corp.,  sec.  486. 
T.  Connecticut  Bank,  13  Conn.  493; 


88  BANKS   AND   BANKING.  [§  53. 

officers  know  that  the  certificate  is  still  in  the  hands  of  the 
judgment  debtor,  the  corporation  acts  at  its  peril  in  making 
a  transfer.  Although  in  the  particular  locality  the  execu- 
tion sale  gives  a  good  title  against  the  unregistered  trans- 
feree, yet  the  corporate  officers  cannot  know  whether  the 
creditor  had  notice  of  the  transfer,  even  though  they  know 
that  the  corporation  has  had  no  notice.  The  situation 
is  still  worse  where  the  unregistered  transfer  gives  both  a 
legal  and  equitable  title.  The  corporation  can  only  protect 
itself  by  refusing  to  transfer  except  under  a  judgment  of  the 
court.  But  the  party  demanding  the  transfer  may  sue  the 
corporation  in  conversion  instead  of  in  equity  or  mandamus. 
If  the  stock  is  fluctating  in  value  the  corporation  is  ex- 
posed to  a  further  peril  of  responding  for  the  value  of  the 
stock.  On  principle  it  would  seem  that  a  corporation  which 
is  prohibited  by  law  from  acquiring  its  own  stock  could  not 
be  sued  in  trover,  because  the  satisfaction  of  the  trover  judgr 
ment  transfers  title  in  the  stock  to  the  corporation.  Yet 
this  probably  is  not  the  law,  since  the  corporation  is  always 
liable  in  tort,  whether  the  act  be  prohibited  by  law  or  not. 
If  the  transfer  be  made  under  order  of  a  competent  court, 
the  corporation  is  released  from  liability.6  But  this  rule  is 
not  in  accordance  with  the  general  principle  of  law  that  a 
judgment  inpersonam  binds  only  the  parties  thereto.  The 
corporation  can  always  be  protected  in  some  measure  by  the 
exaction  of  security,  which  the  court  has  the  power  to  re- 
quire. But  in  view  of  these  difficulties,  as  well  as  of  the  fact 
that  the  validity  of  an  unregistered  transfer  opens  up  a  wide 
field  for  perjury  (by  enabling  a  party  to  make  a  transfer 
after  the  levy  and  then  antedating  it  in  order  to  beat  the 
levy),  the  policy,  whether  put  in  the  form  of  statutes  or  de- 
cisions, of  recognizing  unregistered  transfers  as  conveying 
more  than  an  equitable  title,  is  exceedingly  questionable.7 

6  Friedlander  v.  Slaughter  House  Chapman  v.  New  Orleans  Gas  Co., 

Co.,  81  La.  Ann.  52a    See  1  Cook  4  La.  Ann.  15a 

on  Corp.,  sees.  359,  388:  2  Cook  on  7It  will  be  found  that  in  many  of 

Corp.,  sec.  489.    See  also  Smith  v.  the  cases  courts  have  paid  little  at- 

Northampton    Bank,    4   Gush.    1;  tention  to  fundamental  principles. 


§  54]  STOCKHOLDERS.  89 

Still  further  difficulties  arise  in  deciding  as  to  which  issue  is 
good  stock,  where  a  transfer  has  been  made  with  a  certifi- 
cate outstanding.  If  the  unregistered  transfer  be  recognized 
as  binding  on  the  corporation,  the  stock  issued  without  a 
surrender  of  the  outstanding  certificate  is  a  nullity.  But  if 
the  new  stock  is  recognized  as  good  stock,  because  issued 
pursuant  to  a  sale  which  amounts  to  a  judgment  in  rem,  e.  g. 
a  tax  sale,8  or  a  forfeiture  for  non-payment  of  assessment,  or, 
in  some  jurisdictions,  a  transfer  under  an  order  of  the  court 
in  an  action  to  which  the  unregistered  transferee  was  not  a 
party,  or  because  of  a  judicial  sale  which  is  held  in  the  par- 
ticular jurisdiction  to  bind  the  unrecorded  transferee,  in  all 
such  cases  the  new  stock  becomes  the  valid  stock  and  the 
outstanding  certificates  represent  over-issued  and  void  stock.9 

§  54.  Bank's  lien  on  shares. —  It  is  settled  that  a  national 
bank  cannot  have  a  lien  upon  its  own  shares  for  claims  against 
its  stockholders.1  But  in  the  case  of  other  banks  such  a  lien 
is  provided  for  in  some  cases  by  the  charter  or  the  govern- 
ing statute,  in  others  by  a  by-law,  in  others  by  the  words  of 
the  stock  certificates.2  In  the  absence  of  such  a  provision 
the  bank  can  have  no  lien.3  The  lien  where  permitted  does 

If   stock   is   transferable    on  the  bank  could  have  a  lien  on  its  own 

books,  the  phrase  must  mean  that  shares.    Bath  Sav.  Inst.  v.  Sagada- 

by  a  transfer  on  the  books  the  title  hoc  Nat.  Bank,  36  Atl.  R  996.    The 

passes,  and  not  till  then.    This  is  court  cited  Knight  v.  Bank,  in  3 

the  legal  title,  and  the  unregistered  Cliff.,  expressly  overruled  by  the 

transferee  has  an  equitable  title  Supreme  Court,  Judge  Clifford  dis- 

until  transfer  on  the  books.  senting,  and  Bank  v.  Laird,  2  Wheat. 

8  Smith  v.  Northampton  Bank,  4  390.   Probably  the  Maine  court  pre- 
Cush.  1.  ferred  to  follow  Judge  Clifford. 

9  See  1  .Cook  on  Corp.,  sees.  284,  2  Jennings  v.  Bank  of  Cal.,  79 
388.  Cal.  323;  Wain  v.  Bank  of  N.  Amer- 

JBullard  v.  Bank,  18  Wall  589.  ica,  8   S.  &  R.  89;    Vansands   v. 

See  also  Bank  v.  Lanier,  11  Wall.  Bank,  26  Conn.  144. 

369;  Evansville  Nat.  Bank  v.  Met.  3  Merchants'  Bank  v.  Shouse,  14 

Nat  Bank,  2  Biss.   527.     But   in  Wkly.    Notes    Cas.   133;    Dana  v. 

Maine  it  appears  that  the  bench  Brown,  1  J.  J.  Marsh.  304    See  also 

and  bar  have  not  access  to  any  re-  Neale  v.  Janney,  2  Cranch  C.  C.  86; 

port  of  recent  date,  because  that  Duncan  v.  Biscoe,  7  Ark.  175. 
court  lately  held  that  a  national 


90  BANKS   AND   BANKING.  [§  54. 

not  extend  to  dividends  upon  the  stock.4  Where  the  lien  is 
provided  for  by  charter  or  by  general  statute,  which  is,  of 
course,  a  part  of  the  charter,  the  unregistered  transferee  of 
stock  takes  subject  to  the  lien,5  and  the  bank  may  refuse  to 
make  a  transfer  until  its  claim  is  satisfied.6  Such  a  lien  is 
general  in  its  nature.  It  covers  all  indebtedness  of  every 
kind  of  the  stockholder  to  the  bank  —  overdrafts,7  individual 
and  partnership  liabilities,8  liability  as  principal  debtor,9 
whether  secured  by  indorsement  or  not,10  contingent  liabil- 
ity as  an  indorser.11  But  the  lien  does  not  reach  the  indebt- 
edness of  an  intermediate  assignee  who  is  not  entered  on 
the  books,12  nor  the  indebtedness  of  a  stockholder  contracted 
after  notice  to  the  bank  of  a  transfer  by  him.13  It  has  been 
held  that  the  lien  does  not  give  the  power  to  sell.14  The 
lien  seems  to  apply  also  on  the  principle  of  subrogation  for 
the  benefit  of  the  sureties  or  indorsers  of  the  debtor.15  This 
lien  the  bank  may  waive  by  permitting  a  transfer  without 
insisting 'upon  its  right.16  One  aberrant  case  has  held  that 
the  lien  is  waived  by  taking  security;17  another,  that  it  is 

4  Brent  v.  Bank  of  Washington,       10  In  re  Morrison;  Fed.  Cas.  No.  9839. 
2  Cranch  C.  C.  517.  »  Leggett  v.  Bank  of  Sing  Sing, 

*  Union  Bank  v.  Laird,  2  Wheat  24  N.  Y.  283;  Bank  of  Ky.  v.  Bon- 

390;  Mohawk  Nat  Bank  v.  Scheneo  nie,  43  S.  W.  R.  407;  Brent  v.  Bank 

tady  Bank,  151  N.  Y.  665;  Rogers  of  Washington,  10  Pet.  596.  Contra, 

v.  Huntingdon  Bank,  12  S.  &  R.  77;  Reese  v.  Bank  of  Commerce,  14  Md. 

Farmers'  Bank  v.  Iglehart,  6  Gill,  27f. 

50 ;  Hammond  v.  Hastings,  134  U.  S.       '2  Helm  v.  Swiggett,  12  Md.  194. 
401;  Reese  v.  Bank  of  Commerce,       13Nesmith  v.  Washington  Bank,  6 

14  Md.  271.  Pick.  324;  Conant  v.  Reed,  1  Ohio 

6  Leggett  v.  Bank  of  Sing  Sing,  St.  298. 

24  N.  Y.  283 ;  Downer  v.  Zanesville  14  Tete  v.  Farmers'  Bank,  4  Brewst 

Bank,  Wright,  477.  308.  Contra,  In  re  Farmers'  Bank, 

7  Reese  v.  Bank  of  Commerce,  14  2  Bland,  394;  Hammond  v.  Hast- 
Md.  271.  ings,  134  U.  S.  401. 

8  Franklin  Bank  v.  Comm.  Bank,  15  Klopp  v.  Lebanon  Bank,  46  Pa. 
5  Ohio  Dec.  339;  Mechanics'  Bank  88. 

v.  Earp,  4  Rawle,  884  16  Nat  Bank  v.  Watsontown  Bank, 

9  Even  if  pledged  for  other  in-  105  U.  S.  217;   Hill  v.  Pine  River 
debtedness  of  the  stockholder  to  Bank,  45  N.  H.  300;  Presbyterian 
the  bank.    In  re  Peebles,  2  Hughes,  Cong.  v.  Carlisle  Bank,  5  Barr,  345. 
394  i"  McLean  v.  Lafayette  Bank,  3 


§  54:.]  8TOCKHOLDEES.  91 

waived  by  issuing  certificates  without  making  some  mention 
of  the  right  thereon,18  an  absurdly  wrong  conclusion.  Where 
a  bank  releases  its  lien  for  a  specified  time  its  lien  is  post- 
poned to  any  claim  created  in  the  released  period.19  Where 
the  lien  is  created  by  a  by-law  of  the  bank,  a  stockholder  is- 
charged  with  notice  of  the  by-law.20  But  where  the  by-law 
provided  that  the  certificates  of  stock  should  contain  on 
their  face  notice  of  the  provision  in  the  by-law  for  the  bank's 
lien  that  no  transfer  should  be  made  by  any  stockholder  in- 
debted to  the  company,  and  the  certificates  of  stock  con- 
tained no  such  notice,  and  the  transferee  had  no  notice  of 
the  by-law,  it  was  held  that  he  took  by  an  assignment  a  good 
title  free  from  any  lien  of  the  bank.21  Where  the  by-law 
prevented  a  transfer  so  long  as  the  holder  of  the  stock  was 
in  arrears  or  in  any  form  indebted  to  the  bank,  the  strict 
construction  was  adopted  that  arrears  meant  unpaid  calls, 
and  other  indebtedness  meant  indebtedness  other  than  the 
stock  subscription,  and  that,  therefore,  a  transfer  could  not 
be  refused  where  no  call  had  been  made  which  remained 
unpaid  and  where  no  other  indebtedness  existed.22  Where 
the  statute  provided  that  holders  of  bank  shares  might  trans- 
fer them  unconditionally  unless  otherwise  agreed  in  the  ar- 
ticles of  association,  a  lien  in  favor  of  the  bank  cannot  be 
created  by  a  by-law.23  The  doctrine  has  been  ventured  by 
another  court  that  a  by-law  of  this  kind  does  not  bind  judg- 
ment creditors  of  the  stockholders,  but  that  position  is,  of 
course,  untenable.24  The  bank  has  no  lien  in  the  nature  of 

McLean,  587;  Fitzhugh  v.  Bank,  3  transferee  were  charged  with  no 

T.  B.  Mon.  126,  semble.  tice  of  the   by-law.     How   could 

18  Lee  v.  Citizens'  Nat  Bank,  2  Gin.  either  be  prejudiced  by  a  failure  to 
R  298, 5  Ohio  Dec.  21.  Contra,  Reese  state  the  fact  on  the  certificate? 
v.  Bank  of  Commerce,  14  Md.  271.  But  see  note  18  to  this  section. 

19  Bank  of  America  v.  McNeil,  10  ^Kahn  v.  Bank  of  St  Joseph,  70 
Bush,  54.  Mo.  262. 

20  Tete  v.  Farmers'  Bank,  4  Brewst  23  Bank  of  Attica  v.  Manuf.  Bank, 
308.  20  N.  Y.  501. 

21  Bank  of  Holly  Springs  v.  Pin-  24  Byron  v.  Carter,  22  La.  Ann.  98; 
son,  58  Miss.  421.    This  case  is  cer-  Sewell  v.  Lancaster  Bank,  17  S.  & 
tainly  wrong.   Both  transferror  and  R  285. 


"92  BANKS   AND   BANKING.  [§§  55,  56. 

a  set-off  to  apply  the  dividends  accruing  upon  stock  after 
the  death  of  the  stockholder  upon  notes  indorsed  by  him.25 

§  55.  Statutory  prohibition  of  transfers. — Where  the 
statute  prohibits  a  transfer,  as,  for  example,  before  the  whole 
amount  of  subscription  has  been  paid  in,  no  legal  transfer  of 
the  stock  can  be  made  until  it  is  fully  paid.1  So  where  the 
right  of  the  subscriber  to  his  stock  is  forfeitable  for  failure 
to  pay  an  instalment  or  call,  no  right  in  the  stock  can  be 
transferred  before  the  instalment  is  paid,  even  though  the 
assignee  paid  the  instalment.2 

§  56.  Prohibition  of  transfers  by  agreement. —  There 
seems  to  be  authority  for  the  proposition  that  the  corpora- 
tors or  shareholders  may  agree  not  to  dispose  of  their  stock 
for  a  certain  time,  and  that  such  a  contract  may  be  specific- 
ally enforced  by  a  court  of  equity.1  A  court  has  specifically 
enforced  an  agreement  of  a  stockholder  to  sell  to  other  stock- 
holders.2 But  the  enforcement  of  such  a  contract  belongs  to 
that  receptacle  which  has  been  made  the  custodian  of  many 
remarkable  decisions,  to  wit:  the  discretion  of  the  court.8 
But  such  contracts  do  not  bind  a  lonafide  purchaser,4  nor  do 
they  prevent  a  legal  title  in  the  stock  from  passing  to  the 
transferee,  although  he  had  notice.5  But  a  by-law  of  the 
corporation  cannot  restrain  the  absolute  right  of  the  stock- 
holder to  transfer  his  stock.6  If  the  provision  against  alien- 
ability is  incorporated  in  the  articles  of  agreement,  it  would 
seem  to  follow  that  it  would  be  valid  under  some  of  the  above 
decisions,  which  have  entirely  lost  sight  of  the  general  prin- 
ciple of  law  that  any  restraint  on  alienation  of  real  or  per- 

25  Brent  v.  Bank  of  Washington,  2       2  Jones  v.  Brown  (Mass.),  50  N.  E. 
Cranch  C.  C.  517.  R.  64& 

1  Merrill  v.  Call,  15  Ma  428.  »  Re  Argus  Co.,  138  N.  Y.  557. 

2  Coleman  v.  Spencer,  5  Blackf.  .      <  Brinkerhoof-Farris  Co.  v.  Home 
195.    This  case  cannot  be  consid-    Lumber  Co.,  118  Mo.  447. 

ered  sound.    See  also  2  Cook  on  5  See  2  Cook  on  Corp.,  sec.  621o, 

<3orp.,  sec.  621o.  note  2. 

*  Williams  v.  Montgomery,  148  N.  6  2  Cook  on  Corp.,  sec.  621o. 
Y.  519. 


§§  57,  58.]  STOCKHOLDERS.  9& 

sonal  property  held  in  absolute  ownership  is  void.7  The 
obvious  expedient  of  putting  the  stock  in  the  hands  of  a 
trustee  does  not  restrain  the  alienation  by  the  beneficiary  of 
his  equitable  interest.8  Yet  if  the  stock  is  put  in  the  hands 
of  a  trustee,  who  is  given  the  voting  power,  it  is  probable 
that  some  courts  would  refuse  to  compel  the  trustee  to  trans- 
fer to  the  real  owner. 

§  57.  Eight  of  stockholders  in  bank. —  A  state  statute 
granting  to  stockholders  access  to  and  the  right  of  inspec- 
tion of  the  books  is  binding  upon  national  banks,  and  does 
not  conflict  with  sections  5240  and  5241  of  the  Revised  Stat- 
utes.1 Stockholders  in  banks  have  the  usual  remedies  as. 
against  the  directors  to  prevent  a  breach  of  duty.2  In  the 
case  of  state  banks  the  United  States  courts  are  governed 
by  the  rules  as  to  their  jurisdiction  laid  down  in  Hawes  v. 
Oakland,  104  U.  S.  450,  and  the  rule  of  the  Supreme  Court 
in  pursuance  thereof.3  The  remedies  to  inquire  into  elections 
and  abuse  of  powers  given  by  statute  do  not  call  for  particu- 
lar mention.4 

§  58.  Liabilities  of  stockholders. —  The  first  and  original 
liability  of  a  stockholder  is  that  upon  his  stock  subscription^ 
to  pay  the  full  amount  subscribed.  But  in  addition  to  this 
liability  various  statutes  have  added  an  additional  liability 
to  stockholders  for  debts  of  the  corporation.  It  is,  of  course, 
a  matter  of  common  legal  knowledge  that  no  liability  upon 
a  stockholder  as  such,  except  for  the  stock  subscription,  ex- 
ists at  common  law.  But  as  a  general  rule  statutes  hav& 

7  See  Gray,  Restraints  on  Aliena-  2  Reese  v.  Bank  of  Mont.  Co.,  31 
tion,  sec.  105  et  seq.  Pa.  78;  Manderson  v.  Coinm.  Bank, 

8  If  this  device  was  taken  merely  28  Pa.  379;  Dodge  v.  Woolsey,  18- 
to  destroy  the  alienability,  no  court  How.  331. 

ought  to  enforce  it  3Quincy  v.  Steel,  120  U.  S.  245; 

1  Winter  v.  Baldwin,  89  Ala.  483.  Dimpfell  v.  Railroad  Co.,  110  U.  S. 

Compare  as  to  the  general  right  to  211. 

inspect,  Hatch  v.  City  Bank,  1  Rob.  4  See  Albert  v.  State,  65  Ind.  413^ 

(La.)  470;  Cockburn  v.  Union  Bank*  Wiltz  v.  Peters,  4  La.  Ann.  339. 
13  La.  Ann.  289. 


$4:  BANKS   AND    BANKING.  [§  59. 

imposed  additional  liabilities  upon  bank  stockholders.  And 
these  statutes  will  doubtless  be  held  to  apply  to  all  corpora- 
tions with  banking  powers,  whether  they  are  named  banks 
or  trust  companies,  but  the  double  liability  would  only  apply 
to  that  part  of  their  business  transactions  which  was  that  of 
a  bank.  Sometimes  the  stockholders  of  the  bank  are  made 
liable  for  its  debts  upon  insolvency  or  dissolution.  In  one 
instance  found  in  State  Savings  Bank  v.  Foster,  76  1ST.  W.  R. 
499  (Mich.),  the  stock  liability  is  for  depositors,  but  not  other 
creditors.  At  other  times  they  are  made  liable  to  a  certain 
amount  for  debts  contracted  while  they  were  stockholders, 
regardless  of  a  transfer.  By  other  statutes  the  stockholders 
existing  at  the  time  suit  is  brought  are  made  liable.  In  some 
instances  both  the  stockholders  when  the  debt  was  con- 
tracted, and  those  existing  at  the  time  suit  is  brought,  are 
made  liable.  There  have  been  in  times  past  statutes  impos- 
ing on  stockholders  in  state  banks  of  issue  a  particular  lia- 
bility upon  the  circulating  notes  of  the  bank.  Under  our 
national  banking  system  the  notes  of  national  banks  are  fully 
secured.  But  the  stockholders  of  national  banks  are  made 
liable  for  an  amount  equal  to  the  amount  of  their  stock  in 
addition  to  the  stock  subscription  for  the  debts  of  the  bank. 
This  is  the  common  form  of  liability  for  bank  shareholders. 
Only  those  who  are  stockholders  at  the  time  when  insolv- 
ency impends  are  liable  under  the  national  bank  act.  There 
are  yet  other  statutes  which  make  stockholders  liable  for  cer- 
tain acts  of  the  corporation,  which  liability  is  something  in 
the  nature  of  a  penalty.  It  is  not  the  purpose  of  the  writer 
to  examine  this  subject  minutely,  for  it  is  so  complicated 
with  general  corporation  law  that  it  would  swell  this  chap- 
ter beyond  reasonable  limits.  The  subject  has  been  fully 
treated  by  excellent  authorities.1 

§  59.  Liability  on  stock  subscription,—  The  engagement 
which  a  stockholder  makes  when  subscribing  for  stock  is  to 
pay  the  amount  of  his  stock  subscription.  This  engagement 

1  See  3  Thompson  on  Corp.,  sees,  extensive  use  of  a  learned  note,  3 
2925-3843,  who  must  have  made  an  Am.  St  R.  806. 


§  59.]  STOCKHOLDERS.  95 

is  a  contract  with  the  corporation  which  becomes  binding  as 
soon  as  the  corporation  is  formed.  This  capital  fund  must 
be  paid  to  the  corporation.  If  the  statute  requires  payment 
in  specie  it  must  be  so  made.1  If  the  law  of  the  particular 
jurisdiction  permits  a  payment  in  something  else  than  money, 
payment  may  be  so  made.2  The  contract  may  be  avoided, 
it  is  true,  on  the  ground  of  fraud  if  the  subscriber  is  not 
estopped  from  making  that  defense.3  But  conceding  a  valid 
subscription,  the  subscribed  capital  becomes  the  security  of 
the  creditors,  and  the  stockholders  are  powerless  to  make 
any  arrangement  among  themselves  relieving  them  from  this 
liability.4  Nor  can  this  capital  stock  be  divided  up  among 
the  stockholders  to  the  prejudice  of  the  creditors  of  the  cor- 
poration.5 If  a  stockholder  has  given  a  note  to  the  corpora- 
tion in  payment  of  his  subscription,  he  cannot  defend  against 
it  on  the  ground  that  the  corporation  had  no  power  to  take  it.6 
Nor  can  a  stockholder  escape  this  liability  by  showing  that 
the  bank  was  not  properly  organized ; 7  but  it  has  been  held 
that  a  violation  of  law  in  organizing  the  bank  would  be 
pleadable  against  this  stock  subscription.8  Even  this  decision 
is  wrong  unless  it  is  explainable  on  the  theory  that  it  was  a 
contract  which  the  law  forbade.  The  state  can  be  compelled 
to  meet  this  liability.9  It  will  not  avail  the  stockholder  to 
show  that  he  has  paid  the  notes  of  the  bank  up  to  the  extent 
of  his  liability,10  nor  that  he  has  paid  a  judgment  against 

1  King  v.  Elliot,  5  Smedes  &  M.  6  Finnell  v.  Sandford,  17  B.  Mon. 
428,  on  a  statutory  implication.  748;    Farmers'    Bank  v."  Jenks,  7 

2  See  §  19,  supra.  Mete.  592. 

3  See  3  Am.  St.  R.  824  et  seq.,  in  7  Palmer  v.  Lawrence,  3  Sandf. 
note;    Bissell  v.  Heath,  98  Mich.  161. 

472;  In  re  Empire  City  Bank,  6  8  North  Missouri  Co.  v.  Winkler, 

Abb.  Pr.  385,  and  see  §  48,  ante.  33  Mo,  354.   If  it  had  been  the  stat- 

4  Sagory  v.  Dubois,  3  Sandf.  Ch.  utory  liability,  this  defense  would 
466;  Palmer  v.  Lawrence,  3  Sandf.  have    been    irrelevant    beyond    a 
161;  Dayton  v.  Borst,  7  Bosw.  115.  doubt. 

8  Wood  v.  Dummer,  3  Mason,  308;  9Curran  v.   Arkansas,   15  How. 

Bank  of  St.  Mary's  v.  St.  John,  25  304.    See  note  to  §  48,  ante. 

Ala.  566,  a  case  where  the  directors  10  Marsh  v.  Burrows,  1  Woods,  463. 

and  all  who  participated  were  held  See  §  315,  notes  15  and  16,  post. 
liable  for  the  moneyand  for  profits. 


96  BANKS   AND   BANKING.  [§§  60,  61. 

himself  as  a  partner  responsible  for  the  bank's  debts.11  If  the 
subscriber  sells  his  stock  to  the  bank  he  is  still  liable,12  but 
it  has  been  held  otherwise.  But  a  valid  transfer  completed 
and  assented  to  by  the  bank  releases  the  original  subscriber, 
unless  a  statute  makes  him  liable.13  The  authorities  hereto- 
fore cited  as  to  the  effect  of  a  transfer  when  not  in  good 
faith  or  for  the  purpose  of  avoiding  liability  are  all  in  point 
here.14  The  right  to  call  in  unpaid  stock  subscriptions,  how- 
ever, it  has  been  held  in  a  case  of  doubtful  authority,  may 
be  taken  away  by  statute  as  to  debts  contracted  after  the 
statute  was  passed.15  The  ruling  shows  the  result  of  foolish 
schemes  for  state  banking. 

§  60.  Statutory  modifications. —  Some  instances  occur 
where  the  statute  makes  the  original  subscriber  a  guarantor 
of  the  payment  of  the  stock  subscription  by  a  transferee.1 
Statutes  which  were  works  of  supererogation  have  been 
passed  declaring  the  stockholders  liable  for  unpaid  subscrip- 
tions. This  is  merely  declaring  the  liability  that  the  law 
already  imposed.  Courts  have  in  some  instances  construed 
statutes  making  the  stockholder  liable  for  the  amount  of  his 
stock  to  be  declaratory  of  a  liability  to  the  amount  of  the 
original  subscription,  but  not  a  double  liability.  These  stat- 
utes have  some  bearing  upon  the  matter  of  remedy.1 

§  61.  Remedies  upon  stock  subscriptions. —  The  unpaid 
stock  subscription  belongs  to  the  corporation,  and  the  method 

11  Bates  v.  Lewis,  8  Ohio  St.  459.  is  wrong.   See  Hawthorne  v.  Calef, 
The     payment     was     after     suit  2  Wall  10,  which  holds  the  double 
brought.  liability  to  be  an  unrepealable  con- 

12  In  re  Reciprocity  Bank,  22  N.  Y.  tract.    But  the  original  stock  sub- 
9.     Contra,  Robinson  v.  Bank  of  scription  must  be  a  contract  be- 
Darien,  18  Ga.  65.   This  latter  bank  tween  all  the  stockholders.     It  is 
was  well  named.    See  10  Macau-  mere  folly  to  say  the  legislature 
lay's  England,  185.  can  vary  private  contracts. 

13  Cowles  v.  Cromwell,  25  Barb.  1  Marr  v.  Bank  of  West  Tennes- 
413.  see,  4  Lea,  578;  Harper  v.  Carroll, 

"See  §§  49,  50,  ante.  69  N.  W.  R  610  (Minn.). 

15  Robinson  v.  Bank  of  Darien,  18        l  See  next  section. 
Ga.  65.    If  it  is  a  contract  this  case 


§  61.]  STOCKHOLDERS.  97 

of  obtaining  the  subscription  is  for  the  proper  authority  in 
the  corporation  to  make  a  call.  If  the  stockholder  does  not 
pay  he  is  suable  at  law  upon  his  contract;  the  form  of  the 
action,  since  the  contract  is  a  specialty,  is  either  debt  or  cove- 
nant at  common  law.  But  if  the  corporation  will  not  make 
the  call,  a  creditor's  bill  lies  in  favor  of  the  creditor  who 
has  exhausted  his  remedy  against  the  corporation,1  or  where 
the  pursuit  of  that  remedy  would  be  useless.2  Mandamus 
also  lies  in  some  jurisdictions,  and  on  principle  wherever  the 
common  law  is  in  force,. to  compel  the  proper  authorities  of 
the  corporation  to  make  a  call.3  But  this  remedy  is  cum- 
brous and  little  used,  and  in  some  jurisdictions  is  practically 
denied.4  Where  the  unpaid  subscription  is  due  by  call  and 
unpaid,  the  creditor  may  garnish  the  corporation,5  and  in 
one  state  even  when  not  due,6  but  this  ruling  is  anomalous.7 
But  the  remedy  in  equity  is  complete,  and  the  court,  where 
the  assets  are  insufficient,  will  make  a  call  for  the  unpaid 
subscription  and  may  compel  discovery  from  the  stockhold- 
ers. The  judgment  against  the  corporation  is  conclusive 
upon  the  stockholders.  Since  the  unpaid  subscriptions  are 
an  asset  of  the  corporation,  they  pass  to  the  assignee  or  re- 
ceiver, who  may  sue  upon  them  in  equity,  joining  all  the 
stockholders  or  some  of  them.8  After  a  receiver  has  been 
appointed,  a  repeal  of  the  statute  under  which  he  was  ap- 
pointed will  not  prevent  his  prosecution  of  the  suit.9  But 
where  the  remedy  is  pursued  by  the  creditor,  it  is  sometimes 
desirable  that  he  proceed  at  law  on  account  of  his  chance 
for  a  priority.  In  such  case  the  law  of  the  particular  juris- 
diction must  settle  the  remedy.  Where  the  statute  enforces 

1  See  3  Am.  St.  R.  810  et  seq.,  in  "  Robertson  v.  Noeninger,  20  111. 
nota  App.  227.   See  Gasch  v.  World's  Fair 

2  See  last  citation.  Excursion  and  Transp.  Co.,  59  I1L 

3  Patterson  v.  Lynde,  112  111.  196,  App.  391. 

for  foreign  corporation.  7  Lane's  Appeal,  105  Pa.  49. 

4  Ward  v.  Griswold  Co.,  16  Conn.  8  Robinson  v.    Carey,  8  Ga.  537. 
593;  Dalton  R.  R.  Co.  v.  McDaniel,  He  may  sue  at  law  if  a  call  has 
56  Ga.  191.  been  made. 

5  See  3  Am.  St.  R.  807,  in  note;  9  Farmers'  Bank  v.  Jenks, 
but  see  note  7,  infra.  592. 

7 


98  BANKS   AND   BANKING.  [§§  61»,  62. 

the  liability  for  unpaid  subscriptions  and  makes  the  stock- 
holder liable  therefor,  it  would  seem  on  principle  that  the 
liability  created  was  a  legal  liability  and  no  longer  cogniza- 
ble solely  in  equity.  So  one  case  has  held,10  but  other  courts 
have  decided  otherwise.11 

§  61a.  Other  questions  as  to  this  liability,  —  The  right  of 
the  creditor  to  proceed  by  bill  in  equity  accrues,  of  course, 
when  he  has  exhausted  his  remedy  at  law.  But  where  the 
bank  has  refused  payment,  or  has  become  insolvent,  the  right 
accrues  at  once.1  In  a  suit  by  a  creditor  in  equity,  the  cor- 
poration is  a  necessary  party  to  the  action,  since  the  unpaid 
subscription  belongs  to  it.2  When  the  remedy  against  the 
bank  is  barred,  it  is  also  barred  against  the  stockholder,3 
and  the  statute  begins  to  run  from  the  accrual  of  the  liabil- 
ity.* When  the  bank's  remedy  against  the  stockholder  is 
barred,  the  creditor  is  also  barred  from  proceeding  against 
him. 

§  62.  Nature  of  statutory  liability  for  debts.—  The  va- 
rious liabilities  for  debts  of  the  bank  created  by  statute 
against  bank  stockholders,  whatever  the  nature  of  them  may 
be,  whether  primary  or  secondary,  whether  joint  or  several, 
have  one  feature  in  common,  to  wit:  they  are  all  contract- 
ual. Ordinarily  such  a  contractual  relation  would  be  one 
in  its  nature  ;  l  and  as  pointed  out  by  the 


10  Smith  v.  Londoner,  5  CaL  365,  quire  equal    distribution    of   the 

citing  two  Illinois  casas.    See  also  assets. 

Stephens  v.  Fox,  83  N.  Y.  313,  and  l  Wood  v.  Dummer,  3  Mason,  308. 

cases  cited.  2  Wood  v.  Dummer,  supra, 

"Patterson  v.  Lynde,  106  U.S.  »  Fleischer  v.Rentchler,  17  Brad  w. 

519,  citing  an  Oregon  case.    The  402. 

court  fails  to  see  that  the  statute  4  Godfrey  v.  Terry,  97  U.  S.  171  ; 

creates  a  gtwm-contract  where  be-  Baker  v.  Atlas  Bank,  9  Mete.  182; 

fore  only  a  remedy  in  equity  ex-  Long  v.  Bank  of  Yanceyville,  90 

isted,  and  therefore  gives  a  remedy  N.  C.  405;  Amer  v.  Armstrong,  6 

at  law.   The  cases  in  note  10,  supra,  Pa.  Co.   Ct.  R.  392.    These  cases, 

are  therefore  correct,   unless  the  while  not  in  point  as  to  the  facts, 

bank  was  insolvent,  when  the  stat-  are  in  point  as  to  the  principle. 

ute  in  some   states  is  held  to  re-  lfhis  distinction  between  con- 


§  62.]  STOCKHOLDERS.  99 

Supreme  Court  of  the  United  States,  a  quasi-con  tract  is  not 
a  contract  that  is  protected  by  the  constitutional  prohibition 
against  the  states  of  impairing  the  obligation  of  a  contract.2 
The  distinction  becomes  of  importance  in  case  it  is  desired 
to  issue  a  writ  of  attachment.  Many  statutes  permit  a  writ 
of  attachment  to  be  issued  upon  a  cause  of  action  arising 
out  of  a  contract,  express  or  implied.  Such  a  contract  to  be 
implied  must  be  one  implied  as  an  actual  agreement  of  the 
parties,  not  one  implied  contrary  to  the  intention  of  the  par- 
ties, or  one  arising  from  a  statute  as  a  <2"M<m'-contract.  There- 
fore if  this  statutory  liability  is  a  quasi-contrsict  in  those 
jurisdictions  just  spoken  of,  the  writ  ol'  attachment  would 
not  lie  upon  it,  nor  would  it  be  protected  against  a  law  tak- 
ing the  liability  away  as  to  future  contracts.  But  it  has 
been  erroneously  decided  by  the  highest  authority  that  this 
liability  of  stockholders  is  a  genuine  contract,  because,  it  is 
said,  being  a  provision  of  law,  it  is  as  if  written  into  the  ar- 
ticles of  agreement  of  the  corporation  as  a  part  thereof.3  It 
has  been  held  that  it  cannot  be  repealed  by  a  state  statute,4 
because  the  obligation  of  a  contract  would  be  impaired. 
This  decision  was  made  through  a  total  misconception.  The 

tract  and  quasi-contra,ct  is  one  that  also    Corning    v.    McCullough,    1 

courts  have  much  confused,  but  it  Comst.  47.    But  the  court  in  First 

is  important.    See  Keener,  Quasi-  Nat.  Bank  v.  Hawkins,  79  Fed.  R. 

Contract,  ch.  I.    Prof.  Wigmore,  in  51,  held  it  a  quasi-contract,  in  seem- 

his  classification,  25  Am.  Law  Rev.  ing  ignorance  of  this  decision.   The 

695,  ignores  customary  and  statu-  holding  in  the  case  just  cited  was, 

tory  duties  as  part  of  the  law  of  however,  perfectly  correct,  but  has 

quasi-con  tract.    It  was  even  held  been  re  versed  in  the  Supreme  Court, 

expressly  by  a  court  of  high  author-  First  Nat.  Bank  v.  Hawkins,  174 

ity  that  this  liability  was  not  one  U.  S.  364 

of  contract,  but  was  gwem-contract-  4  Hawthorne     v.     Calef,    supra. 

ual.    First  Nat.  Bank  v.  Hawkins,  While  the  decision  may  be  correct, 

79  Fed.  R  51  (C.  C.  A.).    See  Amer  the  reasons  given  for  it  are  per- 

v.  Armstrong,  6  Pa.  Co.  Ct.  R.  892.  f ectly  erroneous.  The  statutory  lia- 

2  Louisiana  v.  New  Orleans,  109  bility  is  a  gucm'-contract,  but  when 
U.  S.  285.  the  obligation  has  once  arisen  it 

3  Hawthorne  v.  Calef,  2  Wall.  10.  is  property,  and  a  statute  cannot 
This  case  was  argued  by  eminent  abolish  it,  because  the  act  would 
counsel,  but  the  idea  of  quasi-con-  be  confiscation.    See  §  128,  note  10, 
tract  was  not  even  suggested.    See  post. 


100  BANKS   AND   BANKING.  [§  63. 

obligation  may  be  enforced  in  another  state,  because  it  is 
not  penal  in  its  nature.8  It  survives  against  the  personal 
representative  of  a  deceased  stockholder.6  It  covers  all  man- 
ner of  debts  and  liabilities  that  fall  within  the  terms  of  the 
statute.7  The  word  "  debts,"  in  these  statutes,  seems  to  mean 
every  kind  of  a  contractual  claim ;  but  a  claim  for  a  tort  does 
not  become  a  debt  because  it  is  reduced  to  a  judgment, 
which  is  ordinarily  called  a  debt  of  record.8  These  decis- 
ions are  erroneous,  because  founded  on  a  misconception  of  a 
^wosz-contract.  There  are  some  liabilities  against  stockhold- 
ers which  are  penal  in  their  nature  and  not  enforced  in  other 
states.9  The  remedy  of  special  nature  provided  will  not  be 
applied  in  another  state.10 

§63.  General  character  of  liability. —  The  statutes  are 
so  varied,  and  the  character  of  the  liability  established  so 
different,  that  it  is  difficult  to  attain  any  general  rule.  But 
the  power  of  the  legislature  to  impose  the  liability  as  to 
future  debts  exists  wherever  the  right  to  alter  the  charter  has 
been  reserved,1  and  it  seems  that  even  without  such  a  power 
reserved  the  legislature  can  impose  the  liability  upon  the 
stockholders  as  a  condition  to  the  corporation  further  doing 
business,  which  imposition  is  valid  as  to  all  the  stockholders 
who  continue  in  the  corporation,2  certainly  as  to  those  who 
accept  the  condition.3  As  to  the  rule  of  construction  to  be 
adopted  for  such  statutes,  some  states  have  held  they  must 

•Flash  v.  Conn,  109  U.  S.  371;        ^Sayles  v.  Brown,  40  Fed.  R  8. 

Nimio  v.  Iron  Works,  25  W.  Va.  "  Christensen  v.  Eno,106N.  Y.97; 

184.    But  see  Post  v.  Toledo  R  R  Lowry  v.  Inman,  46  N.  Y.  119. 
Co.,  144  Mass.  341,  which  is  put  upon        l  Sherman  v.  Smith,  1  Black,  587 ; 

grounds  of  procedure.    Lawler  v.  Allen  v.  Walsh,  25  Minn.  543;  Gray 

Burt,  7  Ohio  St  340,  affirms  that  v.  Coffin,  9  Gush.  192;  Heidenger  v. 

the  liability  is  in  tort  Spruance,  101 11L  278. 

6  Richmond  v.  Irons,  121  U.  S.  27;        2  u.  S.  Trust  Co.  v.  U.  S.  Fire  Ins. 
Wickham  v.  Hull,  60  Fed.  R.  326.  Co.,  18  N.  Y.  199;  In  re  Reciprocity 
But  see  New  England  Bank  v.  New-  Bank,  22  N.  Y.  9;  In  re  Oliver  Lee 
port  Steam  Fac.,  6  R  L  154.  &  Co.'s  Bank,  21  N.  Y.  9. 

7  See  3  Am.  St  R  844,  in  note.  *0wen  v.  Purdy,  12  Ohio  St  73. 

8  See  last  citation. 


§  64.]  STOCKHOLDERS.  101 

be  strictly  construed,4  others  liberally;5  but  the  better  rule 
seems  to  be  that  they  should  be  given  a  reasonable  construc- 
tion.6 There  seems  to  be  a  general  agreement  among  the 
different  states  upon  the  proposition  that  the  liability  in- 
curred by  the  stockholders  is  not  that  of  sureties  or  guaran- 
tors,7 although  in  most  cases,8  though  not  in  all,9  an  ascertain- 
ment by  some  officer,  sometimes  a  sheriff  with  an  execution, 
sometimes  a  comptroller  of  the  currency,  is  required  that  the 
assets  of  the  corporation  are  insufficient  to  pay  the  debts  of 
the  corporation.  The  liability,  however,  is  that  of  principal 
debtor,10  except  in  a  few  instances  where  there  have  been 
anomalous  rulings.11  This  liability,  too,  the  creditor  may 
waive,  either  by  his  express  contract  or  by  conduct.12  The 
liability  cannot  be  created  by  a  by-law  or  by  the  form  of 
the  certificates,  but  stockholders  may  make  themselves  so 
liable  by  conduct  amounting  to  an  estoppel,  or  by  an  express 
agreement.13 

§  64.  Joint  or  several  liability. —  Whether  the  liability 
created  by  these  statutes  is  joint  or  several  has  an  important 
bearing  upon  the  remedy  to  be  adopted  in  order  to  enforce 
it.  It  seems  plain  that  where  the  statute  places  no  limit 
upon  the  extent  of  the  liability  it  is  joint.1  But  wherever 

«  Appeal  of  Gunkle,  48  Pa.   13;  R  197;  Fuller  v.  Ledden,  87  111.310; 

Baker  v.  Atlas  Bank,  9  Met.  182.  Coleman  v.   White,   14  Wis.   762; 

» See  3  Am.  St.  R.  836.  s.  c.,  80  Am.  Dec.  797;  Schalucky 

•  See  last  note.  v.  Field,  124  111.  617;  S.  C.,  7  Am.  St. 

7  See  2  Morawetz  on  Corp.,  sec.  R.  397;  Mitchell  v.   Beckman,  64 
879;  Hewett  v.  Adams,  54  Me.  206;  Cal.  117. 

Sterne  v.  Atherton,  51  Pac.  R.  791  n  Wilson  v.  Book,  13  Wash.  676. 

(Kan.).  But  this  opinion  amounts  only  to 

8  Hastings  v.  Barnd,  75  N.  W.  R.  saying  that  the  assets  must  be  ex- 
49;  McLaughlin  v.  O'Neil,  51  Pac.  hausted.    See  3  Am.  St.  R  851,  in 
R.  251;  Pickering  v.  Hastings,  76  note. 

N.  W.  R  587.  12  New  England  Bank  v.  Newport 

9  State   v.    Union    Stock    Yards    Steam  Fac.,  6  R  L  154;  Van  Horn 
Bank,  70  N.  W.  R.  752  (Iowa) ;  Barnes    v.  Whitlock,  26  Wend.  43. 

v.  Arnold,  51  N.  Y.  Supp.  1109.  13See  3  Am.  St.  R.  835,  in  note. 

10  Hobart  v.Johnson,  8  Fed.  R.  493;        JShafer  v.  Moriarity,  46  Ind.  9; 
Irons  v.  Manuf.  Nat.  Bank,  21  Fed.    Doming  v.  Bull,  10  Conn.  409. 


102  BANKS   AND   BANKING.  [§  64:. 

there  is  a  limit  placed  upon  the  liability,  as,  for  example, 
where  it  is  in  proportion  to  the  stock  up  to  a  certain  amount, 
or  where  it  is  double  the  value  of  the  stock  held,  the  liabil- 
ity must  be  a  several  one.2  The  reason  for  this  distinction 
is  plain:  in  the  first  case,  unless  the  liability  be  joint,  one 
stockholder  could  be  sued  for  all  the  debts  of  the  institution; 
but  in  the  second  case,  the  liability  being  of  a  varying 
amount  as  to  different  stockholders,  it  must  be  several.  It 
is  true  that  some  statutes  declare  that  the  stockholders  shall 
be  jointly  and  severally  liable,  or  as  partners,3  yet,  if  the 
liability  is  in  proportion  to  the  stock,  it  must  be  several. 
Therefore,  as  to  any  of  these  statutes,  it  is  a  confusion  of 
terms  to  say  that  the  liability  is  that  of  partners,4  even 
where  the  statute  makes  the  corporators  liable  for  all  debts 
to  the  amount  of  their  stock,  regardless  of  any  exhaustion 
of  the  assets.5  Since  the  liability  is  generally  several,  if  it 
is  ratable  there  can  be  no  increased  liability  thrown  upon 
one  stockholder  by  reason  of  the  fact  that  there  are  insolv- 
ent stockholders,6  although  if  the  liability  is  joint  that  re- 
sult is  obtained,  in  effect,  by  a  judgment  against  the  joint 
obligors,  and  a  levy  of  execution  upon  those  able  to  respond. 
A  distinction  is  made  in  these  statutes  between  a  provision 
rendering  a  stockholder  individually  liable  to  an  amount 
equal  to  his  stock,  and  a  provision  making  the  stockholders 
responsible  to  the  amount  of  their  stock  equally  and  ratably, 
or  not  one  for  the  other.7 

2  Kennedy  v.  Gibson,  8  Wall  498;  is  held  to  impose  a  liability  equally 
United  States  v.  Knox,  102  U.  S.  and  ratably  upon  stockholders.  See 
422.  In  re  Hollister  Bank,  27  N.  Y.  393. 

3  See  Thompson  v.  Meisser,  108  7Dupee  v.  Swigert,  127  111.  494. 
Ill  359.    See  note  7,  infra.  The  reason  is  that  the  first  provis- 

4  2  Morawetz  on  Corp.,  sec.  878.  ion  makes  the  stockholder  liable 
See  Coleraan  v.  White,  14  Wis.  700.  for  that  amount  regardless  of  the 

5  Culver  v.  Bank,  64  111.  528.    See  situation  of  the  other  stockholders, 
also  Matthews  v.  Albert,  24  Md.  527;  but  the  second  provision  requires 
Norris  v.  Johnson,  84  Md.  485.  a  computation  of  the  whole  liabil- 

6  United  States  v.  Knox,  102  U.  S.  ity  and  a  division  thereof  accord- 
422;  Crease  v.  Babcock,  10  Met  524  ing  to  the  amount  of  stock  held. 
This  must  be  so  where  the  statute 


§§  65,  66.]  STOCKHOLDERS.  103 

§  65.  Who  can  enforce  liability. —  This  statutory  liability, 
being  imposed  for  the  benefit  of  creditors,  belongs  prima- 
rily to  them.1  Unless  it  is  so  provided  by  statute,  impliedly 
or  expressly,  the  suit  upon  this  statutory  liability  cannot  be 
brought  by  the  corporation,  nor  by  its  receiver  or  assignee 
suing  for  it.2  Since  the  obligation  is  a  <?w<m-contract,  as 
pointed  out  in  section  62,  'ante,  and  is  double  the  stock  sub- 
scription, a  close  analysis  would  show  that  it  is  simply  a 
doubling  of  the  stock  subscription,  and  therefore  the  other 
party  to  the  contract  is  the  corporation.  But  the  other  idea 
is  too  firmly  rooted  to  be  disturbed.  In  the  case  of  national 
banks  it  was  originally  held  that  the  receiver  of  the  bank 
was  the  proper  party  to  bring  the  suit;3  but  this  rule  has 
now  been  changed  by  statute  and  it  may  be  brought  by 
creditors 4  as  well  as  the  receiver.  But  if  the  receiver  re- 
fuses to  bring  the  suit  the  creditors  may  do  so,5  even  though 
the  state  statute  gives  the  right  to  the  receiver  or  some  one 
else. 

§  66.  Who  liable. —  There  is  a  diversity  among  the  stat- 
utes as  to  those  who  are  liable  to  respond  to  this  liability. 
If  the  statute  names  the  particular  class  of  stockholders  who 
are  liable,  no  difficulty  is  met.  Sometimes  the  statute  fixes 
the  liability  upon  those  who  are  stockholders  when  the 
debt  was  created,  and  a  certain  time  thereafter.1  Under 
statutes  that  do  not  fix  the  class  of  stockholders  liable,  it 
has  been  variously  held  that  stockholders  at  the  time  the 
debt  was  contracted,2  stockholders  at  the  time  payment  of 

1  Richmond  v.  Irons,  121  U.  S.  21 ;  »  Kennedy  v.  Gibson,  8  Wall.  498; 
Jacobson  v.  Allen,  20  Blatchf.  525;  Casey  v.  Galli,  94  U.  S.  674 
Steinke  v.  Loofbourrow,  54  Pac.  R  4  Harvey  v.   Lord,   11   Biss.  144; 
120;  Runner  v.  Dwiggins,  46  N.  E.  Peters  v.  Foster,  56  Hun,  607;  Irons 
R.  580,  36  L.  R  A.  645.    Compare  v.  Manufacturers'  Nat.   Bank,   17 
Farmers'  Trust  Co.  v.  Funk,  49  Neb.  Fed.  R.  308;  s.  c.,  27  Fed.  R.  591. 
353.    See  §  329,  post,  notes  13,  14,  5  Anderson  v.  Seymour,  73  N.  W. 
15, 16,  17.  R  171,  for  a  state  statute. 

2  See  cases  last  cited;  Worth  v.  *  Harper  v.  Carrol,  62  Minn.  152. 
Piedmont  Bank,  28  S.  E.  R  488;  2  Moss  v.  Oakley,  2  Hill,  265. 
Ueland  v.  Haugan,  73  N.  W.  R  169. 


101  BANKS   AND    BANKING.  [§  67. 

the  debt  was  refused,3  stockholders  at  the  time  of  suit 
brought,4  or  stockholders  at  the  time  insolvency  impended,5 
are  meant.  It  is  held  even  that  both  the  stockholders  at 
the  time  the  debt  was  contracted  and  when  the  action  was 
brought  are  liable.6  Where  a  stockholder  who  is  such  at 
the  time  the  debt  was  contracted  is  made  liable,  a  transfer 
does  not  relieve  him  of  this  liability,  and  the  contraction  of 
the  debt  would  seem  to  cover  an  instalment  of  a  debt  fall- 
ing due.7  Where  those  are  made  liable  who  were  stockhold- 
ers at  the  time  the  action  was  brought  or  insolvency  im- 
pended, a  transfer  in  good  faith,  and  not  colorable  nor  for 
the  purpose  of  evading  the  responsibility,  nor  made  after 
insolvency,  relieves  the  transferror  of  liability.8  The  fact 
that  the  stock  is  not  paid  for  in  full  of  the  subscription  price 
has  no  bearing  upon  the  statutory  responsibility.9 

§  67.  Remedy,  whether  at  law  or  in  equity. —  This  sub- 
ject is  involved  in  the  greatest  confusion.  It  seems  extraor- 
dinar}^  that  courts  can  reach  such  totally  different  con- 
clusions about  a  simple  matter.  In  the  first  place,  it  is 
conceded  that  if  the  statute  gives  a  special  remedy  in  the 
particular  forum  where  the  suit  is  brought,  that  remedy 
must  be  followed.  Since  no  one  has  a  vested  right  in  a  mere 
remedy,  the  remedy  may  be  changed,  but  not  so  as  to  de- 
prive the  complainant  of  all  remedy.1  But  the  statutes  are 

•Bond  v.  Appleton, 8  Mass.  473.  'See  3  Am.  St.  R  860  et  seq.,  in 

4  Cleveland  v.  Burnham,  55  Wis.    note. 

598;  Middleton  Bank  v.  Magill,  5  8  See  §§  46-53,  ante. 

Conn.  28.  9See  Matthews  v.  Albert,  24  Md. 

5  As   under   national  bank   act.  527;  Wheeler  v.  Millar,  90  N.  Y.  353. 
See  §  70,  post.  l  Thompson  on  Liability  of  Stock- 

6Curtiss  v.  Harlow,  12  Met  3;  holders,  §73;  Hawthorne  v.  Calef, 

Holyoke    Bank    v.    Burnham,    11  2  Wall  10.    All  matters  of  remedy 

Cush.  183;  Brown  v.  Hitchcock,  36  are  governed  by  the  law  of  the 

Ohio  St   667;  Sayles  v.  Bates,  15  forum  where  suit  is  brought.    Spe- 

R  I.  342;  Freeland  v.  McCullough,  cial  remedies  given  where  the  right 

1  Denio,  414;  Root  v.  Sinnock,  120  accrued,  but  not  where  remedy  is 

111.  350.    The  transferror  is  some-  sought,  will  not  be  applied  in  the 

times  made  surety  for  the  trans-  latter  forum.    Lowry  v.  Inman,  46 

feree.    Marr  v.  Bank  of  West  Ten-  N.  Y.  119;  Christensen  v.  Eno,  106 

nessee,  4  Lea,  578.  N.  Y.  97. 


§  67.]  STOCKHOLDERS.  105 

frequently  silent  as  to  the  remedy,  and  the  courts  are  left 
to  fix  some  rule  that  will  be  followed.  If,  as  already  pointed 
out,  this  liability  is  one  of  ^wasz'-contract  or  contract,  there 
ought  to  be  no  doubt  that  an  action  at  law  would  lie  upon 
it.  There  might  difficulty  arise  in  the  matter  of  proof,  but 
that  ought  not  to  affect  the  legal  right.  It  is  perfectly  con- 
sistent with  the  foregoing  proposition  that  a  suit  in  equity 
would  also  lie  for  the  purpose  of  avoiding  a  multiplicity  of 
actions.2  It  is  also  perfectly  consistent  with  this  proposition 
that  the  action  at  law  would  not  lie  until  the  party  had  ex- 
hausted his  remedy  against  the  corporation.  The  advantage 
for  the  action  at  law  is  that  thereby  the  first  creditor  suing, 
or  at  any  rate  first  getting  a  judgment,  obtains  a  priority,  of 
which  he  cannot  be  deprived  by  the  person  owing  the  lia- 
bility,3 and  he  is  not  compelled  to  share  the  fruits  of  his 
diligence  with  any  other  creditor,  as  he  would  be  compelled 
in  equity.  In  the  next  place  the  creditor  can  single  out  one 
stockholder  who  is  most  conveniently  situated  to  be  sued, 
and  sue  him  alone  without  being  troubled  with  the  delay  or 
the  expense  of  services  upon  numerous  parties  defendant. 
Again,  the  stockholder  in  such  an  action  could  not  set  off  any 
debt4  which  the  corporation  owed  to  him,  as  he  might  do  if 
sued  in  equity.5  Nor  if  the  suit  is  at  law  could  it  be  treated 
as  a  creditor's  bill  and  the  judgment  at  law  required  to  be 
that  of  the  forum  where  the  equitable  remedy  is  sought.6 
But  when  the  decisions  are  consulted  they  speak  "a  various 

2  Parker  v.  Carolina  Sav.  Bank,  Harrison,   12    Bradw.  457,  semble, 

31  S.  E.  R.  673  (S.  C.).  contra,  and  Boyd  v.  Hall,  56  Ga.  563. 

»Thebus  v.  Smiley,  110  III  316;  » Welles  v.  Stout,  38  Fed.  E.  807. 

Cole  v.  Butler,  43  Me.  401;  Jones  v.  But  this  is  not  the  general  rule.  See 

Wiltberger,  42  Ga.  575;  Bates  v.  Hobart  v.   Gould,  8    Fed.    R.   57; 

Lewis,   3  Ohio  St.  459.    Compare  Sowles  v.  Witters,  39  Fed.  R.  403. 

City  of  Chicago  v.  Hall,  103111. 342;  Except  where  the  claim    of  the 

Savings  Ass'n  v.  Kellogg,  63  Mo.  540.  stockholder  is  good  as  against  the 

4  In  re  Empire  City  Bank,  18  N.  Y.  creditors    in    general.     But    see 

199;  Buchanan  v.  Meisser,  105  III  Wheeler  v.  Millar,  90  N.  Y.  353. 

638;  Burnap  v.  Harkins  Engine  Co.,  6  Patterson  v.  Lynde,  112  111.  196, 

127  Mass.  586;  Paine  v.  Stewart,  33  which  case  is  clearly  wrong  upon 

Conn.  516.    But  compare  Gauch  v.  this  point. 


106  BANKS   AND   BANKING.  [§  68, 

language."  It  was  originally  held  in  one  court  that  the  cred- 
itor had  a  remedy  at  law  alone,7  but  this  court  has  receded 
from  this  position.8  So  in  the  case  of  national  banks  it  was 
held  that  -the  receiver's  suit  for  an  assessment  levied  by  the 
comptroller  was  at  law.9  But  courts  applying  the  analogy 
of  a  creditor's  bill,  the  analogy  consisting  of  the  fact  that 
the  assets  of  the  corporation  must  first  be  exhausted,  have 
held  that  where  the  stockholders  were  held  liable  in  propor- 
tion to  the  amount  of  their  stock  the  remedy  is  in  equity  and 
not  at  law.10  -But  in  reason  the  better  rule  is  that  where  the 
liability  is  to  the  amount  of  or  in  proportion  to  the  stock,  the 
creditor  may  sue  either  at  law  or  in  equity,11  unless,  of  course, 
he  is  also  a  stockholder,  when  he  would  be  compelled  to  sue 
in  equity,  as  he  would  be  himself  liable  for  part  of  his  own 
claim. 

§  68.  Where  legal  remedy  obtainable. —  "Where  an  action 
at  law  upon  the  statutory  liability  can  be  brought,  it  may  be 
under  a  statute  which  does  not  require  the  exhausting  of  the 
bank's  assets.  In  such  case  the  remedy  consists  in  suing  th& 
individual  stockholder  upon  his  contract.  Such  was  the  old 
method  of  enforcing  the  liability  for  a  state  bank's  circulat- 
ing notes.1  But  where  the  right  to  sue  the  stockholder  is 
held  to  be  dependent  upon  the  bank's  lack  of  assets,  that  fact 

7McCarthay  v.  Lavasche,  89  III  Walsh,  25  Minn.  543.  Alabama,  Ar- 

270.  kansas,  Michigan,  Massachusetts^ 

8Earnes  v.  Doris,  102  111.  350;  New  Jersey,  Ohio,  Rhode  Island  and 

Tunesma  v.  Schuttler,  1 14  111.  156.  Wisconsin  seem  to  hold  this  rule, 

9  Casey  v.  Galli,  94  U.  S.  673.    But  though  not  all  as  to  bank  statutes, 
a  suit  in  equity  lies  now  by  the  u  Carroll  v.  Green,  92  U.  S.  509; 
statute.     Irons  v.  Manufacturers'  Mills  v.  Scott,  99  U.  S.  25,  under 
Nat  Bank,  27  Fed.  R.  591 ;  Rich-  laws  of  two  different  states. 
mond  v.  Irons,  121  U.  S.  27.    The  l  Adkins  v.  Thornton,  19  Ga.  325. 
action  at  law  remains  and  both  See  also  on    this   subject,  where 
remedies  exist  bonds  and    notes  were  given  by 

10  Pollard  v.  Bailey,  20  WalL  520;  stockholders  to  secure  circulation, 
Terry  v.  Tuhman,  92  U.  S.  156;  Cuy-  Duncan  v.  Biscoe,  7  Ark.  175;  Van 
kendall  v.  Miles,  10  Fed.   R.   342;  Steenwyck  v.  Sackett,  17  Wis.  645;. 
Terry  v.  Martin,  10  S.  C.  263;  Terry  Rusk  v.  Sackett,  28  Wis.  400. 

v.  Little,  101  U.  S.  216;  Allen  v. 


§  68.]  STOCKHOLDERS.  107 

necessarily  must  appear  by  allegation  and  proof.  The  judg- 
ment at  law  and  return  of  nulla  bond  is  sufficient,  nor  can 
that  judgment  be  disputed.2  If  the  liability  is  several,  and 
it  would  seem  to  be  such  in  most  cases  where  an  action  at 
law  lies,  but  one  stockholder  can  be  sued.3  By  the  action 
the  creditor  obtains  a  priority,  which  the  stockholder  sued 
cannot  avoid  by  payment  to  any  other  creditor.4  No  set-off 
lies  on  behalf  of  the  stockholder  for  a  debt  owing  to  him  by 
the  corporation,5  for  the  creditor  sues  in  his  own  right,  not 
by  right  of  the  corporation.  The  question  of  contribution 
among  the  stockholders  cannot  of  course  be  litigated.  The 
method  of  recovery,  where  the  liability  is  in  proportion  to 
the  stock  or  some  equivalent  expression  is  used,  would  re- 
quire allegation  and  proof  as  to  the  exhaustion  of  the  bank's 
assets,  where  that  is  necessary,  proof  of  the  whole  liability 
of  the  stock  and  of  the  amount  of  the  stockholder's  holding, 
from  which  his  liability  is  a  mere  matter  of  computation. 
But  if  the  liability  was  held  to  be  an  equal  and  ratable  one, 
proof  would  be  required  of  the  total  debts,  and  the  propor- 
tion of  the  creditor's  debt  thereto  would  be  a  matter  of  in- 
ference. It  is  believed,  however,  that  in  this  latter  case  an 
action  at  law  never  lies  except  in  the  case  of  national  banks, 
where  the  amount  of  the  receiver's  claim  against  each  stock- 
holder is  determined  by  the  assessment  of  the  comptroller 
of  the  currency,6  or  unless  the  suit  is  upon  an  assessment 
made  under  an  order  of  a  court. 

2  Marsh  v.  Burroughs,  1  Woods,  199;  Buchanan  v.  Meisser,  105  111. 
463.    See  next  section,  note  4.  638;  Burnap  v.  Harkins  Engine  Co., 

3  Perry  v.  Turner,  55    Mo.  418;  127  Mass.  586;  Paine  v.  Stewart,  33 
Terry  v.  Little,  101  U.  S.  216.  Conn.  516.    The  same  rule  would 

4Thebus  v.  Smiley,  110  111.  316;  apply  in   equity  as  at  law.    But 

Cole  v.  Butler,  43  Me.  401;  Jones  v.  Wheeler  v.  Millar,  90  N.  Y.  353,  ia 

Wiltberger,  42  Ga.  575;    Bates  v.  contra.    And  see  Boyd  v.  Hall,  56 

Lewis,  3  Ohio  St.  459.   But  see  City  Ga,  563. 

of  Chicago  v.  Halt,  103  111.  342;  6See  §  70,  infra;   Pickering   v. 

Savings  Asso.  v.  Kellogg,  63  Ma  Hastings,  76  N.  W.  R.  587;  Gagerv. 

540.  Bank  of  Edgerton,  77  N.  W.  R.  920. 

8  In  re  Empire  City  Bank,  18  N.  Y.  But  see  Boyd  v.  Hall,  56  Ga.  563. 


108 


BANKS    AND    BANKING. 


[§69. 


§  69.  Suit  in  equity. —  "Where  the  rule  is  held  that  the 
suit  to  enforce  the  stockholder's  liability  must  be  brought  in 
equity,  or  wherever  such  a  suit  is  brought  on  grounds  of 
convenience,  although  an  action  at  law  lies,  the  suit  should 
be  brought  on  behalf  of  all  the  creditors  similarly  situated,1 
and  against  all  the  stockholders  liable,2  unless  certain  of 
them  cannot  be  made  parties  because  beyond  the  court's 
jurisdiction.3  "Where  it  is  necessary  to  show,  as  a  condition 
precedent  to  maintaining  the  suit,  that  the  bank  has  no 
available  assets,  the  recovery  of  a  judgment  and  a  return 
of  nulla  Ijona  must  appear;  but  facts  that  excuse  such  a  pro- 
ceeding may  be  alleged  and  proven,  as  that  the  bank  is  in- 
solvent or  in  the  hands  of  a  receiver,  or  any  other  facts  that 
render  such  a  proceeding  useless.4  The  suit  must  necessarily 
be  brought  by  the  creditors  unless  the  statute  permits  some 
one  else  to  sue.5  There  can  be  no  set-off  pleaded  in  favor  of 
a  stockholder  on  account  of  claims  against  the  bank,6  but 
there  are  exceptions.  One  is  the  exception  under  a  peculiar 


1  Irons  v.  Manut  Nat.  Bank,  27 
Fed.  R  591. 

2  Terry  v.  Martin,  10  Rich.  263; 
Coleman  v.  White,  14  Wis.  700. 

3  Terry  v.  Martin,  supra;  Kennedy 
v.  Gibson,  8  Wall.  498. 

4  Hodgson  v.  Cheever,  8  Mo.  App. 
318.    There  is  such  a  confusion  be- 
tween courts  as  to  whether  this  is 
necessary  without  a  statute  that  no 
general  rule  can  be  found.    See  3 
Am.  St.  R  851,  in  note,  and  §  63, 
ante, 

5  See  cases  cited  in  note  .1,  §  65, 
supra.    And  see  Howarth  v.  Ell- 
wan  ger,  86  Fed.  R  54;  Watterson 
v.  Masterson,  15  Wash.  511;  State 
v.  Union  Stock  Yards  Bank,  70  N. 
W.  R  752.    But  even  if  the  suit  is 
given  to  the  receiver  or  a  particu- 
lar officer  it  may  be  brought  by  a 
creditor  (Worth  v.  Piedmont  Bank, 
28  S.  E.  R  488),  if  the  officer  or  re- 


ceiver will  not  sue  (Anderson  v. 
Seymour,  73  N.  W.  R  171),  without 
applying  to  the  corporation.  Foster 
v.  Bank  of  Abingdon,  88  Fed.  R  604. 
This  case  decides  that  creditors 
suing  for  negligent  injuries  to  bank 
by  the  officers  are  not  within  the 
ninety-fourth  equity  rule,  which  re- 
quired an  application  to  the  corpo- 
ration and  a  refusal  by  it  to  sue. 
But  of  course  the  bank  or  its  re- 
ceiver must  be  a  party  to  the  ac- 
tion. 

«Hobart  v.  Gould,  8  Fed.  R  57; 
Sowles  v.  Witters,  39  Fed.  R.  403; 
Witters  v.  Sowles,  32  Fed.  R.  130; 
Thompson  v.  Meisser,  108  111.  359; 
In  re  Empire  City  Bank,  18  N.  Y. 
119;  Buchanan  v.  Meisser,  105  IlL 
638;  Burnap  v.  Harkins  Engine 
Co.,  127  Mass.  586;  Paine  v.  Stew- 
art, 33  Conn.  516;  Parker  v.  Caro- 
lina Sav.  Bank,  31  S.  E.  R  673. 


§  69.]  STOCKHOLDERS.  109 

statute  in  New  York,  where  the  statutory  liability  arises 
upon  a  failure  to  pay  in  the  whole  capital,7  and  another  ex- 
ception is  that  if  the  stockholder's  claim  is  of  such  a  nature 
that  he  is  entitled  to  payment  before  the  creditors,  his 
claim  may  be  set  off.8  The  nature  of  the  action  provides 
for  a  contribution  among  the  stockholders,  since  all  must  be 
sued.  The  decree  in  equity  must  be  several  as  against  the 
different  stockholders,  unless,  of  course,  the  liability  is  made 
joint,  when  a  decree  against  all  for  the  whole  amount  would 
be  good.  Such  a  case  is  impossible  where  the  liability  is  in 
proportion  to  the  amount  of  stock  held  by  each  stockholder.9 
In  an  equitable  proceeding  it  is  a  matter  of  some  doubt 
whether  the  corporation  ought  to  be  made  a  party  or  not, 
either  through  itself  or  its  receiver  or  assignee.  Where 
the  right  to  sue  belongs  to  the  creditors  and  is  against  the 
stockholders,  it  would  seem  to  be  reasonably  plain  that  the 
corporation  is  not  concerned.10  But  owing  to  statutes  which 
give  the  receiver  the  right  to  sue,  and  other  statutes  or  rul- 
ings which  require  the  assets  of  the  corporation  to  be  ex- 
hausted, it  is  rarely  safe  to  omit  making  the  corporation  or 
its  representative  a  party  to  a  suit  in  equity.  The  judg- 
ment against  the  corporation  being  conclusive,11  such  a  course 
can  work  no  injury;  and  where  no  execution  has  been  issued 
on  the  judgment,  or  where  no  judgment  has  been  obtained, 
the  presence  of  the  corporation  as  a  party  is  as  necessary  to 
complete  justice  as  the  presence  of  its  representative  is  nec- 
essary where  the  right  of  action  is  given  to  him. 

7  Wheeler  v.  Millar,  90  N.  Y.  353.  i°See  §  65,  supra.    But  it  seems 
The  reasoning  of  this  case  is  exceed-  to  be  permissible  to  join  in  this  ac- 
ingly  attenuated.    Compare  Boyd  tion  causes  of  action  against  offi- 
v.  Hall,  56  Ga.  563.  cers  of  the  bank.    Where  this  is 

8  Wells  v.  Stout,  38  Fed.  R  807.  done,  it  is  needless  to  say  the  corpo- 
This  case  seems  right  wherever  the  ration  and  its  receiver  should  both 
assets  of  the  corporation  must  first  be  made  parties,  because  the  right 
be  exhausted.  of  action  is  in  the  bank.    See  Gager 

9  See  cases  cited  in  note  9  to  §  65,  v.  Marsden,  77  N.  W.  R.  920. 
supra.    But  at  law  several  stock-  « Marsh  v.  Burroughs,  1  Woods, 
holders  might  be  sued  where  the  463.    See  3  Am.  St.  R  858,  in  note, 
liability  of  none  exceeded  the  debt. 


110  BANKS  AND  BANKING.  [§  TO. 

§  70.  National  banks. —  "We  have  already  noticed  to  some 
extent  the  remedy  applied  in  the  case  of  national  banks. 
The  procedure  as  to  those  banks  is  somewhat  simplified  by 
the  fact  that  when  the  bank  is  in  difficulties  it  is  taken  pos- 
session of  by  an  examiner  or  by  a  receiver  appointed  by  the 
comptroller  of  the  currency,  who  determines  the  assessment 
to  be  levied  upon  each  stockholder.1  But  congress,  not  sat- 
isfied with  a  plain  and  intelligent  system,  out  of  a  desire, 
perhaps,  to  provide  against  the  comptroller's  failure  of  duty, 
has  given  to  creditors  the  right  to  institute  an  action  which 
attains  the  same  result  as  the  comptroller's  action.2  As  a 
necessary  condition  to  this  suit  it  must  appear  that  the  bank 
is  insolvent.  The  bank,  of  course,  must  be  made  a  party; 
the  court  establishes  the  liability  of  stockholders  and  pro- 
vides for  the  same  by  its  judgment.  This  judgment  must 
be  several  as  against  the  various  stockholders,  since  the  lia- 
bility is  several.3  The  proceeding  is  for  the  benefit  of  all 
creditors,4  and  should  be  against  all  stockholders  subject  to 
the  jurisdiction.5  The  same  rules  as  to  set-off  would  apply 
in  such  a  suit  as  are  mentioned  in  the  last  section.  The 
method  to  be  followed  in  ascertaining  the  amounts  to  be 
awarded  by  the  decree  would  require,  first,  the  ascertain- 
ment of  the  whole  par  value  of  the  stock ;  next,  the  fixing 
of  the  amount  of  the  deficit  necessary  to  pay  debts  over  and 
above  the  assets;  next,  the  ascertaining  whether  the  total 
liability  amounted  to  or  exceeded  the  total  deficit.  If  the 

*  Kennedy  v.  Gibson,  8  Wall.  498.  not  properly  perform  his  duties. 

2  Statute  of  June  30,  1876.    See  But  the  conduct  of  the  receiver  in 

Harvey  v.  Lord,  11  Biss.  144;  Peters  Ex  parte  Chetwood,  165  U.  S.  443, 

v.  Foster,  56  Hun,  607;   Irons  v.  is  a  full  justification  of  the  statute. 

Manuf.  Nat  Bank,  17  Fed.  R.  308.  3  Kennedy  v.  Gibson,  8  Wall.  498; 

There  seems  to  be  no  necessity  for  United  States  v.  Knox,  102  U.  S. 

this  statute,  and  in  its  working  it  432. 

must  be  plain  that  an  assessment  4  Irons  v.  Manuf.  Nat.  Bank,  27 

laboriously  made  by  a  court  can-  Fed.  R.  591. 

not  be  as  expeditious  as  an  assess-  8  Kennedy  v.  Gibson,  8  Wall  498. 

ment  made  by  the  comptroller.    It  This  seems  fairly  deducible  in  prin- 

ought  not  to  be  assumed  in  any  ciple  from  that  decision.    It  would 

case  that  the  comptroller  would  be  the  general  rule. 


•§  TO.]  STOCKHOLDERS.  Ill 

liability  should  not  equal  the  deficit,  the  various  claims 
must  be  scaled  down  to  the  total  liability.  Then  each  stock- 
holder should  be  adjudged  to  pay  his  proportionate  amount 
of  the  deficit,  where  it  does  not  reach  the  total  liability,  or 
of  the  deficit  as  scaled  down  where  it  exceeds  the  total  lia- 
bility. The  distribution  among  the  creditors  would  be  a 
mere  matter  of  computation.  But  the  stockholders  would 
be  liable  for  the  bank's  own  stock  which  it  held;  provided, 
of  course,  the  total  liability,  as  divided  among  the  stock- 
holders, did  not  exceed,  for  any  single  stockholder,  his  stat- 
utory liability  of  an  amount  equal  to  his  stock.  The  insolv- 
ency of  any  stockholder  could  not  increase  in  any  way 
another  stockholder's  liability,  since  stockholders  are  not 
held  one  for  the  other.6  But  a  suit  like  the  foregoing  might 
also  be  brought  by  the  receiver  appointed  by  a  court  at  the 
instance  of  a  creditor.  The  result  would  not  be  different 
from  that  attained  by  a  suit  instituted  by  creditors,  where 
the  whole  relief  was  obtained  in  one  action,  even  to  the  ap- 
pointing of  a  receiver.  In  practice  a  suit  by  creditors  would 
never  be  instituted  without  asking  for  the  appointment  of 
a  receiver,  since  it  is  not  conceivable  that  a  bank  could  go 
on  doing  business  while  such  a  suit  was  in  progress.  A  na- 
tional bank  might  make  an  assignment  to  an  assignee  or 
trustee,  but  such  a  course  would  be  impracticable,  since  the 
"comptroller  might  at  once  take  possession.7  The  better 
method  would  be  to  follow  that  of  the  railroads  and  have  a 
receiver  appointed  at  the  suit  of  some  creditor,  with  the 
concurrence  of  the  corporation.8  Such  a  course  would  pre- 
vent the  comptroller  taking  possession  by  his  receiver,9  and 

6  United  States  v.  Knox,  102  U.  S.  for  keeping  the  railroad  in  opera- 
422.  tion.    See  80  Am.  Law  Rev.  801,  an 

7  Such  an  act  would  be  one  of  in-  article  by  Moorfleld  Storey.    Since 
solvency,  and  conclusive  evidence  a  state  court  cannot  issue  an  in- 
thereof.  junction  against  a  national  bank, 

8  This  method,  which  is  so  popu-  it  is  difficult  to  see  how  it  can  act 
lar  among  railway  managers,  ought  as  well  as  the  United  States  court, 
not  to  be  permitted  to  them  as  a  which  can  enjoin  the  bank.    See 
monopoly,  although   it  might  be  §  352,  post. 

urged  that  there  was  a  necessity       9  Harvey   v.  Lord,   11  Biss.   144, 


112  BANKS   AND   BANKING.  [§  70. 

would  answer  the  same  purpose  as  an  assignment.  It  should 
not  be  overlooked  that  United  States  courts,  under  the  stat- 
ute of  1887,  corrected  in  1888,  have  jurisdiction  of  these 
winding-up  suits,  regardless  of  the  citizenship  of  the  bank 
or  of  the  parties.  When  the  comptroller  takes  possession 
by  his  receiver,  whenever  such  a  step  is  permitted  b}^  law, 
the  comptroller,  as  soon  as  the  deficit  of  assets  is  ascertained 
by  him,  proceeds  to  make  an  assessment  upon  the  stock- 
holders.10 This  judgment  of  the  comptroller  is  conclusive 
as  to  the  necessity  for,  and  the  amount  of,  the  assessment.11 
It  was  originally  held  that  the  receiver  was  the  only  party 
to  sue  for  this  assessment,  and  that  his  action  therefor  was 
at  law.12  But  this  ruling  has  now  been  changed  by  statute, 
and  he  may  sue  all  the  stockholders  in  equity.13  He  ought 
to  have  been  able  to  do  so,  in  order  to  avoid  a  multiplicity 
of  actions,  under  a  general  rule  of  equitable  jurisprudence. 
The  creditors  are  neither  necessary  nor  proper  parties  to  an 
action  by  the  receiver.14  He  can  unite  in  the  same  action  a 
suit  for  unpaid  subscription  and  a  suit  for  the  statutory  lia- 
bility.15 But  independent  proof,  it  has  been  said,  must  be 
made  of  the  insolvency  of  the  corporation.  The  order  of 
the  comptroller,  it  has  been  wrongly  held,  is  not  binding 
upon  the  stockholders,  as  proof  of  the  bank's  insolvency.16 

where  it  is  held  that  the  comptrol-  Fed.  R.  591 ;  Richmond  v.  Irons,  121 

ler  ought  not  to  proceed  where  a  U.  S.  27. 

court  has  acted  and,  it  follows,  is  14  Kennedy  v.  Gibson,  8  Wall.  498. 
about  to  act.  15  Warner  v.  Callender,  20  Ohio 
10This  is  a  condition  precedent  to  St.  190.  The  principle  applies  when- 
such  a  receiver's  suit.  Kennedy  v.  ever  the  receiver  or  any  one  else 
Gibson,  8  Wall.  498.  can  enforce  both  liabilities. 

11  Kennedy     v.     Gibson,    supra;  is  Bowden  v.  Morris,  1  Hughes,  378. 
Casey  v.  Galli,  94  U.  S.  673;  Strong  See  Bowden  v.  Johnson,  107  U.  S. 
v.  South  worth,  Fed.Cas.  No.  13,545;  251;  Neale  v.  Wall,  70  Fed.  R.  806. 
O'Connor  v.  Witherby,  111  CaL  523.  Yet  the  order  of  the  comptroller  is 
Compare  Bowden  v.  Johnson,  107  conclusive  as  to  the  receiver's  au- 
U.  S.  251;  Neale  v.  Wall,  70  Fed.  R.  thority.    Since  this  order  of  the  re- 
806.  ceiver  is  a  substitute  for  a  juclg- 

12  Kennedy  v.  Gibson,  8  Wall  498;  ment  of  a  court,  it  is  wrong  to  hold 
Casey  v.  Galli,  94  U.  S.  674.  that  it  is  not  conclusive  upon  all 

13  Irons  v.  Manuf.  Nat  Bank,  27  as  to  the  fact  of  insolvency.    See 


§  71.]  STOCKHOLDERS.  113 

The  payment  of  a  voluntary  assessment  by  the  stockholder 
will  not  reduce  his  liability,17  nor  can  he  offset  the  bank's 
debts  to  him,18  except  when  his  claim  is  payable  out  of  the 
assets  of  the  bank  before  any  of  the  creditors  are  payable.19 
When  the  receiver  sues  in  equity  he  ought  to  unite  as  de- 
fendants all  the  stockholders  who  can  be  served.20  But  the 
state  laws  do  not  govern  the  receiver  suing  in  the  federal 
courts.21  A  trustee  of  stock  as  a  party  represents  his  bene- 
ficiary.22 The  receiver  cannot  compound  this  statutory  lia- 
bility of  stockholders,23  although  the  court  may  permit  him 
to  compromise  the  claim ;  but  the  circumstances  must  be 
conclusive  as  to  the  propriety  of  such  action.24 

§  71.  Other  questions  as  to  liability. — There  are  instances 
where  the  existence  of  the  right  to  enforce  the  liability  is 
made  dependent  upon  a  fact  other  than  insolvency,  such,  as 
in  the  case  of  national  banks,  failure  to  redeem  circulating 
notes,1  and  in  state  banks  dissolution.2  Insolvency  may  be 
proven  in  any  of  the  ways  permitted  by  law.  Certain  facts 
are  conclusive  proof  of  insolvency,  such  as  a  failure  to  re- 
deem notes  in  specie,3  or  failure  to  discharge  claims  upon  it 
in  the  due  course  of  business,  or  the  fact  may  appear  by 
proof  that  the  bank  is  notoriously  insolvent.4  It  is  needless 
to  point  out  that  in  a  suit  to  enforce  this  liability  such  con- 
dition to  the  liability  must  be  alleged  and  proven.  The 
liability  is  single  in  the  sense  that  the  stockholder  can  be 
compelled  to  discharge  it  but  once.  If  he  pays  in  part, 
the  payment  is  a  discharge  pro  tanto.  The  claim  is  barred 

§43,  supra.  Washington  Nat  Bank  23  Price   v.  Yates,  Fed.   Cas.  No. 

v.  Eckels,  57  Fed.  R  870,  is  contra.  11,418. 

n  Delano  v.  Butler,  118  U.  S.  634.  2*  In    re    Stockholders'  Cal  Nat. 

"Sowles   v.  Witters,  39  Fed.  R.  Bank,  53  Fed.  R.  38. 

403.  !  See  §  43,  ante. 

19  Welles  v.  Stout,  38  Fed.  £.  807.  2See  Donelly  v.  Hodgson,  14  Mo.. 

20  This  follows  from  the  nature  of  App.  548. 

the  action.  3  Lane  v.  Moms,  8  Ga.  468;  Terry 

2iStanton  v.  Wilkeson,  Fed.  Cas.  v.  Culnan,  13  S.  C.  330. 

No.  13,399.  4  Terry  v.  Tubman,  93  U.  &  156;. 

*2Wadsworth  v.  Hocking,  61  HL  Terry  v.  Anderson,  95  U.  S.  628. 

App.  156. 
8 


114:  BANKS   AND   BANKING.  [§   72. 

by  the  statute  of  limitations  in  equity  as  at  law.5  The  stat- 
ute begins  to  run  from  the  accrual  of  the  liability,6  and 
whenever  the  creditor's  debt  against  the  bank  is  barred, 
his  claim  upon  the  stockholders  is  also  barred.7  Interest  on 
the  liability  in  national  bank  cases  runs  from  the  order  of 
assessment,8  and  in  cases  under  state  laws  runs  either  from 
the  commencement  of  the  action 9  or  from  the  date  of  the 
decree.10 

§  72.  Dividends. —  It  is  not  our  purpose  to  examine  the 
whole  subject  of  dividends  upon  stock,  but  merely  the  decis- 
ions in  bank  cases  thereon.  The  power  to  declare  dividends 
belongs  to  the  board  of  directors.  Their  discretion  in  regard 
thereto  will  not  be  interfered  with  unless  clearly  abused.1 
For  an  abuse  of  the  power,  a  civil  as  well  as  in  some  cases  a 
criminal  responsibility  rests  upon  them.2  But  there  can  be 
no  doubt  that  bank  directors  have  the  right  to  collect  a  sur- 
plus before  declaring  dividends.3  In  some  cases  they  are 
directed  to  do  so  by  statute.  But  a  dividend  that  has  been 
obtained  by  a  decrease  of  stock  cannot  be  retained  by  the 
bank  as  surplus.4  The  bank,  whatever  may  be  its  power  to 
hold  a  lien  upon  its  stock,  may  hold  a  stockholder's  dividend 
upon  an  indebtedness  of  the  stockholder  to  the  bank.5 

8  Carrol  v.  Green,  92  U.  S.  509.  9  Barnes  v.  Arnold,  51  N.  Y.  Supp. 

6  Godfrey  v.  Teriy,  97  U.  S.  171;     1109. 

Thompson  v.  German  Ins.  Co.,  77  10  Palmer  v.  Bank  of  Zumbrota,  75 

Fed.  R  258;  Baker  v.  Atlas  Bank,  9  N.  W.  R  880. 

Met.  182;  Long  v.  Bank  of  Yancey-  *  Ely  v.  Sprague,  Clarke  Ch.  359; 

ville,  90  N.  C.  405;  Amer  v.  Arm-  Hiscock  v.  Lacey,  30  N.  Y.  Supp. 

strong,  6  Pa.  Co.  Ct.  R  392.    The  860. 

rule  is  the  same  as  to  unpaid  sub-  2  See  §  93,  note  14,  infra,  and  see 

scriptions  for  capital  stock.  last  case  in  preceding  note. 

7  Fleischer  v.  Eentchler,  17  III  3  Reynolds  v.  Bank  of  Mt.  Vernon, 
App.  402.  39  N.  Y.  Supp.  623. 

8  If  made  under  an  order  of  a  *  Seley  v.  Exch.   Nat.  Bank,  78 
court,  from  the  date  of  the  order;  N.  Y.  608. 

or  if  made  by  the  comptroller,  from  8Hagar  v.  Union  Nat.  Bank,  63 
the  date  of  his  order.  Casey  v.  Me.  509;  First  Nat.  Bank  v.  De 
Galli,  94  U.  S.  673;  Bowden  v.  John-  Morse,  26  S.  W.  R  417.  Compare 
son,  107  U.  S.  251.  Brent  v.  Bank  of  Washington,  2 

Cranch  C.  C.  517. 


CHAPTER  Y. 

OFFICERS  AND  AGENTS. 
ARTICLE  I. —  DUTIES  AND  LIABILITIES. 

§  73.  In  general. —  A  corporation  can  act  only  by  means 
of  agents.  All  its  officers  and  employees  are  agents  to  do 
certain  acts.  A  private  banker  or  a  partnership  or  joint- 
stock  company  has  in  practice  the  same  kinds  of  officers  and 
agents  that  a  corporation  has,  with  the  exception  of  a  board 
of  directors  and  officers  of  the  board.  Some  private  banks 
have  the  same  machinery  for  making  loans  or  discounts  that 
a  corporation  has.  Where  a  private  bank  has  officers  such 
as  an  incorporated  bank,  the  powers  and  duties  of  those  offi- 
cers, and  the  rules  of  law  governing  them,  must  be  precisely 
the  same.1 

§  74.  Appointment  of  agents. —  A  corporation  and  a  pri- 
vate person  may  appoint  an  agent  to  do  anything  that  the 
principal  can  do.1  In  the  case  of  a  corporation  the  powers 
of  the  corporation  are  in  the  first  instance  lodged  in  a  board 
of  directors,  who  exercise  the  corporate  powers.  Certain 
portions  of  these  powers  are  in  practice  delegated  to  agents, 
whose  appointment  need  not  be  under  seal,2  and  the  fact  of 
agency,  just  as  in  the  case  of  a  private  person  as  principal, 
may  arise  from  the  fact  of  acting  as  such  agent  with  knowl- 
edge on  the  part  of  the  principal  or  of  those  who  represent  it.3 

§  75.  Corporate  officers. —  The  officers  of  a  corporation 
must  be  elected  in  the  manner  provided  by  its  charter  or  in 

1  Austin  v.  Daniels,  4  Denio,  299;  &  G.  324;  Townson  v.  Havre   de 

Bidwell  v.  Madison,  10  Minn.  13.  Grace  Bank,  6  Har.  &  J.  47. 

1  Bates  v.  State  Bank,  2  Ala.  451.        3  Bradstreet  v.  Bank  of  Royalton, 

2  Savings  Bank  v.  Davis,  8  Conn.  42  Vt.  128. 
191;  Union  Bank  v.  Ridgley,  1  H. 


116  BANKS   AND   BANKING.  [§  T6. 

a  manner  consonant  thereto.1  In  practice  the  officers  other 
than  directors  are  generally  elected  or  appointed  by  the 
board  of  directors,  but  the  method  pointed  out  by  the  char- 
ter must  be  followed.2  Yet  as  to  third  parties,  de  facto  offi- 
cers, that  is  to  say  officers  who  are  publicly  acting  as  such, 
but  without  proper  appointment,  election  or  qualification, 
will  be  held,  certainly  as  to  third  persons,  to  be  proper  offi- 
cers.8 Should  vacancies  occur,  they  must  be  filled  as  pro- 
vided in  the  charter.4  The  general  officers  of  a  bank  usually 
hold  until  removed  as  provided  by  the  charter  or  law,  or 
until  a  successor  is  appointed  and  qualified.5  But  a  suspen- 
sion of  an  officer  does  not  take  effect  until  the  fact  is  brought 
to  his  knowledge.6 

§  76.  Bonds  of  officers. — "Where  a  bond  is  taken  from  an 
officer  for  the  due  performance  of  his  duties,  and  every  cor- 
poration has  such  a  right  (Bank  v.  Cresson,  12  Serg.  &  R. 
306),  the  general  principles  of  law  governing  such  instru- 
ments are  applicable.  The  bond,  of  course,  covers  only  the 
office  as  to  which  it  is  given.1  It  need  not  conform  to  the 
terms  of  the  law,  but  will  take  effect  as  a  common-law  bond.2 

1  State  v.  Thompson,  27  Mo.  365.    251;  but  see  Bartholomew  v.  Bent- 
A  stockholder  in  debt  to  the  corpo-    ley,  1  Ohio  St.  37. 

ration  on  his  original  subscription  4  Bank  of  Virginia  v.  Robinson,  5- 

cannot  vote  for  directors.    United  Grat.  174     A  general  law  is,  of 

States  v.  Barry,  36  Fed.  R  246.  course,  if  applicable,  part  of  the 

2  Booker  v.  Young,  12  Grat  303.  charter. 

But  as  against  the  direct  attack  8  So  held  as  to  a  cashier,  but  the 

upon  a  director's  title  he  must  show  rule  is   general    Union    Bank  v. 

a  valid  election  and  qualification.  Ridgely,  1  Har.  &  G.  324;  Dedham 

It  is  therefore  held  that  one  who  Bank  v.  Chickering,  3  Pick.  335; 

obtains  shares   by  transfer  after  Sparks  v.  Farmers'  Bank,  3  Del  Ch. 

expiration  of  a  national  banking  274    A  by-law  cannot  make  the 

charter  is  ineligible.     Richards  v.  cashier  of  a  national  bank  an  an- 

Attleborough  Nat  Bank,  148  Mass,  nual  officer.  Westervelt  v.  Mohren- 

187.  This  decision  is  wrong  because  stecker,  76  Fed.  R.  118. 

it  was  in  fact  a  case  of  collateral  6  Bank  of   U.    S.    v.  Magill,  12 

attack.  Wheat  511. 

3  Baird  v.  Bank  of  Washington,  l  Northw.  Nat  Bank  v.  Keen,  14 
11  S.  &  R.  411;  Cooker  v.  Curtis,  30  Phila.  7. 

Ma  488;  Milliken  v.  Steiner,  56  Ga.        2  Grocers'  Bank  v.  Kingman,  16- 


§  77.]  OFFICERS  AND  AGENTS.  117 

The  principal  in  the  bond  need  not  sign  it,8  nor  does  a 
misnomer  destroy  its  efficacy.4  The  bond  will  be  binding 
whether  executed  before  or  after  the  officer  enters  upon  the 
performance  of  the  duties  of  his  office.5  An  acceptance  of 
the  bond  by  the  corporation  will  be  presumed,  whether  the 
acceptance  be  in  the  form  required  by  law  or  not.6  The  bond 
holds  good  until  it  is  released  by  the  terms  of  the  law  or  by 
proper  authority.7  Whether  a  bond  is  required  from  the 
officer  or  not  cannot  affect  in  any  way  the  lawfulness  of  his 
acts  while  he  is  permitted  to  act. 

§  77.  Salaries. —  If  an  officer  is  not  a  director  his  salary 
is  generally  fixed  by  the  board  of  directors,  unless  the  law 
forbids  it.1  If  such  an  officer  or  an  agent  is  permitted  to 
draw  a  salary  larger  than  the  amount  originally  fixed,  which 
fact  is  reported  to  the  board  of  directors  and  no  objection 
is  made  by  it,  there  will  be  inferred  an  agreement  implied 
as  a  fact  to  pay  the  additional  amount.2  But  since  the  di- 
rectors themselves  wield  the  corporate  powers,  their  salary, 
if  one  can  be  lawfully  drawn  by  them,  must  be  agreed  upon 
prior  to  their  election.3  The  board  of  directors  cannot  vote 
salaries  to  themselves  after  election,  nor  can  they  vote  a 
salary  to  one  of  their  number  as  an  officer,  where  the  par- 
ticular director's  vote  is  necessary  to  the  order,4  or  where  he 
is  present  and  takes  part  in  the  meeting.5  But  this  principle 

Gray,  473;  State  Bank  v.  Lock,  4  'Mobile  Branch  Bank  v.  Collins, 

Dev.  529.  7  Ala.  95. 

3  Bank  of  North  Liberties  v.  Ores-  2  San    Joaquin   Valley  Bank  v. 
son,  12  S.  &  R.  306.  Bowers,  65  Cal.  247.     See  Blue  v. 

4  Pendleton  v.  Bank  of  Kentucky,  Cap.  Nat.  Bank,  145  Ind.  518. 

1  T.  B.  Hon.  171.  3  Wickersham   v.   Crittenden, 

6  Bank  of  U.  S.  v.  Brent,  2  Cranch,  93  CaL  17. 

C.  C.  696.  *  Wickersham    v.   Crittenden, 

6  Bank  of  U.  S.  v.  Dandridge,  12  supra. 

Wheat.  64;  Prysev.  Farmers' Bank,  6  Wickersham    v.    Crittenden, 

33  S.  W.  R.  532.    And  see  two  first  supra,  uses  this  language,  but  the 

cases  cited  in  note  5  to  last  section,  case  is  wrong  if  it  means  to  say  that 

7  State  Treas.  v.  Mann,  34  Vt.  371 ;  any  action  taken  by  the  board  of  di- 
Pendleton  v.  Bank  of  Ky.,  1  T.  B.  rectors  as  to  a  contract  with  one  of 
Mon.  171.  the  board  is  vitiated  by  the  fact 


118  BANKS   AND   BANKING.  [§  78. 

does  not  prevent  a  director  from  receiving  pay  for  services 
which  he  has  rendered  to  the  bank  as  an  agent  outside  of 
the  duties  of  his  office  of  director.6  Neither  a  director  nor 
an  officer  who  is  one  of  the  board  can  require  pay  for  serv- 
ices which  he  has  rendered  as  director  or  president,  nor  can 
such  officer  recover  on  a  quantum  meruit; 7  but  if  the  services 
rendered  are  extraordinary  or  outside  of  the  duties  of  the 
office,  he  can  recover,  according  to  some  decisions.8  The  fair 
rule  is  that  where  services  are  rendered  which  a  director  or 
an  officer  who  is  one  of  the  board  could  not  be  called  upon 
to  perform,  and  there  is  nothing  to  show  that  the  services 
were  gratuitous,  he  ought  to  be  permitted  to  recover.  Yet 
owing  to  the  fact  that  abuses  might  arise,  the  weight  of  au- 
thority is  that  services  rendered  are  gratuitous,  unless  ex- 
pressly made  otherwise.  As  to  any  other  officer,  the  general 
rule  applies  that  whatever  he  does  for  the  corporation  is  cov- 
ered by  his  salary. 

§  78.  Board  of  directors. —  The  directors  act  as  a  board  at 
meetings  either  specially  called  or  fixed  by  the  by-laws  or 
general  law  or  charter.  Unless  it  be  otherwise  provided  a 
notice  need  not  be  given  of  fixed  and  stated  meetings.1  The 
rule  has  been  carried  so  far  as  to  apply  to  a  special  meeting.2 
But  unless  the  articles  of  agreement  or  by-laws,  or  a  statute, 
provides  otherwise,  the  notice  need  not  state  the  object  of 
the  meeting  unless  business  out  of  the  usual  nature  is  trans- 
acted.8 It  is  not  necessary  for  the  board  to  keep  a  written 

that  such  director  takes  part,  al-  Hill  &  D.  Supp.  221,  which  holds 

though  a  majority  of  the  board  otherwise. 

without   the    interested   director  1  See  the  case  cited  in  the  next 

vote  for  the  proposition.  note. 

6  Chandler  v.  Monmouth  Bank,  13  2  If  it  is  the  custom  to  hold  di- 
N.  J.  Law,  255.  rectors'  meetings,  where   a  suffi- 

7  Holland  v.  Lewiston  Falls  Bank,  cient  number  is  present  no  notice 
52  Me.   564;    Sawyer   v.   Fawners  is  required,  unless  the  statute  or  a 
Bank,  88  Mass.  207;  Penn  v.  First  by-law  requires  it    Am.  Ex.  Nat 
Nat  Bank,  130  Mass.  391;  Blue  v.  Bank  v.  First  Nat  Bank,  82  Fed.  R 
Cap.  Nat  Bank,  145  Ind.  518.  961. 

8  See    cases   cited   in  preceding  3  Savings  Bank  v.  Davis,  8  Conn, 
note;  but  compare  Leavitt  v.  Beers,  191. 


§  79.]  OFFICERS   AND   AGENTS.  119 

record  of  their  doings  unless  they  are  required  to  do  so  by 
the  charter  or  the  by-laws,  for  the  acts  of  the  board  may 
be  proven  by  parol.4  A  quorum  of  the  directors  may  act  as 
a  board; 5  but  if  it  be  customary  to  allow  less  than  a  quorum 
to  act,  the  doings  of  such  less  number  will  bind  the  corpora- 
tion in  regard  to  acts  authorized  by  the  customary  mode  of 
proceeding.6  The  president,  if  he  be  one  of  the  board,  or 
if  he  is  entitled  to  the  powers  of  a  director,  is  one  of  the 
quorum.7  The  general  rule  is  that  the  director  cannot  act 
in  regard  to  a  matter  in  which  he  is  personally  interested  as 
against  the  bank ;  yet  this  rule  would  not  apply  to  innocent 
third  parties  who  had  no  notice  of  the  director's  interest.8 
A  director  may  resign  and  relieve  himself  from  liability,  al- 
though he  be  elected  to  hold  for  one  year  and  until  his  suc- 
cessor be  elected  or  appointed  and  qualified.9 

§  79.  Liability  of  officers  and  agents  to  bank. —  Leaving 
out  of  view  for  the  present  directors,  we  may  say  that  the 
rule  governing  the  responsibility  of  the  officer  or  agent  to 
the  bank  is  simply  an  application  of  the  law  of  principal  and 
agent.  If  the  officer  in  any  way  misappropriates  the  funds 
of  the  bank  he  is  liable  to  the  bank  therefor.1  In  whatever 
form  the  misapplication  of  the  funds  is  made,  the  bank  may 
hold  the  officer  liable,2  and  may  follow  the  funds  or  the  prop- 
erty obtained  thereby  until  they  reach  a  bona  fide  holder.3 
The  officer  being  an  agent,  if  the  agent  has  diverted  the 

4  Edgerly  v.  Emerson,  23  N.  H.        ?  Bank  of  Maryland  v.  Ruff,  7  Gill 
555.    But  if  the  law  requires  the    &  J.  448. 

record  to  be  in  writing,  can  the  8Baird  v.  Bank  of  Washington, 

writing  be  supplemented  or  varied  11  S.  &  R.  411. 

by  parol,  or  can  it  be  supplied  by  9Briggs  v.  Spalding,  141  U.  S.  132; 

parol  ?     As  between  persons  who  Movius  v.  Lee,  30  Fed.  R.  298. 

are  bound  by  the  record  the  answer  l  First  Nat.   Bank   v.  Drake,  29 

would  be  no,  but  as  to  third  persons  Kan.  311;  Austin  v.  Daniels,  4  Denio, 

not    bound   thereby   the    answer  299;  Knapp  v.  Roche,  62  N.  Y.  614; 

would  be  yes.  In  re  Boker,  7  Phila.  479. 

5  Nat.    Bank    of    Commerce   v.  2See   cases   cited    in  preceding 
Shumway,  49  Kan.  224.  note. 

6  Nat.  Security   Bank   v.    Cush-  3  Farmers'  Bank  v.  Kimball  Mill- 
man,  121  Mass.  490.  ing  Co.,  1  S.  D.  388;  Anderson  v. 


120  BANKS   AND   BANKING.  [§  79. 

moneys  of  his  principal,  they  may  be  pursued  at  law  in  an 
action  for  money  had  and  received  until  the  funds  come  into 
the  hands  of  a  lonafide  holder,4  or  the  remedy  may  be  pur- 
sued in  equity  as  for  a  breach  of  trust.5  Thus,  where  the 
president  of  a  bank  issues  to  a  firm  of  brokers  with  whom 
he  is  doing  business  the  drafts  of  the  bank,  which  show  upon 
their  face  that  they  were  issued  by  himself,  and  are  received 
by  those  who  know  that  they  are  being  received  upon  the 
president's  private  business,  the  funds  may  be  reclaimed  by 
the  bank  or  by  its  receiver.6  The  president  himself  would 
also  be  liable,  just  as  he  is  held  liable  to  the  bank,  for  caus- 
ing an  unenforceable  loan  to  be  made  to  a  minor.7  So  where 
a  bank  president  sold  his  stock  in  a  bank  when  it  was  em- 
barrassed, and  took  the  purchaser's  check  upon  the  bank  for 
the  price,  and  caused  the  bank  to  cash  the  check  by  permit- 
ting the  purchaser  an  overdraft,  he  was  held  liable  to  the 
bank  for  the  amount  of  the  check.8  All  cases  of  misappro- 
priation of  the  bank's  funds  are  properly  cases  of  fraud,  al- 
though the  officer  himself  may  gain  no  benefit.  This  rule 
applies  to  every  officer  and  agent  of  .the  bank  whatever  his 
grade  may  be.  The  persons  liable  may  also  include  those 
not  agents  who  knowingly  assisted  the  fraud.  The  various 
classes  of  persons  liable  may  be  classed  as  follows:  Those 
who  were  concerned  in  the  unlawful,  improvident  or  culpa- 
bly negligent  transaction  and  profited  by  it;  those  who 
were  concerned  in  it  but  did  not  profit  by  it;  these  two 
classes  may  include  both  agents  and  those  who  are  not 
agents;  then  those  who  negligently  failed  to  perform  their 
duty  in  preventing  the  transaction,  although  they  knew  of 

Kissam,  35  Fed.  R  699;  Lamson  v.  188;  Thompson  v.  Hynds,  15  Utah, 

Beard,  94  Fed  R.  30,  and  cases  cited.  389. 

See   also    Atlantic  Bank  v.   Her-  5  See  cases  cited  in  note  3. 

chants'  Bank,  10  Gray,  532;  Skin-  6  Lamson  v.  Beard,  94  Fed.  R.  30. 

ner  v.  Merchants'  Bank,  4  Allen,  7  Brown  v.  Farmers' Bank,  88  Tex. 

290.    The  following  cases,  Pascoag  265.   Or  worthless  overdrafts.  First 

Bank  v.  Hunt,  3  Edw.  Ch.  583,  and  Nat.  Bank  v.  Reed,  36  Mich.  263. 

Bank  of  Charleston  v.  State  Bank,  8  Germania  Sav.  Bank  v.  Wulfe- 

13  Rich.  Law,  291,  are  wrong.  kuhler,  19  Kan.  60. 
4  Keener  on  Quasi-Contract,  183- 


§  79.]  OFFICEKS   AND   AGENTS.  121 

it;  those  who,  though  not  cognizant  of  the  transaction,  yet 
negligently  failed  to  perform  a  duty,  the  performance  of 
which  would  have  prevented  the  transaction;  those  who 
failed  to  exercise  a  reasonable  inspection,  though  charged 
with  that  duty,  and  thus  contributed  to  the  loss.  These  dis- 
tinctions are  taken  from  Williams  v.  McKay,  46  N".  J.  Eq.  25, 
a  valuable  opinion.  Sometimes  the  statute  gives  a  right  of 
action,9  but  the  statute  is  needless.  Where  negligence  is 
charged  which  is  a  case  of  failure  to  act,  the  test  to  be  ap- 
plied to  any  officer  other  than  an  unpaid  director  is  the  care 
which  a  man  of  ordinary  prudence  would  apply  to  his  own 
affairs.10  Thus,  if  the  cashier  fails  to  properly  notify  the 
maker  of  a  note,  whereby  the  bank  suffers  loss  through  the 
escape  of  an  indorser,  the  cashier  is  responsible  to  his  bank 
to  the  extent  of  the  loss  suffered.11  If  the  president  of  the 
bank  allows  a  customer  to  take  a  security  away  from  the 
bank,  and  the  bank  suffers  loss,  the  officer  must  respond,  al- 
though there  was  a  banking  custom  permitting  the  act.12 
And  where  an  officer  negligently  permits  an  overdraft  he  is 
responsible  to  the  bank  for  the  loss,13  but  not  where  he  takes 
sufficient  security.14  But  if  the  bank  be  not  injured  by  the 
act  no  liability  results,  and  the  same  is  the  case  where  the 
bank  ratifies  the  act.15  An  officer  is  liable  for  the  acts  of 

9  Buell  v.  Warner,  33  Vt.  570.   Be-  liable  on  the  contract  before  pro- 
cause  there  was  a  remedy  by  stat-  ceeding  against  the  officer  liable, 
ute,  a  court  mistaking  the  law  in  Paine  v.  Barnum,  50  How.  Pr.  303. 
the  case  below,  held  that  there  was  12  Citizens'  Bank  v.  Wiegand,  5 
no  other  liability.   It  was  in  a  cred-  Wkly.  Notes  Gas.  12.  Or  if  he  makes 
itor's  suit,  but  it  was  wholly  wrong,  a  worthless  purchase,  he  is  liable 
Dedrick  v.  Bank  of  Commerce,  45  for  the  loss,  including  the  expenses 
S.  W.  R.  786  (Tenn.).  of  a  suit  caused  by  it.    Stearns  v. 

10  Pryse  v.  Farmers'  Bank,  33  S.    Lawrence,  83  Fed.  R.  738. 

W.  R.  532.    See  also  Second  Nat.  13  Bank  of  St.  Mary's  v.  Calder,  3 

Bank  v.  Burt,  93  N.  Y.  233,  which  Strob.  403. 

was  a  case  of  worthless  indorse-  14  Commercial  Bank  v.  Ten  Eyck, 

ment.  48  N.  Y.  305. 

nBidwell  v.  Madison,  10  Minn.  15  Where  no  injury.  Commercial 
13.  In  no  such  case  is  the  bank  Bank  v.  Ten  Eyck,  50  Barb.  9;  Wai- 
required  to  proceed  against  the  lace  v.  Savings  Bank,  89  Tenn.  630. 
worthless  borrower  or  the  party  Ratification.  First  Nat.  Bank  v. 


122 


BANKS    AND   BANKING. 


[§ 


his  subordinates  only  where  he  has  been  guilty  of  negligence 
in  employing  or  retaining  them.16  Finally,  if  an  officer  dis- 
obeys positive  instructions,  or  does  acts  contrary  to  the  au- 
thority given  him,  he  is  liable,  regardless  of  his  own  care, 
where  the  acts  result  in  loss  to  the  bank.17  The  case  of  the 
liability  for  negligence  of  bank  directors  who  act  gratui- 
tously needs  separate  consideration  from  that  of  other  offi- 
cers. They  are,  of  course,  liable  for  fraud.  Three  different 
tests  have  been  offered  as  to  their  responsibility  to  the  bank 
for  negligence.  The  first  is  that  they  are  liable  for  gross 
negligence.18  The  second  is  that  they  are  held  to  the  same 
care  that  a  man  of  ordinary  prudence  would  exercise  in  re- 
gard to  his  own  affairs.19  The  third  is  they  are  held  to  the 
care  that  a  man  of  ordinary  prudence  would  exercise  under 
the  same  circumstances.20  The  third  test  is  preferable :  the 
first  is  unmeaning,  the  second  is  too  harsh.  The  remedy  for 
the  bank  is  at  law  where  the  directors  sued  are  all  liable.21 


Reed,  36  Mich.  263;  Jones  v.  John- 
son, 86  Ky.  530.  See  also  Clews  v. 
Bardon,  36  Fed.  R  617. 

iSBriggs  v.  Spalding,  141  U.  S. 
132;  Batchelor  v.  Planters'  Nat 
Bank,  78  Ky.  435.  Compare  Pepper 
v.  Planters'  Nat.  Bank,  5  Ky.  Law 
R  85.  So  directors  for  cashier.  Rob- 
inson v.  Hall,  63  Fed.  R  222;  S.  G, 
25  U.  S.  App.  48. 

17  San  Joaquin  Valley  Bank  v. 
Bowers,  65  CaL  247. 

"Dunn  v.  Kyle,  14  Bush,  134; 
Swentzel  v.  Penn  Bank,  147  Pa.  140; 
Bank  v.  Boisseux,  4  Hughes,  387. 

19  Hun  v.  Gary,  82  N.  Y.  65;  Briggs 
v.  Spalding,  141  U.  a  132. 

20  Delano   v.   Case,   121    111.   247; 
Jones  v.  Johnson,  86  Ky.  530.    The 
first  test  does  not  differ  from  the 
third  except  in  the  mere  splitting 
of  hairs.    When  does  a  man  show 
gross  negligence?    The  standard  of 
the  law  as  to  negligence  is  the  care 
of  an  average   prudent  man.    Is 


gross  negligence  the  failure  to  ob- 
serve the  care  of  a  man  less  than 
reasonably  prudent  ?  Is  it  anything 
from  such  a  failure  to  the  want  of 
care  shown  by  a  man  with  no  pru- 
dence at  all,  i.  e.,  the  maniac?  The 
very  inquiry  ends  in  absurdity. 
The  futility  of  this  attempted  dis- 
tinction has  been  pointed  out  by 
very  great  judges;  by  Justice  Curtis, 
in  Steamboat  v.  King,  16  How.  474; 
by  Justice  Bradley,  in  New  York  R 
R  Co.  v.  Lockwood,  17  Wall.  382; 
by  Justice  Willes,  in  Lord  v.  Mid- 
land Co.,  L.  R  2  C.  P.  339;  by 
Baron  Rolfe,  in  Wilson  v.  Brett,  11 
M.  &  W.  113;  and  by  Lord  Denman, 
in  Hinton  v.  Dibbin,  2  Q.  B.  646. 

21  Stephens  v.  Overstolz,  43  Fed. 
R  771.  Contra,  Wells  v.  Graves,  41 
Fed.  R  459,  which  is  wrong.  A 
suit  in  equity  lies  on  the  theory  of 
a  breach  of  trust  (Merchants'  Bank 
v.  Jeffries,  21  W.  Va.  504),  or  of  ac- 
count. 


§  80.]  OFFICERS   AND   AGENTS.  123 

But  of  course  a  suit  at  law  would  not  lie  against  certain 
officers  for  one  act  and  certain  other  officers  for  another  act. 
These  suits  would  necessarily  be  separate  suits  M  where  the 
suit  was  at  law  but  not  in  equity.  The  cause  of  action 
against  officers  is  held  to  survive  against  the  personal  rep- 
resentative in  Wilkinson  v.  Dodd,  41  N.  J.  Eq.  566. 

§80.  Liability  to  stockholders. —  It  is  everywhere  con- 
ceded that  if  an  officer  or  director  commits  a  tort  he  is  re- 
sponsible to  the  person  injured  whether  that  person  is  a 
stockholder  or  not.  But  the  right  of  action  does  not  arise 
because  the  tort-feasor  is  an  officer  of  the  bank  nor  because 
the  injured  party  is  a  stockholder.  The  officer  is  liable  just 
as  another  person  not  an  officer  would  be  liable.  Thus,  if  a 
bank  officer  makes  false  and  fraudulent  representations  to  a 
stockholder  upon  which  the  latter  acts  to  his  injury ;  if  he, 
assuming  a  duty  to  act,  acts  negligently  about  the  stockhold- 
er's private  affairs,  not  the  bank's  affairs;  or  if  he  commits 
any  other  tort  against  the  stockholder,  he  will  be  liable  in 
the  appropriate  kind  of  an  action,  even  if  the  corporation  be 
also  liable  to  the  stockholder  injured.1  The  director  and 
the  stockholder  are  considered  simply  as  private  individuals 
not  interested  in  the  same  corporation.  But  merely  as  an 
officer  of  the  bank,  the  officer  owes  no  duty  to  the  stock- 
holder as  such  that  he  does  not  owe  as  an  individual  to  the 
stockholder  as  an  individual.  Therefore  as  a  general  rule 
the  stockholder  cannot  sue  the  bank  officer  for  a  breach  of 
the  duty  which  the  officer  owes  to  the  bank,  either  at  law 
or  in  equity.2  This  arises  from  the  fact  that  the  incorpo- 
rated bank  is  one  person  and  the  stockholder  is  another  per- 
son who  does  not  own  the  rights  of  the  corporation.  But 

22  O'Brien  v.  Fitzgerald,  143  N.  Y.  son  v.  First  Nat.  Bank,  1  Wyo.  108, 

377.  A  receiver's  suit;  but  the  same  for  a  legal  curiosity, 

principle  would  apply  to  the  cor-  2  Con  way  v.  Halsey,  44  N.  J.  Law, 

poration's  suit.    This  latter  case  is  462;  Craig  v.  Gregg,  83  Pa.  19;  Rich 

inconclusive  as  to  the  nature  of  v.  Shaw,  23  Me.  343;  Smith  v.  Hurd, 

the  action,  whether  at  law  or  in  12  Met.  371.    These  last  three  cases 

equity.  are  in  states  which  originally  had 

1  See  dissenting  opinion  in  Wil-  no  system  of  equitable  remedies. 


124 


BANKS   AND   BANKING. 


[§80. 


the  law  recognizes  that  a  stockholder  has  certain  rights  in 
the  corporation.  One  of  those  is  to  bring  a  suit  in  equity 
to  enforce  a  right  of  the  bank,  when  the  controlling  officers 
of  the  bank  refuse  to  enforce  the  right,  either  because  they 
are  the  wrong-doers  or  for  some  other  reason.8  But  it  is 
plain  that  in  the  latter  case  he  sues  in  right  of  the  bank,  and 
in  such  a  suit  the  bank  is  a  necessary  party.  The  fruits  of 
the  litigation  do  not  belong  to  the  stockholder,  but  to  the 
bank.4  If  this  distinction  had  been  kept  clearly  in  view  no 
confusion  would  have  resulted,  but  the  stockholder  in  this 
latter  suit  has  been  allowed  to  mingle  rights  which  belonged 
to  him  as  an  individual  with  rights  which  he  was  asserting 
in  the  name  of  the  bank.5  But  it  is  possible  that  in  such  a 
litigation  a  court  could  by  its  decree  separate  those  rights 
and  give  one  kind  of  a  judgment  to  the  stockholder  as  an 


But  the  principle  is  plainly  correct. 
But  if  the  statute  gives  the  stock- 
holder a  remedy  that  is  another 
matter.  Buell  v.  Warner,  33  Vt 
570. 

3  Smith  v.  Rathbun,  22  Hun,  150; 
Brinckerhoof  v.  Bostwiek,  99  N.  Y. 
185;  Wallace  v.  Lincoln  Sav.  Bank, 
89  Tenn.  630;  Ackerman  v.  Halsey, 
37  N.  J.  Eq.  356;  Nelson  v.  Burrows, 
^  Abb.  N.  C.  280. 

4  Dewing  v.  Perdicaries,  96  U.  S. 
193,  as  to  a  creditor's  suit,  to  which 
the  same  rule  must  apply,  if  the 
suit  is  allowed.  Chester  v.  Halliard, 
34  N.  J.  Eq.  341. 

8  Hand  v.  Atlantic  Nat  Bank, 
55  How.  Pr.  231.  A  case  that  pre- 
sents a  remarkable  confusion  of 
ideas  is  found  in  Utah.  Warren  v. 
Robison,  57  Pac.  R  287.  The  case 
was  a  suit  by  creditors  and  stock- 
holders against  the  directors,  charg- 
ing negligence  in  making  loans  and 
managing  the  affairs  of  the  bank, 
whereby  its  funds  were  dissipated. 


The  suit  was  not,  of  course,  one  by 
depositors  alleging  the -reception  of 
deposits  while  the  bank  was  insolv- 
ent Therefore  it  was  a  suit  by  the 
creditors  and  stockholders  in  right 
of  the  bank.  To  such  a  suit  the 
bank  was  a  necessary  party.  The 
receiver  was  a  party,  but  he  had 
been  discharged.  And  although 
the  point  is  made  in  the  briefs,  the 
court  does  not  even  notice  it.  The 
opinion  makes  a  remarkable  sug- 
gestion, and  that  is  that  the  stock- 
holders and  creditors  may  have 
been  guilty  of  such  contributory 
negligence  as  to  defeat  their  recov- 
ery. The  learned  court  evidently 
supposed  that  the  stockholders  and 
creditors  were  suing  for  being  run 
down  by  a  railroad  train,  Contrib- 
utory negligence  in  such  a  case  as 
this  is  impossible.  The  plaintiffs 
ha,d  no  control  of  the  corporation. 
The  opinion  is  by  Bartch,  J.,  who 
has  won  a  deserved  immortality. 


§§  81,  82.]  OFFICERS   AND   AGENTS.  125 

individual  and  another  kind  of  a  judgment  to  him  for  the 
corporation. 

§  81.  Suits  by  bank  assignees  and  receivers  against  of- 
ficers.—  The  rights  of  action  which  the  bank  has  pass  to  its 
assignee l  or  receiver.2  He,  of  course,  can  enforce  whatever 
right  the  bank  could  enforce,  against  both  officers  and  third 
persons.  Even  though  the  statute  declares  that  by  certain 
acts  the  bank  is  dissolved,  the  suit  still  remains  to  the  bank,3 
and  a  fortiori  to  the  receiver.  Whatever  rights  are  given 
to  the  corporation  by  law  or  by  statute,  such  as  the  bank's 
rights  to  recover  illegal  dividends,  can  be  enforced  by  the 
receiver.4  But  it  will  happen  that  the  receiver  may  be  ap- 
pointed in  a  suit  brought  by  the  stockholders,8  when  the 
court  will  take  cognizance  of  the  whole  matter,  and  in  the 
one  suit  settle  all  the  rights  of  the  corporation  involved  by 
proper  proceedings  in  that  action.6  The  corporation  would 
be  a  necessary  party  to  such  suit.  But  after  the  receiver 
was  appointed  he  could  proceed  to  enforce  the  corporation's 
rights  either  in  ancillary  proceedings  in  the  same  action  or 
in  actions  at  law.7  In  suits  either  by  the  representative  of 
the  corporation  or  by  the  corporation  itself,  there  is  no  ne- 
cessity of  joining  all  the  tort-feasors.8  To  such  suits  the 
creditors  are  not  proper  parties.9  As  to  a  compromise  of 
such  claims  by  the  receiver,  we  give  below  a  case.10 

§82.  Statutory  liability  of  officers  for  debts.— There 

are  some  statutes  which  make  officers  liable  for  debts  of  the 
corporation.     Such  a  liability  is  penal  in  its  nature,  to  some 

1  Schultz  v.  Christman,  6  Mo.  App.  the  liability  of  officers   either  to- 
838.  stockholders  or  to  creditors. 

2  Butterworth  v.  O'Brien,  39  Barb.        «  Warren  v.  Fake,  19  How.  Pr. 
193.    And  see  §  79,  ante,  notes  3,  4  430. 

and  5.  7  See  O'Brien  v.  Fitzgerald,  143 

3  Bank  of  Niagara  v.  Johnson,  8    N.  Y.  347. 

Wend.  645.  8  Smith  v.  Rathbun,  22  Hun,  150. 

*  Van  Dyck  v.  McQuade,  45  N.  Y.  9  Kimball  v.  Ives,  30  Hun,  568. 

Super.  Ct.  620.  w  Williams  v.  Halliard,  14  AtL  R, 

5  Jones  v.  Johnson,  86  Ky.  530,  is  a  880. 
case  of  gross  misapprehension  of 


126  BANKS   AND   BANKING.  [§  83. 

extent,  and  does  not  arise  out  of  contract.1  But  it  will  be 
enforced  in  another  state.2  The  liability  created  is  joint, 
and  a  director  is  liable  even  though  he  dissented.3  For  the 
same  reason  a  release  of  one  director  liable  releases  all.4 
But  the  creditor  need  not  join  the  personal  representative 
of  a  deceased  director,5  and  need  only  join  in  the  suit  those 
who  can  be  reached  by  process.6  In  such  case  the  action  of 
debt  lies  against  the  officer.7  The  officer  liable  cannot  an- 
ticipate the  creditor  by  buying  up  claims  against  the  bank, 
since  they  are  not  proper  matters  of  set-off,  although  it  is 
held  in  one  case  that  a  claim  against  the  bank  by  an  officer 
can  be  set  off  by  a  claim  against  him  for  negligence.8 

§  83.  Liability  of  officers  to  creditors. —  We  have  already 
examined  the  liability  to  creditors  established  by  statute  in 
the  last  section.  We  come  now  to  those  rights  which  the 
creditor,  without  the  aid  of  a  statute,  can  enforce  against 
the  officers  of  the  corporation.  The  creditor  can  sue  the 
officer  of  the  bank  who  commits  a  tort  against  him.  But 
this  action  lies  not  because  he  is  a  creditor,  for  it  would  lie 
in  favor  of  any  person  injured  by  a  tort.1  In  the  next  place, 
some  courts  recognize  that  a  creditor  has  certain  rights 
which  he  can  enforce  against  the  officers  of  a  corporation, 
where  he  sues  in  right  of  the  corporation.  Still  other  courts 
maintain  the  doctrine  that  a  creditor  can  sue  the  officers  of 
a  corporation  for  negligence  in  the  management  of  the  cor- 

iSturgesv.  Burton,  8  Ohio  St.  215;  7Bullard  v.  Bell,  1  Mason,  243, 

Gregory  v.  German  Bank,  3  Colo,  agai;  st  a  stockholder  on  a  statu- 

333;  Ashley  v.  Frame,  45  Pac.  R  tory  liability. 

927.     Contra,  Banks  v.  Darden,  18  8St.  Louis  School  Disk  v.  Broad- 

Ga.  318;  Hargroves  v.  Chambers,  30  way  Bank,  12  Mo.  App.  104.  Contra, 

Ga.  580.  But  see  the  next  case  cited.  Ahl  v.  Rhodes,  84  Pa.  319. 

2  Huntington  v.  Attrill,  146  U.  S.  l  The  officer  cannot  shelter  him- 
657.  self  by  saying  that  his  act  was  out- 

3  Banks  v.  Darden,  18  Ga.  318.  side  of  his  duties  as  an  officer.    Mt. 

4  Robinson  v.  Bealle,  20  Ga.  275.  Vernon  Bank  v.  Porter,  52  Mo.  App. 

5  Hargroves  v.  Chambers,  30  Ga.  244.    This  rule  would  apply  also  to 
580.  suits  by  the  bank,  or  its  receiver, 

6  White  v.  How,  3  McLean,  111;  or  hy  the  stockholders. 
&  C.,  Fed.  Cas.  No.  17,548. 


§  84:.]  OFFICERS  AND  AGENTS.  127 

poration.  The  national  bank  act  introduces  further  com- 
plication, which  will  be  noticed  in  proper  sequence.  No 
subject  is  rendered  more  obscure  on  account  of  loose  lan- 
guage used  by  the  courts,  but  it  is  believed  that  the  princi- 
ples which  underlie  the  subject  are  plain,  and  ought  to  be 
•easy  of  application. 

§  84.  Relation  of  officers  of  a  corporation  to  creditors. 

Since  the  officer  is  merely  an  agent  of  the  corporation  he 
stands  in  the  same  relation  to  a  corporation's  creditor  that 
the  agent  of  an  individual  stands  in  relation  to  that  individ- 
ual's creditor,  where  the  agent  has  managed  the  business 
for  the  individual  who  is  his  principal.  Such  is  the  plain 
proposition,  and  although  the  courts  have  befogged  the  sub- 
ject such  the  relation  must  be.  Such  a  situation  discloses 
tio  fiduciary  relation  between  the  officer  and  the  creditor, 
and  none  exists.  But  just  as  the  creditor  of  an  individual 
•can  sue  that  individual's  agent  for  a  fraud  perpetrated  by 
the  agent,  or  for  a  malicious  act  amounting  to  a  tort,  so  the 
creditor  of  the  corporation  can  sue  the  corporation's  officer 
for  a  tort  perpetrated  by  him  against  the  creditor.  The 
common  instance  of  this  action  is  one  for  fraudulent  mis- 
representations or  deceit.  But  the  law  also  recognizes  that 
the  capital  stock  and  assets  of  a  corporation  constitute  the 
security  of  the  corporation's  unsecured  creditor,  just  as  the 
debtor's  property  is  the  sole  security  of  the  debtor's  unse- 
cured creditor;  and  since  the  officers  of  the  corporation  have 
•no  right  to  absorb  or  give  away  this  capital  stock  or  assets, 
where  they  commit  culpable  acts  which  cause  loss  to  the 
corporation,  the  creditor  can  follow  by  a  creditor's  bill  that 
•capital  stock  or  assets  into  the  hands  of  any  one  who  is  not 
a  purchaser  for  value,  or,  if  the  corporation's  property  has 
so  passed,  may  hold  those  who  were  guilty  of  wrongful  con- 
duct in  disposing  of  the  corporation's  property.  This  is 
simply  the  case  of  following  by  creditor's  bill  the  assets  of 
the  debtor,  or,  if  they  cannot  be  followed,  then  it  is  the  case 
of  subjecting  the  debtor's  rights  of  action  against  his  wrongly 
-acting  agent  to  creditor's  bill.  These  seem  to  be  the  correct 


128 


BANKS    AND    BANKING. 


[§85. 


rules  of  law  applicable  to  the  subject.  But  courts  have  ob- 
scured the  subject  so  much  by  fuliginous  expressions  in  re- 
gard to  bank  directors  being  trustees  for  the  creditors,  and 
the  capital  stock  of  a  corporation  being  a  trust  fund,  that  it 
is  a  devious  work  to  find  one's  way  among  the  cases. 

§85.  Liability  to  creditors  for  fraud. —  When  a  bank 
officer  makes  a  false  and  fraudulent  representation  to  a  man, 
whereby  he  becomes  a  creditor  of,  or  a  depositor  in,  a  worth- 
less or  insolvent  bank,  and  the  creditor  relies  upon  that  fraud- 
ulent statement,  the  officer  must  respond  in  damages  in  an 
action  of  deceit.1  But  fraud  may  consist  of  a  representation 
made  either  by  words  or  by  conduct.  If  bank  officers,  who 
control  a  bank,  keep  its  doors  open  when  it  is  insolvent,  they 
thereby  represent  to  every  one  who  comes  to  the  bank  that 
it  is  competent  to  do  business  and  a  safe  place  to  deposit 
money.2  This  latter  case  is  simply  the  former  case,  but  the 


i  Seale  v.  Baker,  70  Tex.  283;  Gid- 
dings  v.  Baker,  80  Tex.  308;  Pres- 
cott  v.  Haughey  65  Fed.  R.  653; 
Solomon  v.  Bates,  118  N.  C.  311. 
Since  this  liability  exists  against 
the  director,  not  as  officer,  but  as 
an  individual,  a  forfeiture  of  the 
bank  charter  is  wholly  immaterial 
Hargroves  v.  Chambers,  30  Ga.  580. 
Such  fraudulent  representations 
may  be  contained  in  published  re- 
ports. Merchants'  Nat  Bank  v. 
Thomas,  28  Wkly.  Law  Bui.  164  It 
has  been  said  that  the  bank  itself 
is  not  liable  for  the  directors'  false 
statements  as  to  the  condition  of 
the  bank,  where  a  man  loaned 
money  on  the  stock  of  the  bank. 
Merchants'  Nat.  Bank  v.  Arm- 
strong, 65  Fed.  R  932.  Whether  a 
director  would  be  liable  would  de- 
pend in  such  case  upon  whether 
the  party  had  a  right  to  rely  on  the 
statement  as  one  to  himself.  The 
director  is  liable  even  though  he 


resided  away  from  the  bank's  loca- 
tion. Houston  v.  Thompson,  29  S.  E. 
R.  827.  If  the  director  attests  a  re- 
port he  is  liable  to  one  who  acted 
on  it,  regardless  of  his  knowledge. 
Gerner  v.  Mosher,  78  N.  W.  R.  384. 
2St  Louis  &  S.  F.  Ry.  Co.  v. 
Johnston,  133  U.  S.  566,  and  the 
cases  cited  therein ;  Craigie  v.  Had- 
ley,  99  N.  Y.  131;  Townsend  v. 
Williams,  117  N.  C.  330;  Miller  v. 
Howard,  95  Tenn.  407;  Delano  v. 
Case,  17  Bradw.  531;  Higgins  v. 
Hayden,  73  N.  W.  R  280.  See 
under  a  statute,  Cummings  v. 
Spannhorst,  5  Mo.  App.  21;  Cum- 
mings v.  Winn,  89  Mo.  51.  The 
statute  may  make  a  failure  within 
thirty  days  prima  facie  evidence 
of  an  intent  to  defraud.  Am.  T. 
&  S.  Bank  v.  Manuf.  Co..  150  III 
836.  Since  such  a  statute  is  simply 
declaratory  of  the  common  law.it  is 
nothing  but  an  instance  of  judicial 
density  to  call  it  a  penalty,  as  it  is- 


§85.] 


OFFICERS   AND   AGENTS. 


129 


representation  is  by  conduct  and  not  by  express  words.3  If 
the  officer  knew,  or  ought  to  have  known,  or  through  negli- 
gence did  not  know,  of  the  bank's  condition  he  is  guilty  of 
the  misrepresentation.4  However  in  the  preceding  ways,  he 
made  the  representation,  he  will  not  be  heard  to  say  that  he 
did  not  intend  to  defraud.8  A  bank  is  not  insolvent  under 
this  rule  as  long  as  it  is  meeting  its  liabilities  in  due  course  of 
business  and  there  is  an  expectation  entertained  on  reason- 
able grounds  of  belief  by  those  who  are  familiar  with  its 
business  that  it  will  continue  to  meet  its  obligations.6  The 
action  above  some  courts  in  their  confusion  have  called  neg- 
ligence or  gross  negligence,7  while  others  have  called  it  the 
violation  of  a  trust  duty  which  the  officers  owed  to  the  de- 
positor.8 But  the  slightest  analysis  shows  that  it  is  neither, 
but  simply  an  action  of  deceit.  To  such  a  case,  it  being  a 
tort  committed  by  the  officer  against  the  depositor,  the  cor- 

called  in  Ashley  v.  Frame,  45  Pac. 
R.  927.  There  was  a  statute  which 
was  wholly  useless  and  was  a  cor- 
rect statement  of  the  common-law 
principle,  yet  the  court  had  the 
hardihood  to  declare  the  liability 
created  a  penalty. 

3  See  Rochester  Printing  Co.  v. 
Loomis,  45  Hun,  93,  120  N.  Y.  659. 

4  Delano  v.  Case,  17  Bradw.  581; 
Baxter  v.  Coughlan,  72  N.  W.  R. 
797;  Cassidy  v.  Uhlman,  50  N.  Y. 
Supp.  818.  Negligence  in  not  know- 
ing is   the   same   as    knowledge. 
Wolf  v.  Simmons,  28  S.  R  586.    The 
case  of  Pierrat  v.  Young,  49  S.  W. 
R  694,  failed  to  notice  this  fact. 

*Seale  v.  Baker,  70  Tex.  288; 
Giddings  v.  Baker,  80  Tex.  308; 
Gerner  v.  Mosher,  78  N.  W.  R  384. 
But  the  allegation  must  show  a 
reliance  upon  the  representation. 
Baker  v.  Ashe,  80  Tex.  356.  And 
it  seems  the  allegation  must  be 
that  the  depositor  would  have 
withdrawn  his  deposit,  not  that  he 
9 


allowed  it  to  remain.  Pierrat  v. 
Young,  49  S.  W.  R.  964;  Brady  v. 
Evans,  78  Fed.  R.  558. 

6  Minton  v.  Stahlman,  96  Tenn. 
98.    This  case  is  unsound  on  an- 
other point.  . 

7  Hodges  v.  Screw  Co.,  1  R.  I.  312; 
Savings  Bank  v.  Caperton,  87  Ky. 
306. 

8  Delano  v.  Case,  17  Bradw.  531, 
121  III  247.    It   must  have  been 
an  exceedingly  astonishing  thing 
for  the  attorneys  for  the  plaint- 
iff who  carefully  drew  a  declara- 
tion based  upon  deceit,  which  is  an. 
admirable  precedent  in  its  way  (see 
17  Bradw.  531),  to  find  themselves 
allowed  to  recover    because  they 
sued  for  a  breach  of  trust.    How 
the  court  could  make  such  an  ab- 
surd error  in  a  state  where  the 
common  law  and  chancery  juris- 
dictions are  kept  separate  almost 
surpasses  belief.    All  judges  ought 
to  know  the  remedies  for  breaches, 
of  trust  are  equitable. 


130  BANKS   AND   BANKING.  [§  86. 

poration  or  its  receiver  need  not  be  made  a  party 9  unless 
the  depositor  or  creditor  so  injured  desires  to  hold  the  bank 
also  responsible  as  a  joint  tort-feasor.  Many  and  various 
may  be  the  phases  of  such  an  action  against  officers  of  a 
bank,  and  they  would  all  be  governed  by  the  same  rule.10 
The  foregoing  principles  apply  also  to  national  banks.  They 
are  wholly  independent  of  statutes,  for  they  exist  by  force 
of  the  common  law.11  The  corporation  or  its  receiver  has 
nothing  to  do  with  this  action.12 

§  86.  Liability  of  officers  to  creditors  for  negligence 
and  illegal  acts. —  A  bank  officer  is  a  trustee  for  the  bank, 
and  in  the  performance  of  that  trust  may  be  guilty  of  viola- 
tions of  the  trust  that  make  him  responsible  to  the  bank, 
or  those  officers  whose  duty  it  is  to  supervise  the  affairs  of 
the  bank  may,  as  heretofore  seen,1  be  guilty  of  negligence 
in  supervision,  whereby  the  injury  to  the  corporation  takes 
place.  Such  acts  dissipate  the  property  of  the  bank;  its 
creditors  have  the  right  to  follow  that  property,  but  since  it 
cannot  usually  be  followed,  the  creditors  may  by  a  creditors' 
bill,  enforce  their  claim  upon  what  the  corporation  has 
left,  which  is  simply  a  right  of  the  bank  to  hold  the  officers 
liable  in  damages  for  a  breach  of  trust.  Those  rights  of 
the  bank  are  choses  in  action,  which  are  equitable  assets  in 
the  sense  that  they  are  rights  to  recover  for  breaches  of 
trust.  They  are  assignable,  and  survive  against  the  per- 
sonal representative  of  the  deceased  officer.2  But  the  judi- 

9  Solomon  v.  Bates,  118  N.  C.  311*  353.    The   uselessness  of  statutes 

Tate  v.  Bates,  118  N.  C.  287.    The  upon  this  matter  is  apparent.    The 

court  reached  a  correct  result,  al-  common  law  presents  a  full  rem- 

though  it  did  not  seem  to  under-  edy.    Its    deficiencies  are  due  to 

stand  the  nature  of  the  action  at  the  ignorance  of  those  who  apply  it. 

all    The  text-writers  only  serve  to  12  They  cannot  release  the  liabil- 

add  to  the  confusion.  ity.    Mallon  v.  Hyde,  76  Fed.  R. 

10  The  confusion  of  the  text-writ-  388;  Houston  v.  Thompson,  29  S. 

ers  is  extreme.    Take  the  case  pro-  E.   R.   827;   Barnes  v.    Poque,    29 

posed  by  3  Thomp.  Corp.,  sees.  4138,  Wkly.    Law    Bui.    382;    and    see 

4139.    The  directors  could  be  sued  §  334,  post,  note  12. 

under  this  section  for  deceit.  l  See  §  79,  ante. 

«  Prescott  v.  Haughey,  65  Fed.  R.  2  Wilkinson  v.  Dodd,  41  N.  J.  Eq. 


§  86.] 


OFFICEES    AND    AGENTS. 


131 


cial  mind  has  nowhere  shown  itself  of  a  higher  specific 
gravity  than  in  dealing  with  this  question.  Judges  have  be- 
come confused  as  to  the  trust  between  the  bank  and  its  offi- 
cers and  the  creditor's  right  to  enforce  the  trust.  Thus 
some  courts  have  triumphantly  demonstrated  that  there  is 
no  trust  relation  between  the  bank  officers  and  its  creditors, 
and  thought  that  they  have  thus  disposed  of  the  question ; 8 
but,  as  a  matter  of  fact,  they  have  not  touched  it,  because 
the  creditor's  right  is  not  founded  upon  a  trust,  but  is  based 
upon  his  rights  to  have  the  bank  assets.  On  the  other  hand, 
we  find  courts  insisting  that  there  is  a  right  in  the  creditor 
to  claim  that  the  bank  is  a  trustee  for  him,  and  that  in  this 
action  he  sues  for  a  breach  of  that  trust.4  But  if  that  is 


566;  Stephens  v.  Overstolz,  43  Fed. 
R  771.  Some  courts  and  law  writ- 
ers may  find  difficulty,  because 
of  the  fact  that  the  breach  of  duty 
on  the  part  of  the  officer  consists 
of  negligence  in  the  performance 
of  his  duties,  and  hence  such  a 
right  of  action  might  not  be  as- 
signable. But  this  consideration 
overlooks  the  fact  that  the  negli- 
gence is  a  breach  of  trust  towards 
the  beneficiary,  which  is  the  bank, 
and  the  right  to  recover  for  a 
breach  of  trust  was  never  governed 
by  the  rules  of  the  common  law, 
but  by  the  rules  of  equity.  Such 
rights  of  the  beneficiary  were  al- 
ways assignable  and  are  one  of  the 
accompanying  circumstances  of  an 
equitable  estata  They  not  only 
survive  to  the  heirs  of  the  benefi- 
ciary, but  they  survive  against  the 
personal  representative  of  the 
trustee.  No  difficulty,  therefore, 
can  be  met  from  this  phase  of  the 
question. 

3  Thus  Dedrick  v.  Bank  of  Com- 
merce, 45  S.  W.  R  786,  is  an  admi- 
rable disquisition  proving  that  the 


officers  of  a  bank  are  not  trustees 
for  creditors  of  the  bank.  There- 
fore, the  opinion  concludes,  the  ac- 
tion does  not  lie,  because  it  is  for  a 
breach  of  trust.  It  must  have  been 
painful  to  the  plaintiff's  attorneys, 
who  drew  an  admirable  creditor's 
bill,  to  find  that  the  court  could  not 
understand  that  they  were  trying 
to  enforce  the  bank's  rights  against 
the  bank's  trustees.  The  same  re- 
mark applies  to  Union  Nat.  Bank 
v.  Hill,  49  S.  W.  R  1012  (Mo.).  So, 
in  Foster  v.  Bank  of  Abingdon,  88 
Fed.  R  604,  the  court  totally  mis- 
conceives what  the  case  was  about, 
but  makes  a  correct  decision. 

4  Marshall  v.  Farmers'  Bank,  85 
Va.  676;  Savings  Bank  v.  Caperton, 
87  Ky.  306;  Banning  v.  Loving,  82 
Ky.  370;  Conant  v.  Bank,  1  Ohio 
St.  298,  and  Morse  on  Banking  (2d 
ed.),  133,  all  show  this  misconcep- 
tion at  its  worst.  See  §  84,  ante. 
These  authorities  appear  to  think 
that  this  action  lies  at  law,  and  the 
law  has  been  so  wrenched  from  its 
moorings  by  crude  thought  upon 
this  subject  that  the  action  at  law 


132  BANKS   AND   BANKING.  [§  86. 

true,  the  fruits  of  the  litigation  would  not  be  assets  for  the 
bank,  but  would  belong  to  the  creditors.  Again,  this  right 
of  the  creditor  can  never  be  insisted  upon  except  when  the 
bank  is  insolvent,  for  as  long  as  the  bank  is  able  to  pay,  and 
does  pay,  its  creditors,  no  creditor  is  injured  by  or  can  com- 
plain of  the  officer's  breach  of  his  duty  toward  the  bank. 
But  the  bank  being  insolvent,  two  principles  come  into 
play:  first,  the  assets  ought  to  be  equally  distributed  among 
the  creditors;  and  second,  the  suit  being  a  creditors'  bill, 
all  creditors  have  a  right  to  come  into  the  action,  and  must 
come  into  that  action.  This  fact  being  conceded,  the  ne- 
cessity for  a  judgment  at  law  and  a  return  of  "  nulla  'bond  " 
is  dispensed  with.5  Such  being  the  nature  of  the  action, 
it  is  quite  useless  for  us  to  say  that  without  a  statute  such 
an  action  does  not  lie  at  law;6  because  no  creditor's  bill 
lies  at  law.  But  since  the  right  against  the-  officer  which 
the  creditor  is  asserting  belongs  to  the  bank,  the  corpo- 
ration must  be  made  a  party,7  just  as  the  debtor  whose 
rights  are  being  asserted  must  be  made  a  party.  In  the 
next  place,  if  the  bank  has  an  assignee  or  a  receiver,  he 
must  be  made  a  party,8  because  the  bank's  choses  in  action 
belong  to  him;  and  since  he  is  the  custodian  of  those  rights, 

has  been  held  to  lie  for  this  cause  v.  Dorchester,  23  Pick.  112.    And 

of  action.    In  Warren  v.  Robison,  see  note  4  to  this  section. 
57  Pac.  R.  287,  where  the  suit  was       7  Chester  v.  Halliard,  36  N.  J.  Eq. 

by  both  creditors  and  stockholders,  313.    The  court  of  New  Jersey  has 

the  court  actually  proposed  con-  done  much  to  explain  this  question, 
tributory  negligence  as  a  defense.  8Hand  v.  Atlantic  Bank,  55  How. 

8  This  follows  from  the  principle  Pr.  231.    The  case  of  Solomon  v. 

stated  in  §  61,  ante;  and  Cunning-  Bates,  118  N.  C.  311,  was  an  action 

ham  v.  Pell,  5  Paige,  607,  shows  the  for  deceit,  and  hence  was  rightly 

propriety  of  bringing  the  action  on  decided.   So  was  the  case  of  Foster 

behalf  of  all  creditors,  because  the  v.  Bank  of  Abingdon,  88  Fed.  R 

fruits  of  the  litigation  are  corpo-  604,  rightly  decided,  because  the 

rate  assets.    But  the  dicta  in  Col-  suit  was  not  by  stockholders.    The 

lins  v.  Brierfield  Coal  Co.,  150  U.  S.  case  of  Robison  v.  Warren,  57  Pac. 

371,  would  seem  to  require  a  judg-  R  287,  inferentially  decides  other- 

ment.    But  a  judgment  in  such  a  wise  (see  note  5  to  the  preceding 

case  would  be  entirely  useless.  section);  but  the  court,  in  its  opin- 

6  Funz  v.  Spanhorst,  67  Mo.  256;  ion,  displays  such  an  amazing  mis- 

Vose  v.  Grant,  15  Mass.  505;  Harris  conception  of  the  nature  of  this 


§80.] 


OFFICEKS    AND   AGENTS. 


133 


if  he  is  a  receiver,  an  officer  of  the  court,  no  suit  ought  to 
be  brought  unless  he  has  refused  to  bring  a  suit  and  thus 
renounced  his  intention  of  enforcing  the  obligation  on  be- 
half of  the  bank.9  But  since  a  creditor  need  not  make  a 
demand  upon  his  debtor  to  enforce  his  choses  in  action,  so 
the  creditor  of  the  bank  need  not,  under  the  ninety-fourth 
equity  rule,  make  a  demand  upon  the  bank  to  sue.10  The 
action  being  equitable,  it  should  be  brought  by  one  creditor 
on  behalf  of  all.11  Since  the  court  of  equity  can  mould  its 
decree,  the  creditor  may  unite  all  rights  which  he  is  insist- 
ing upon,  both  those  which  he  is  enforcing  in  right  of  the 
bank,  and  rights  which  he  claims  on  account  of  fraudulent 
representations  made  by  the  bank  officers  to  his  injury.12 
The  bill  is  not  multifarious,  because  the  defendants  are  not 
all  equally  liable,  or  are  not  liable  upon  the  same  act.13  The 
fruits  of  the  litigation  where  the  bank's  choses  in  action  are 
enforced  are  assets  of  the  bank  for  the  purpose  of  distribu- 

The  laches  of  the  bank  would 


tion  among  its  creditors.14 


action  that  it  is  forced  upon  us  to 
say  that  the  most  charitable  con- 
struction to  put  upon  that  case  is 
that,  although  it  was  a  bill  in 
equity,  the  court  thought  it  was  a 
common-law  action  for  breach  of 
duty. 

9Ackerman  v.  Halsey,  87  N.  J. 
Eq.  356;  Hand  v.  Atlantic  Bank,  55 
How.  Pr.  231 ;  Nelson  v.  Burrows,  9 
Abb.  N.  C.  280.  The  case  of  Ex 
parte  Chetwood,  165  U.  S.  443,  rec- 
ognizes the  principle  as  a  proper 
one.  Brinckerhoff  v.  Bostwick,  88 
N.  Y.  52.  And  see  §  80,  note  2,  for 
the  principle  as  applied  to  stock- 
holders. 

10  Foster  v.  Bank  of  Abingdon,  88 
Fed.  R  604  The  reasoning  of  the 
court  is  absolutely  beside  the  ques- 
tion. So  it  is  in  Solomon  v.  Bates, 
118  N.  C.  311;  Tate  v.  Bates,  118 
N.  C.  287,  but  they  are  correctly  de- 


cided. See,  however,  the  authori- 
ties in  the  last  note;  and  Howe  v. 
Barney,  45  Fed.  R  668;  National  Ex. 
Bank  v.  Peters,  44  Fed.  R  13,  say 
the  suit  cannot  be  brought  by  cred- 
itors at  all  if  there  is  a  receiver. 
But  see  last  note. 

11  Cunningham  v.  Pell,  5  Paige, 
607,  and  note  5,  supra. 

'2 Foster  v.  Bank  of  Abingdon,  88 
Fed.  R  604;  Tate  v.  Bates,  118  N.  C. 
287;  Solomon  v.  Bates,  118  N.  C. 
311.  But  it  is  wrong  to  permit 
such  joinder,  because  of  the  diffi- 
culty of  dividing  by  decree  assets 
from  what  the  plaintiffs  individu- 
ally own. 

"Hayden  v.  Thompson,  71  Fed. 
R  60;  Stephens  v.  Overstolz,  43 
Fed.  R  771.  But  see  O'Brien  v. 
Fitzgerald,  143  N.  Y.  347. 

14  Dewing  v.  Perdicaries,  96  U.  S. 
193.  But  see  note  12,  supra. 


134  BANKS   AND   BANKING.  [§  87. 

be  a  defense  against  a  suit  by  the  creditors,  because  they 
can  attain  no  higher  rights  than  the  bank  has.15 

§  87.  National  banks. —  In  the  case  of  national  bank  di- 
rectors it  is  necessary  to  keep  in  mind  that  there  are  liabilities 
created  by  statute  and  liabilities  that  exist  independently  of 
any  statute.  Thus  national  bank  directors  are  liable,  just 
as  any  other  bank  officer  or  private  person,  for  fraudulent 
representations  by  words  or  by  conduct.1  The  bank  or  its 
receiver  may  sue  the  directors  for  mismanagement  and  mis- 
•application  of  the  funds  of  the  bank.2  The  stockholders  in 
a  national  bank  may  sue  where  the  receiver  or  the  corpora- 
tion will  not.3  The  creditors  may  have  the  remedies  that 
exist  for  the  creditors  of  any  other  bank.4  But  where  the 
redress  sought  is  for  a  violation  of  the  national  banking 
law,  a  court  of  appeal  has  erroneously  held  that  the  remedy 
given  to  the  comptroller  is  exclusive,  and  can  only  be  en- 
forced by  the  receiver  of  the  comptroller.5  But  that  receiver 
may  bring  the  suit  without  an  order  from  the  comptroller.6 
It  is  held  further  that  where  a  remedy  is  sought  in  order  to 
charge  directors  with  a  violation  of  the  national  banking 
act,  under  section  5239  of  the  Revised  Statutes  of  the  United 

15  Cooper  v.  Hill,  94  Fed.  R  583.  supra.     Hayden  v.  Thompson,  71 

But  the  laches  will  not  begin  until  Fed.  R  60,  puts  the  suit  on  the 

the  directors  surrender  control.  Na-  ground  of  breach  of  trust    This  is 

tional  Bank  v.  Wade,  84  Fed.  R  10.  true  where  the  corporation  or  its 

^rescott  v.   Haughey,  65  Fed.  receiver  sues.    When  the  creditor 

R  353;  Merchants'  Nat.   Bank  v.  sues,  the  right  to  recover,  on  what- 

Thoms,  28  Wkly.  Law    Bui.   164.  ever  ground  it  is  put,  is  not  for  a 

Withdrawal  of  a  large  deposit  by  a  breach  of  trust  toward  the  creditor, 

director  is  said  to  be  by  a  remark-  but  a  breach  of  trust  toward  the 

able  effort  of  the  judicial  intellect  bank. 

cognizable  at  law,  but  not  in  equity.  8Ex  parte  Chetwood,  165  U.  S. 

Robinson  v.  Hall,  59  Fed.  R  648.  443.     See  §  80,  supra,  and   cases 

That  is  not  true.    It  is  an  illegal  cited  in  note  3  to  that  section, 

preference  which  the  receiver  of  4  See  §  86,  supra. 

the  bank  may  recover.    See  §  327,  8  Hayden  v.  Thompson,  71  Fed.  R 

post.  60.    But  this  case  must  be  consid- 

2  Robinson  v.  Hall,  63  Fed.  R  222,  ered  as  overruled  by  Ex  parte  Chet- 

25  U.  S.  App.  48;  Warner  v.  Pen-  wood,  165  U.  S.  443.    See  §  334,post. 

noyer,  91  Fed.  R  987.    See  §  81,  6  Hayden  v.  Thompson,  supra 


§§88,  89.]  OFFICERS   AND   AGENTS.  135 

States,  no  suit  lies  until  forfeiture  of  the  charter  is  made  as 
provided  in  that  act.7  This  erroneous  ruling  in  effect  denies 
such  remedies  to  either  stockholders  or  creditors  until  a  for- 
feiture has  taken  place,  when,  a  receiver  being  already  in 
possession,  the  suit  would  be  useless.  The  rules  of  joinder 
of  causes  of  action  have  been  noticed  in  the  preceding  sec- 
tion. The  directors  cannot  discharge  their  liability  for  any 
part  of  an  illegal  loan  by  showing  that  part  of  the  loan  was 
paid  in  illegal  dividends.8  The  statute  of  limitations  or  the 
defense  of  laches  will  not  run  in  favor  of  the  officers  while 
they  control  the  bank.9 

§  88,  Release  to  directors. —  The  rule  of  law  is,  except 
where  modified  by  statute,  that  the  release  of  one  joint  tort- 
feasor  releases  all.1  A  release  to  one  director  jointly  liable 
would  be  a  defense  to  the  action.  Since  the  right  to  call  its 
officers  to  account  belongs  to  the  corporation,  except  where 
the  statute  confers  the  right  on  some  other  party,  the  cor- 
poration can  release  its  directors  from  liability  to  it,  if  the 
act  be  otherwise  lawful.  But  such  a  transaction  would  be 
narrowly  scanned  by  a  court  for  evidences  of  fraud.  If 
fraudulent  it  would  be  held  for  naught.2  Compromises  of 
the  liability  are  not  usually  permitted.3 

§  89.  Criminal  liability  of  bank  officers. —  Certain  acts 
in  banking  officers  are  offenses  at  common  law,  others  are 

7  Wells  v.  Graves,  41  Fed.  R  459;  See  also,  where  a  release  is  given  to 
Gerner  v.  Thompson,  74  Fed.  R 125.  one  with  a  reservation  as  to  others, 
These  cases  are  no  longer  author-  Solly  v.  Forbes,  2  Brod.  &  Bing.  38; 
ity.    Their  absurdity  is  sufficiently  Ruble  v.  Turner,  2  Hen.  &  Munf. 
apparent.    Cockrill   v.  Cooper,  86  88;  Matthews  v.  Manufacturing  Co., 
Fed.  R  7  (C.  C.  A.);  National  Bank  3  Robt  711. 

v.  Wade,  84  Fed.  RIO.    And  a  ficti-  2  A  release  after  insolvency  or 

tious  increase  of  capital  stock  on  a  suit  brought  would  probably  never 

fictitious  valuation  of  assets  ren-  be  permitted  to  stand.  The  release 

ders  the  directors  liable.    Cockrill  by  the  directors  to  one  of  their  own 

v.  Abeles,  86  Fed.  R  505.  number  or  to  an  officer  would  be  a 

8  Witters  v.  Sowles,  43  Fed.  R  771.  fraud  in  itself. 

9  National  Bank  v.  Wade,  84  Fed.  3  Williams  v.  Halliard,  14  AtL  R 
R  10.  880. 

1  Cocke  v.  Jennor,  Hob.  66,  pL  69. 


136  BANKS   AND   BANKING.  [§  90. 

offenses  under  statutes.  "Where  no  common-law  offenses 
exist,  as  under  the  United  States  law  and  under  the  criminal 
and  penal  codes  of  many  states,  the  statute  is  the  sole  defi- 
nition of  the  crime.  But  in  states  which  recognize  common- 
law  offenses,  that  system  must  be  looked  to  as  well  as  the 
statutes  in  order  to  ascertain  what  acts  are  criminal. 

§  90.  Receipt  of  deposits  in  insolvent  bank. —  Where  a 
bank  officer  fraudulently  represents  his  bank  to  be  solvent 
and  obtains  a  deposit,  his  offense  has  been  defined  to  be  the 
obtaining  of  money  by  false  pretenses.1  Insolvency  under 
such  statutes  means  that  condition  where  the  bank  is  unable 
to  meet  its  liabilities  as  they  become  due  in  the  ordinary 
course  of  business.2  An  exception  is  made  in  some  statutes 
as  to  the  receipt  of  a  deposit  where  the  depositor  is  indebted 
to  the  bank,  but  it  must  be  such  a  deposit  as  the  bank  would 
have  the  right  to  appropriate  to  its  claim.8  Such  statutes 
have  been  held  not  to  apply  to  private  bankers.4  Making 
such  an  act  a  criminal  offense  in  a  private  banker  does  not 
cause  imprisonment  for  debt,  nor  does  it  deny  to  the  banker 
the  equal  protection  of  the  laws.5  The  reasons  why  insolv- 
ency exists  and  the  agency  of  the  defendant  in  producing 
the  condition  is  immaterial.6  The  deposit  need  not  be  re- 
ceived in  the  banking  rooms,7  nor  by  the  defendant  himself.3 
The  offense  is  committed  by  keeping  the  bank  open  and  per- 
mitting the  reception  of  deposits,  knowing  it  to  be  insolv- 

1  Commonwealth  v.  Schwartz,  18  pare  Commonwealth  v.  Scholl,  12 
8.  W.  R  359,  19  S.  W.  R  189.    Ex-  Pa.  Co.  Ct.  R  209.    But  it  is  no  de- 
hibiting    false    books.     People    v.  fense  that  the  depositor  can  follow 
Helmer,  43  N.  Y.  Supp.  642.    The  the  deposit  as  a  trust  fund.    State 
rule  applies  to  certificates  of  de-  v.  Eifert,  71  N.  W.  R  248. 

posit.  State  v.  Shore,  70  N.  W.  R  <  State  v.  Kelsey,  89  M o.  623.  Com- 
312.  pare  State  v.  Smith,  62  Minn.  540, 

2  State  v.  Caldwell,  79  Iowa,  432.    and  next  case. 

Capital  stock  and  surplus  are  con-  *  Commonwealth  v.  Sponsler,  16 

sidered  resources.    State  v.  Myers,  Pa.  Co.  Ct.  R  116,  reversed  170  Pa. 

54  Kan.  206.    See  also  Meadowcroft  194;  Baker  v.  State,  54  Wis.  368. 

v.  People,  163  III  56.  «Carr  v.  State,  104  Ala.  4. 

8  State  v.  Beach,  43  N.  E.  R  949;  »  State  v.  Yetzer,  97  Iowa,  423. 

Nichols  v.  State,  46  Neb.  715.    Com-  8  State  v.  Caldwell,  79  Iowa,  432. 


§  91.]  OFFICERS   AND   AGENTS.  137 

ent;9  but  even  the  element  of  knowledge  is  dispensed  with 
by  some  statutes.10  But  if  the  officer  forbids  the  reception  of 
the  deposit,  he  is  not  guilty,11  unless  he  afterwards  received 
it.12  There  is  no  necessity  to  allege  in  the  indictment  that 
any  one  was  injured,13  but  the  fact  of  insolvency  should  be 
alleged  as  a  fact  and  not  inferentiallv.14  This  offense  is  some- 

»/ 

times  defined  as  the  creating  of  indebtedness  of  the  bank  by 
receiving  deposits  while  the  bank  was  insolvent.15  A  similar 
offense  of  fraud  is  perpetrated  by  selling  a  draft,  knowing 
the  drawer  bank  to  be  insolvent,  and  that  before  the  draft 
can  be  cashed  the  fund  against  which  it  is  drawn  will  be 
exhausted.16  In  states  requiring  a  popular  vote  to  ratify  a 
banking  law,  a  statute  defining  a  criminal  offense  as  to  bank- 
ing does  not  need  to  be  ratified  by  popular  vote.17  Other 
matters  of  evidence  are  ruled  upon  in  cases  in  the  note.18 

§  91.  Other  offenses. —  Statutes  exist  requiring  returns  to 
be  made  by  bank  officers,  and  a  false  return  is  defined  to  be 
perjury.  The  same  offense  is  a  false  return  in  the  case  of 
national  banks.  The  return  is  for  the  purpose  of  showing 
the  condition  of  the  bank.  Even  if  it  does  not  agree  with 
the  books,  but  is  a  fair  showing  of  the  condition  of  the  bank, 
the  officer  is  not  guilty  of  perjury  by  verifying  it.1  It  seems 

9Carr  v.  State,  104  Ala.  4;  State  funds,  no  offense  was  committed. 

v.  Yetzer,  97  Iowa,  428.    Compare  Comm.  v.  Jenkins,  170  Pa.  194. 

State  v.  Eifert,  65  N.  W.  R  309;  14  State  v.  Bard  well,  72  Miss.  535. 

Commonwealth  v.  Scholl,  12  Pa.  Co.  The  word  "  unsafe  "  in  a  statute 

Ct.  R  209.  means  insolvent  as  applied  to  banks. 

10  Murphy  v.  People,  19  Bradw.  125.  In  re  Koetting,  90  Wis.  166. 

11  Commonwealth  v.  Jenkins,  170  15  State  v.  Sattley.  131  Mo.  464. 
Pa.  194,  reversing  Comm.  v.  Spons-  16  Anonymous  Case,  67  N.  Y.  598. 
ler,  16  Pa.  Co.  Ct.  R.  116.  « In  re  Koetting,  90  Wis.  166. 

12  State  v.  Eifert,  65  N.  W.  R.  309.  w  State  v.  Beach,  43  N.  E.  R.  949; 

13  State  v.  Myers,  54  Kan.  206.    An  State  v.   Caldwell,  79   Iowa,  432; 
intention  to  return  the  deposit  is  State  v.  Yetzer,  97  Iowa,  423;  State 
no  defense.    Comm.  v.  Sponsler,  16  v.  Sattley,  131  Mo.  464;  Nichols  v. 
Pa.  Co.  Ct.  R  116.    But  if  the  iden-  State,  46  Neb.  715. 

tical  thing  deposited  was  returned  l  Comm.  v.  Dunham,  Thacher  Cr. 
and  never  mixed  with  the  bank's  Cas.  519.  Compare  United  States 

v.  Allen,  47  Fed.  R  696. 


138  BANKS   AND   BANKING.  [§  92, 

a  fair  proposition  that  the  indictment  should  allege  a  false 
return  was  made  wilfully,  because  the  law  does  not  punish 
mere  mistake  or  ignorance.2  If  the  return  was  made  by  the 
officer  believing  it  to  be  true,  but  when  it  was  in  fact  false,. 
he  would  not  be  guilty.3  Such  is  the  law  of  perjury.  There 
are  offenses  connected  with  banks,  such  as  converting  money 
or  bank  bills  or  notes  of  the  bank,  and  overdrawing  an  ac- 
count by  an  officer.  The  offense  of  conversion  of  bank  bills 
or  notes  in  a  statute  has  been  held  not  to  be  committed  by 
appropriating  promissory  notes  or  commercial  paper  of  the 
bank.4  For  the  offense  of  overdrawing  an  account  by  an 
officer  and  wrongfully  obtaining  the  money  of  the  bank,  it 
is  necessary  to  show  something  more  than  a  mere  overdraft,* 
although  it  is  not  necessary  to  allege  an  intent  to  defraud.6 

§  92.  National  bank  returns. —  The  national  banking  law 
requires  a  return  verified  by  the  president  or  cashier  of  a 
national  bank  and  attested  by  three  directors  to  be  made  five 
times  a  year,  and  special  reports  at  such  other  times  as  the 
comptroller  of  the  currency  may  designate.1  The  form  is 
designed  by  the  comptroller,  and  the  date  of  the  call  is  never 
known  until  the  call  is  made.  Thus  two  kinds  of  reports  are 
provided  for,  both  upon  call.  Another  section  of  the  statute 
makes  it  an  offense  wilfully  to  make  a  false  entry  in  such  a 
return.2  The  entries  are  criminal  when  made  with  an  intent 

2  Comm.  v.  Dunham,  supra.  Com-  ciple  the  two  kinds  of  reports  ought 
pare  Graves  v.  United  States,  165  to  be  discriminated.    If  the  indict- 
U.  S.  323.  ment  was  based  upon  an  allegation 

3  See  cases  of  false  return  in  the  of  a  report  made  to  the  comptroller, 
next  section.  proof  of  either  one  of  the  regular 

4  State  v.  Stimson,  24  N.  J.  Law,  9.  five  reports,  or  of  a  report  on  special 
The  phrase  was  "  money,  bank  bill  call,  would  answer.    But  if  the  in- 
or  note."    The  word  "note,"  on  the  dictment  alleged  one  of  the  five  re- 
principle  of  noscitur  a  sociis,  was  ports,  proof  of  a  report  upon  special 
construed  bank  note.  call  would  be  a  variance.    Because 

5  People  v.  Clements,  42  Hun,  286.  needless  particularity  of  averment 

6  State  v.  Stimson,  24  N.  J.  Law,  in  an  indictment  where  matter  of 
478.  description  must  be  proven  as  al- 

1  Seo.  5211,  R.  S.  U.  S.  leged.    This  very  point  was  made 

2  Sec.  5209,  R.  S.  U.  S.    On  prin-    in  Bacon  v.  United  States,  97  Fed.  R. 


§  92.]  OFFICERS   AND   AGENTS. 

to  deceive  or  defraud  persons  named  in  the  statute.  This 
statute  therefore  requires  two  intents:  the  first,  the  intent  to 
make  a  false  entry  with  knowledge  of  its  falsity.8  It  does 
not  cover  and  is  not  intended  to  cover  honest  mistakes.  It 
will  be  seen,  therefore,  that  if  a  defendant  is  in  fact  ignorant 
of  the  falsity  of  the  entry,  whether  his  mistake  arose  from 
ignorance  of  fact  or  of  law,  he  has  committed  no  offense.4 
Such  a  question  must  always  be  submitted  to  the  jury,  and 
if  it  is  not,  but  the  court  assumes  to  say  that  the  entry  is 
false,  its  charge  is  erroneous.5  If  the  entry  in  the  report  is- 
thus  found  to  be  wilfully  false  the  second  question  arises: 
Was  it  intended  to  deceive  or  defraud  ?6  but  that  fact  may 
be  inferred  from  the  wilful  making  of  a  false  entry  with 
knowledge  of  its  falsity.7  The  charge  must  be  the  intent  to 
deceive  one  of  the  persons  named  in  the  -statute;  an  intent 
to  deceive  the  comptroller  of  the  currency  is  insufficient.8 
The  report  must  be  one  of  the  reports  named  in  the  statute ; 
a  report  made  to  a  bank  examiner,  which  it  is  not  the  duty 
of  the  officer  to  make,  will  not  support  an  indictment.9  The 

35,  but  the  court  ignored  it  or  re-  holds  some  what  different  language. 

fused  to  notice  it  at  alii    The  record  See  47  Fed.  R  696. 

shows  that  the  point  was  made.  See  5  Graves   v.    United  States,   165 

United  States  v.  Hughitt,  45  Fed.  R.  U.  S.  823. 

47.    United  States  v.  Booker,   80  6  United  States  v.  Means,  42  Fed. 

Fed.  R.  376,  wrongly  holds  that  the  R.  599;  United  States  v.  Allis,  73 

report  need  not  be  a  report  men-  Fed.  R.  165.    The  intent  must  be 

tioned  in  sec.  5211,  R.  S.    Bacon  v.  proven  as  alleged.    United  States 

United  States,  97  Fed.   R.   35,  so  v.  Allen,  47  Fed.  R  696. 

holds  also,   but  the  statement  is  7  United  States  v.  Harper,  33  Fed. 

dictum,  for  it  appeared  that  the  re-  R.  471.   The  principle  stated  in  that 

port  was  a  report  covered  by  sec.  case  applies  here. 

5211.  8  United  States  v.  Bartow,  10  Fed. 

3  Graves  v.  United  States,  165  U.  S.  R.  874,    Compare  United  States  v. 
323;  United  States  v.  Allis,  73  Fed.  Allis,  73  Fed.  R.  165. 

R.  165;  United  States  v.  Allen,  47  9  United  States  v.  Eqe,  49  Fed.  R. 

Fed.  R  696;  United  States  v.  Graves,  852.    It  must  be  averred  that  the 

53  Fed.  R.  634.  report  was  verified  by  proper  offi- 

4  This  is  the  effect  of  Graves  v.  cer.    United  States  v.   Potter,  5ft 
United  States,  165  U.  S.  323,  and  Fed.  R.  97.    See  also  note  2  to  this 
United  States  v.  Allis,  73  Fed.  R  section  for  cases  contra,  which  are 
165.    But  United  States  v.  Allen,  United  States  v.  Booker,  80  Fed.  R 


140  BAKES   AND   BANKING.  [§  92. 

persons  named  in  the  statute  alone  are  indictable,  not  the 
directors  who  certify,10  although  they  may  be  indicted  as 
aiding  and  abetting  the  act.11  The  form  of  the  report  is  the 
regular  blank  form.  It  provides  for  the  entry  of  totals  of 
the  various  resources  of  the  bank  and  the  various  liabilities. 
Loans  and  discounts  are  under  one  head,  overdrafts  secured 
and  unsecured  under  other  heads.  Under  the  various  heads 
are  provided  subdivisions  for  the  loans  and  discounts  upon 
which  officers  of  the  bank  are  liable,  and  for  overdrafts  of 
officers  or  upon  which  they  are  liable.12  Suspended  loans 
may  be  entered  under  the  head  of  loans  and  discounts.11 
Unmatured  and  contingent  liabilities  must  be  shown  in  the 
report.14  But  difficult  questions  arise  as  between  loans  and 
discounts  and  overdrafts.  Cases  have  arisen  where  over- 
drafts so  called  have  been  reported  among  the  loans  and 
discounts.  This  may  be  caused  by  the  fact  that  they  have 
been  arranged  for  verbally,  or  that  the  customer  has  given 
a  note  to  the  bank  for  a  certain  amount  secured  by  an  in- 
dorser  or  sometimes  not,  wherein  the  parties  promise  to  pay 
the  overdraft  with  a  rate  of  interest  above  the  legal  rate, 
with  collection  charges  and  attorney's  fees.  The  two  cases 
differ  in  this:  The  arrangement  in  the  one  case  is  verbal, 
in  the  other  is  evidenced  by  a  writing;  but  both  make  a  con- 

376,  and  Bacoii  v.  United  States,  97  12  In  both  United  States  v.  Allis, 

Fed.  R  35.    This  last  case  does  not  73  Fed.  R  165,  and  United  States  v. 

notice  United  States  v.  Eqe,  supra,  Graves,  53  Fed.  R  634,  which  are 

and  United  States  v.  Potter,  supra,  charges  to  juries,  long  disquisitions 

10  United  States  v.  Potter,  56  Fed.  will  be  found  upon  these  reports 
R  97.     Contra,  United  States   v.  and  kindred  matters.  Both  charges 
Means,  42  Fed.  R  599.    But  it  is  are  very  good  examples  of  what  a 
held  in  United  States  v.  Hughitt,  judge  ought  to  avoid  in  charging 
45  Fed.  R  47,  that  the  indictment  the  jury.     They  are  full  of  bold 
need  not  aver  that  the  report  was  assertion   and  irrelevant  rhetoric 
made  pursuant  to  a  call,  or  upon  a  that    would   be   pardonable    in  a 
form  prescribed,  or  at  a  time  called  "  stump  speech,"  but  not  in  a  charge 
by  the  comptroller.    This  case  is  to  a  jury. 

wrong.    See  notes  2  and  10  to  this  13  United  States  v.  Graves,  53  Fed. 

section.  R  634 

11  United  States  v.  Potter,  56  Fad.  14  Cochran  v.  United  States,  157 
R  97.  U.  S.  286. 


§  92.]  OFFICERS   AND   AGENTS.  141 

tract  differing  from  an  overdraft  pure  and  simple,  which 
does  not  draw  interest  unless  a  course  of  dealing  or  custom 
makes  it  draw  interest.  Now  it  seems  plain  that  if  the 
officer  making  the  report  honestly  thought  that  the  over- 
drafts had  become  loans  he  was  guilty  of  no  offense,  because 
it  was  an  honest  mistake.15  In  the  first  case  it  has  been  held 
that  the  overdraft  remained  as  a  matter  of  law  an  overdraft, 
despite  the  verbal  arrangement.16  But  in  the  second  case 
the  transaction  is  certainly  a  loan,  although  it  is  not  a  dis- 
count. It  is  a  contrivance  of  the  borrower  to  avoid  paying 
interest  on  any  more  money  than  he  has  use  for.  The  con- 
tract of  the  parties  is  determined  by  the  note,  and  the  over- 
draft is  simply  evidence  of  the  amount  due  on  the  note.  The 
indorser,  if  there  be  one,  could  only  be  held  by  virtue  of  the 
writing.  But  such  transactions  would  appear  on  the  books 
simply  as  overdrafts.  The  demand  notes  could  not  be  en- 
tered among  the  bills  receivable  of  the  bank,  because  the 
amount  due  would  vary  from  day  to  day.  Yet  this  makes 
no  difference,  because  the  report  ought  to  show  the  actual 
facts ;  it  may  agree  with  the  books  or  not.17  The  books  ought 
not  to  be  evidence  against  the  officer  as  admissions,  unless 
he  kept  the  books  or  directed  the  form  of  entries  in  the 
books,18  although  they  would  be  evidence  if  proved  to  lo& 
entries  in  due  course  of  business  with  the  suppletory  oath 
of  the  person  who  made  the  entries  that  they  were  correct. 

i*  This  is  the  effect  of  Graves  v.  «  United  States  v.  Allen,  47  Fed. 

United  States,  165  U.  S.  323,  and  R  696;  Commonwealth  v.  Dunham, 

United  States  v.  Allis,  73  Fed.  R.  Thach.  Cr.  Gas.  519.     But  Bacon 

Ifi5.    See  §  150,  infra.  v.  United  States,   97  Fed.  R.  35, 

16  United  States  v.  Allis,  73  Fed.  holds  that  the  books  are  admissible 

R.165.  But  Graves  v.  United  States,  without  the   suppletory   oath,  as 

165  U.  S.  323,  while  not  plain  upon  against  any  officer  of  the  bank,  and 

this  point,  seems  to  decide  the  con-  are  presumably  correct,  and  seem- 

trary.    Now  the  circuit  court  of  ingly  holds  that  the  books  control 

appeals,  in  a  very  poorly  considered  the  facts. 

and  reasoned  opinion,  has  practi-  18  He  may  be  indicted  for  an  entry 

cally  refused  to  follow  Graves  v.  made    by    his    direction.     United 

United  States,  supra.   Seetheopin-  States  v.  Youtsey,  91  Fed.  R.  864. 

ion  of  Bacon  v.  United  States,  97  Bacon  v.  United  States,  97  Fed.  R. 

Fed.  R  35.  35,  does  not  agree  with  the  text. 


142 


BANKS    AND    BANKING. 


[§92. 


Therefore  the  conclusion  seems  plain,  in  spite  of  a  decision 
to  the  contrary,  that  overdrafts  so  called,  which  are  evi- 
denced by  demand  notes,  are  properly  returnable  as  loans 
and  discounts,19  but  if  so  returned  out  of  caution  they  should 
be  accompanied  by  an  explanation  stating  the  facts.  The 
jurisdiction  of  this  offense  is  in  the  United  States  courts,20 
but  the  same  act  may  constitute  a  crime  against  the  state 
authority.21  Certain  matters  as  to  the  evidence  have  arisen 
in  the  cases  which  are  cited  in  the  note.22  False  entries  are 


19  United  States  v.  Allis,  73  Fed. 
R  165,  seems  to  so  hold  when  care- 
fully examined.  Potter  v.  United 
States,  155  U.  S.  438,  recognizes  this 
defense  as  to  certifying  a  check, 
where  there  were  no  funds.  It  is 
said  to  be  the  uniform  course  of 
national  bankers  to  call  such  over- 
drafts loans  and  discounts.  But 
now  Bacon  v.  United  States,  97 
Fed.  R  35  (C.  C.  A.),  holds  that 
such  loans  must  be  returned  as 
overdrafts.  The  court,  in  its  opin- 
ion, makes  the  test  of  overdraft  to 
be  the  state  of  the  depositor's  ac- 
count. But  it  misses  the  real  point, 
which  is,  that  if  the  depositor  has 
been  given  a  credit  up  to  the 
amount  of  the  overdraft  note,  he 
has  the  right  to  compel  the  bank 
to  pay  his  checks  up  to  the  amount 
of  his  credit.  It  is  a  misnomer  to 
call  such  a  loan  an  overdraft,  be- 
cause it  is  of  the  essence  of  an  over- 
draft that  it  is  an  authority  revo- 
cable at  any  time.  Conceding  that 
the  authority  given  is  the  right 
to  overdraw  the  apparent  balance 
shown  by  the  books,  it  is  neverthe- 
less binding  upon  the  bank,  if  the 
directors  permit  or  authorize  an  of- 
ficer to  permit  it  The  considera- 
tion making  it  binding  is  the  mak- 
ing and  delivery  of  the  demand 


note.  Hence,  if  the  bank  should 
dishonor  the  depositor's  check,  he 
could  sue  the  bank  for  damages, 
and,  therefore,  such  a  credit  can- 
not be  an  overdraft,  and  Bacon  v. 
United  States  is  a  total  misconcep- 
tion. Yet  because  a  bank  president 
had  returned  such  loans  as  loans 
and  not  as  overdrafts,  he  was  sen- 
tenced to  the  penitentiary  for  seven 
years.  The  ferocity  of  the  sentence 
staggered  the  upper  court.  Since 
this  note  was  first  written,  the  pres- 
ent and  the  last  comptrollers  have 
recommended  the  defendant's  par- 
don. In  his  report  upon  the  case 
the  present  comptroller  says  the 
return  was  properly  mada  The  at- 
torney-general stated  that  he  could 
not  understand  how  any  reasonable 
human  being  could  find  that  the 
defendant  had  been  guilty  of  any 
offense.  The  defendant  (plaintiff 
in  error)  was  therefore  pardoned  in 
order  to  remedy  this  frightful  mis- 
carriage of  justice,  wholly  caused 
by  an  inexcusable  blunder  as  to  the 
law. 

20  In  re  Eno,  54  Fed.  R  669. 

21  Hoke  v.  People,  122  111.  511. 

22  Allis  v.  United  States,  155  U.  S. 
117;  United  States  v.  Allen,  47  Fed. 
R  696;  United  States  v.  Graves,  53 
Fed.    R    6J4;    United   States   v. 


§  93.]  OFFICERS   AND   AGENTS.  143 

practically  the  same  kind  of  offenses  as  false  returns,  as  the 
cases  cited  to  this  section  show. 

§  93.  Embezzlement  and  misapplication  of  funds. —  The 

statute  directed  against  the  embezzlement,  abstraction  or 
wilful  misapplication  of  the  funds  of  a  national  bank  by  its 
•officers  creates  three  distinct  offenses,1  which  cannot  be 
mingled  in  one  count  charging  more  than  one  separate  and 
distinct  offense.2  The  jurisdiction  of  these  offenses  is  in  the 
circuit  court  of  the  United  States.3  But  persons  not  officers 
of  the  bank  are  indictable  as  aiders  and  abettors.4  The  of- 
fense of  abstracting  the  funds  may  be  begun  in  one  jurisdic- 
tion and  completed  in  another  so  that  the  offender  becomes 
indictable  in  the  latter  jurisdiction.5  These  offenses  require 
.an  intent  to  defraud,6  but  the  intent  may  be  inferred  from  a 
wilful  doing  of  an  illegal  act,7  and  is  also  to  be  inferred  from 
an  act  of  embezzlement,8  the  indictment  for  which,  if  good 
as  an  indictment  for  embezzlement,  would  be  held  sufficient. 
The  offense  of  abstraction  of  the  funds  may  be  laid  without 
using  the  technical  words  necessary  to  charge  larceny,9  but 
if  the  words  of  the  statute  are  used  the  manner  of  abstraction 
ought  to  be  alleged.10  This  offense  is  so  close  to  that  of 
misapplication  of  the  funds  that  it  is  difficult  always  to  sepa- 
rate them.  "Whatever  qualifying  or  excepting  clauses  there 
are  in  the  statute  as  to  either  this  offense  or  that  of  misap- 

Harper,  33  Fed.  R  471.    As  to  in-  »  Putnam  v.  United  States,  162 

dictment,    see    United    States   v.  U.  S.  687. 

French,  57  Fed.  R  382.  6  United  States  v.(Voorhees,  9  Fed. 

1  United  States  v.  Lee,  12  Fed.  R.  R  143;  United  States  v.  Britton,  108 
816.  U.  S.  199. 

2  United  States  v.  Cadwallader,  7  United  States  v.  Harper,  33  Fed. 
59  Fed.  R  677.  R  471. 

3  United  States  v.  Buskey,  38  Fed.  8  In  re  Van  Campen,  Fed.  Cas. 
R  99.    But  embezzlement  of  the  No.  16,835;  United  States  v.  Lee,  12 
property  of  a  depositor  in  a  national  Fed.  R  816. 

bank  is  punishable  by  the  state.  9  United  States  v.  Northway,  120 

State  v.  Tuller,  34  Conn.  280.  U.  S.  327. 

4  Coffin  v.  United  States,  156  U.S.  10  United   States  v.  Britton,  108 
432,  162  U.  S.  664.  U.  S.  199;  United  States  v.  Eno,  56 

Fed.  R  218. 


144  BANKS   AND   BANKING.  [§  93. 

plication  must  be  negatived  in  the  indictment.11  The  mak- 
ing of  an  injudicious  loan  is  said  not  to  be  a  criminal  offense 
under  this  section  of  the  law.12  A  definition  of  the  offense  was 
attempted  in  the  statement  that  it  meant  knowingly  applying 
the  funds  of  the  bank  in  a  manner  forbidden  by  statute, 
whether  the  officers  of  the  bank  knew  of  the  act  or  not.13  But 
this  definition  is  not  correct,  for  it  is  held  that  neither  the 
declaration  of  an  illegal  dividend,  nor  a  conspiracy  alleged  to 
have  for  its  object  the  declaration  of  an  illegal  dividend,  are  of- 
fenses under  this  statute;14  nor  is  the  conversion  of  the  funds 
of  the  bank  in  making  an  illegal  purchase  of  its  own  shares,1* 
nor  in  making  an  improvident  loan  to  an  officer,16  nor  the 
permission  to  an  officer  to  overdraw  his  account  with  knowl- 
edge on  the  part  of  the  association.17  It  seems  that  any  act 
ratified  by  the  association  cannot  be  a  misapplication  of  its 
funds.18  It  i.s  said  to  mean  a  misapplication  of  the  funds  to 
the  use  of  some  other  person  than  the  banking  association.19 
The  result  is  that  it  is  very  difficult  to  tell  what  this  statute 
means.20  If  the  president  of  a  bank  should  unload  upon  it 
worthless  loans,  which  the  board  of  directors  should  accept, 
he  would  be  guilty  of  an  offense  under  this  statute.21  Over- 
drawing with  knowledge  that  the  checks  are  to  be  fraudu- 
lently paid  and  concealed  by  the  teller  would  be  an  offense.22 
A  cashier  making  loans  to  himself  upon  the  notes  of  insolv- 
ent makers23  commits  a  violation  of  the  statute.  But  the 

11  Both  cases  last  cited  apply  in  drawal  or  conversion  of  the  funds, 
principle.  Renewals   are   not  a   conversion. 

12  United  States  v.  Harper,  33  Fed.  Mohrenstecker  v.  Westervelt,    87 
R  471.  Fed.  R  157. 

13  United   States   v.    Taintor,   11  20  For  matters  in  regard  to  the  in- 
Blatchf.  374,  dictment   see    Claasen   v.   United 

"United  States  v.  Britton,   108  States,  142  U.S.  140  ;E  vans  v.  United 

U.  S.  199.  States,  153  U.  &  584;  Batchelor  v. 

is  United  States  v.  Britton,  supra.  United  States,  156  U.  S.  426. 

16  United  States  v.  Britton,  supra.  21  Agnew  v.  United   States,   165 

"United   States  v.  Warner,   26  U.  a  36. 

Fed.  R  616.  »  United  States  v.  Kenney,  90  Fed. 

18  United  States  v.  Warner,  supra.  R  257. 

»9  United    States  v    Britton,   108  23  United  States  v.Youtsey,  91  Fed, 

U.  S.  199.    Ther  j  must  be  a  with-  R  864. 


§§  94,  95.]  OFFICERS   AND   AGENTS. 

mere  payment  of  checks  upon  overdrafts  does  not  prove 
necessarily  a  fraudulent  appropriation.24  But  at  any  rate  the 
dicta  in  United  States  v.  Britton  have  been  considerably  modi- 
fied. 

§  94,  Other  offenses  concerning  national  banks. —  The 

wrongful  certifying  of  a  check  where  the  depositor  has  not 
sufficient  funds  in  the  bank  to  meet  the  check  is  an  offense, 
but  a  secured  overdraft  may  be  money  on  deposit.1  The 
forgery  of  a  promissory  note  foi  the  purpose  of  deceiving 
the  bank  examiner  is  not  a  forgery  to  defraud  the  United 
States  under  section  5418  of  the  Revised  Statutes.2  For 
technical  matters  in  regard  to  the  form  of  an  indictment  for 
wrongfully  certifying  a  check,  the  cases  referred  to  in  the 
note  are  authorities.3 

ARTICLE  II. — REPRESENTATION  OF  BANK  BY  ITS  OFFICERS. 

§  95.  The  general  principle. —  The  law  relating  to  the 
powers  of  bank  officers,  or  indeed  any  corporate  officers,  is 
but  a  development  of  the  law  of  principal  and  agent  The 
rule  is  that  the  agent  can  bind  his  principal  in  regard  to  any 
act  done  within  the  scope  of  the  agent's  authority.  The  ex- 
tent and  scope  of  the  authority  in  the  case  of  a  bank  officer 
depend  upon  the  provisions  of  the  general  law,  the  provis- 
ions of  the  special  charter  if  there  be  one,  the  provisions  of 
the  articles  of  agreement,  where  the  organization  is  made 
thereby,  the  nature  and  character  of  the  office,  the  general 
usages  and  customs,  which  are  a  part  of  the  business  of 
banking,  which  define  the  power  and  authority  annexed  to 
a  particular- office,  and  the  power  and  authority  given  to  a 
particular  office  by  a  particular  course  of  dealing  in  a  par- 
ticular bank.  Certain  modifications  arise  from  a  condition 

24  Dows  v.  United  States,  82  Fed.        2  Cross  v.  North  Carolina,  132  U.  a. 
R.  904.  131. 

1  Potter  v.  United  States,  155  U.  S.  *  United  States  v.  Potter,  56  Fed. 
438.  R  83;  Potter  v.  United  States,  155, 

U.  S.  438. 
10 


146  BANKS    AND    BANKING.  [§  90. 

of  fact  when  the  officer  is  acting  in  regard  to  his  own  pri- 
vate interests  as  well  as  those  of  the  bank,  and  when  the 
same  officer  is  acting  for  some  other  person  or  corporation 
dealing  with  the  bank,  and  when  the  third  person  has  or 
has  not  knowledge  of  the  want  of  authority.  The  subject 
is  further  modified  by  the  principles  of  acquiescence  and 
delay  in  objecting  to  an  officer's  unauthorized  act,  or  a  rati- 
fication thereof  by  the  corporation.  The  questions  of  admis- 
sions made  by  corporate  officers  as  to  corporate  transactions 
require  examination;  and  finally  the  subject  of  notice  of  a 
fact  given  to  a  corporation  through  its  officers  —  a  subject 
which  is  also  modified  by  the  fact  that  a  corporate  officer 
may  be  interested  in  a  transaction  in  regard  to  which  notice 
is  sought  to  be  imputed  to  the  bank  through  that  officer's 
knowledge.  These  various  subjects  will  be  examined  in 
order. 

§  96.  General  scope  of  authority. —  The  officers  of  a 
bank  are  held  out  to  the  public  as  having  the  general  power 
to  bind  the  bank  according  to  the  powers  of  the  office  as 
fixed  by  the  general  law  and  by  the  charter  or  the  instru- 
ment that  stands  therefor,1  as  well  as  by  the  by-laws  of  the 
bank  when  they  are  known  to  the  person  dealing  with  the 
bank.2  They  are  also  represented  by  the  bank  to  have 
the  powers  which  are  annexed  to  the  particular  office  by  the 
general  usages  and  course  of  business  applying  to  banks.3 
This  general  scop  of  authority  the  bank  may  modify  as  it 
pleases  by  reducing  the  power  of  its  corporate  officers,  unless 
forbidden  to  do  so  by  the  general  law  and  the  governing  in- 
struments of  incorporation ;  and  any  one  who  has  knowledge 
of  the  corporate  agent's  lack  of  authority  in  doing  a  partic- 
ular act  cannot  rely  upon  that  act  as  against  the  corporation.4 

1  Reed  v.  Powell,  11  Rob.  (La.)  98.  ville.  1  Head,  162;  First  Nat.  Bank 

2  Mechanics'  Bank  v.  Smith,  19  v.   Kimberlands,   16    W.   Va.    555. 
Johns.  115.  This  is  so  even  in  quo  warranto 

3  Lloyd  v.  West  Branch  Bank,  15  without  a  special  restriction.  State 
Pa.  172;  Miner  v.  Mechanics'  Bank,  v.  Comm.  Bank,  5  Smedes  &  M.  218. 
1  Pet.  46;  Eastman  v.  Coos  Bank,  1  4 Savannah  Bank  v.  Hartridge,  73 
N.  H.  23;  Neiffer  v.  Bank  of  Knox-  Ga.  223;  Stallcup  v.  Nat.  Bank  of 


§  96.]  OFFICERS   AND   AGENTS.  147 

Persons  dealing  with  a  corporation  are  presumed  to  know 
the  powers  given  to  its  agents  by  the  general  law  and  by  the 
governing  instruments  of  incorporation,  the  special  charter 
or  the  articles  of  agreement.5  They  are  presumed  to  know 
the  powers  which  general  custom  and  usage  have  given  to 
a  particular  officer  in  the  bank.6  Granted,  however,  that 
the  person  dealing  with  the  bank  has  no  notice  of  the  lack 
of  the  agent's  power,  and  that  the  person  claimed  to  be  act- 
ing for  the  corporation  is  really  its  agent,  for  of  course  the 
bank  is  not  responsible  for  the  act  of  a  person  who  is  not 
acting  for  it,7  tie  may  rely  upon  the  agent's  act,  if  it  is  not 
contrary  to  law  and  is  within  the  general  scope  of  the 
agent's  usual  authority.  If  the  agent  is  forbidden  by  law 
to  do  the  act,  the  person  dealing  with  the  corporation  can 
have  a  remedy  only  as  pointed  out  in  sections  32  and  2Y, 
ante,  unless  he  can  show  a  ratification  or  estoppel.  If  the 
act  be  merely  beyond  the  corporate  power,  the  remedy  is  to 
be  sought  according  to  the  rules  of  section  33,  ante,  but  modi- 
fied by  matters  of  acquiescence,  delay  or  ratification  by  the 
corporation.8  It  is  needless  to  say  that  a  general  law  which 
imposes  a  disability  to  act  upon  corporate  officers  renders 
the  act  unlawful  and  void.9  But  in  connection  herewith  it 
is  to  be  noticed  that  statutes  or  charters  which  require  all 
bills,  bonds,  notes  and  all  other  contracts  or  agreements  of 
a  bank  to  be  signed  by  one  officer  and  countersigned  by  an- 
other are  held  upon  principles  of  business  necessity  not  to 
apply  to  the  acts  usually  performed  by  the  cashier.10  The 

Republic,  15  N.  Y.  St.  R.  39;  Smith  the  protest  (May  v.  Jones,  88  Ga. 

v.  Lawson,  18  W.  Va.  212.  308),  or  for  a  cashier's  slander.    Et- 

5  This  is  the  principle  which  gov-  ting  v.  Comm.  Bank,  7  Rob.  (La.)  459. 
erns  the  doctrine  of  ultra  vires.  8See  §§  105,  106,  109,  infra. 

See  §  33,  supra.  9  Atkinson  v.  Roch.  Printing  Co., 

6  Farmers'  Bank  v.  Troy  Bank,  1  114  N.  Y.  168,  a  decision  which  con- 
Doug.  459.  tains  some  very  erroneous  dicta  on 

7  Thacher  v.  State  Bank,  5  Sandf.  the  ruling  of  trust  funds. 

121.    On  this  ground  the  bank  is  10  Mechanics'  Bank  v.  Bank  of  Co- 

not  responsible  for  the  act  of  a  no-"  lumbia,  5  Wheat.   326;    Northern 

tary  hired  by  it  to  protest  a  note,  in  Bank  v.  Johnson,  5  Cold.  88;  Mer- 

mahing  a  malicious  publication  of  chants'  Bank  v.  Central  Bank,  1  Ga. 


14:8  BANKS   AND   BANKING.  [§  97. 

old  theory  was  that  the  act  of  an  officer  in  doing  something 
forbidden  by  law  would  not  make  the  bank  responsible 
unless  the  corporation  adopted  or  ratified  the  act;11  but  this 
theory  is  wholly  exploded  as  to  torts  committed  in  the  cor- 
poration's business,  and  the  doctrine  of  the  Supreme  Court 
of  the  United  States  is  that  an  act  prohibited  by  law,  where 
it  is  relied  upon  as  a  contract,  cannot  be  ratified  by  the  cor- 
poration or  made  the  basis  of  an  estoppel.12 

§  97.  Board  of  directors. —  A  board  of  directors  is  not  an 
adjunct  of  a  private  bank,  unless  it  be  a  joint-stock  company, 
but  sometimes  a  private  bank  has  what  is  called  a  discount 
or  loan  committee.  A  board  of  directors,  it  has  been  said, 
is  not  necessary  to  a  corporation,1  but  it  is  believed  that  now 
no  corporation  for  banking  purposes  exists  without  a  body 
of  officers  corresponding  thereto,  whether  they  are  called 
directors,  governors  or  trustees.  The  directors  acting  as  a 
board 2  are  charged  with  all  the  corporate  power.3  They 
may  deal  with  the  bank's  property  and  transfer  it  in  whole 
or  in  part.4  They  may  release  its  obligations 5  and  compro- 
mise its  claims.6  They  may  loan  its  funds7  and  borrow 

418;  Casey  v.  McDonald,  7  Ga.  84.  bank.  Louisiana  State  Bank  v.  Sen- 

And  a  bank  may  contract  through  ecal,  13  La.  525;  Hughes  v.  Bank  of 

other  officers.    Dana  v.  Bank  of  St.  Somerset,  5  Litt.  45 ;  Harper  v.  Cal- 

Paul,  4  Minn.  385.  houn,  7  How.  (Miss.)  203 ;  East  River 

11  Clark  v.  Metropolitan  Bank,  3  Bank  v.  Hoyt,  41  Barb.  440. 
Duer,  241.  3  Percy  v.  Millaudon,  3  La.  568; 

12  See  §£  32  and  33,  supra.    A  tort  Burrill  v.  Nahant  Bank,  2  Met.  163. 
by  officers  of  the  corporation,  com-  4Descombes  v.  Wood,  91  Mo.  196; 
mitted   on    its  business,  while  it  National    Bank    v.    Shumway,  49 
makes  the  corporation  responsible  Elan.  224;  Cross  v.  Rowe,  22  N.  H. 
for  compensatory  damages,  will  not  77.    See  also  note  17. 
necessarily  render  it  liable  for  ex-  6Olney  v.  Chadsey,  7  R.  L  224; 
emplary  damages.  See  Lake  Shore  Lewis  v.  Eastern  Bank,  32  Me.  90. 
Ry.  Co.  v.  Prentiss,  147  U.  a  101,  •  Wolf  v.  Bureau,  1  Mart.  (N.  S.) 
and  Goddard  v.  Grand  Trunk  Ry.,  162;  Baird  v.  Bank  of  Washington, 
57  Me.  202.  11  S.  &  R.  411.    Their  fraud  is  imma- 

1  Gillett  v.  Campbell,  1  Denio,  520.    terial  as  to  one  who  acted  in  good 

2  Acting  individually  when  not    faith.    Frankfort  Bank  v.  Johnson, 
specially  authorized,  the  directors    24  Me.  490. 

are  not  agents  or  officers  of  the       7  Leavitt  v.  Yates,  4  Edw.  Ch.  136. 


§  98.]  OFFICERS  AND  AGENTS.  14:9 

money.8  They  may  pledge  the  faith  of  the  bank  where  the 
act  is  not  ultra  vires,9  define  the  authority  of  its  officers,10  em- 
ploy and  empower  its  officers  and  agents  to  do  anything  the 
board  could  lawfully  do;11  may  delegate  certain  powers  to  a 
committee  whose  acts  will  bind  the  bank.12  They  may  ratify 
acts  of  officers  done  without  authority,13  unless  they  are  acts 
which  the  board  itself  could  not  lawfully  do  or  authorize 
to  be  done.  They  may  authorize  by  their  conduct  a  par- 
ticular course  of  dealing  beyond  an  officer's  general  author- 
ity,14 and  they  may  make  the  bank  liable  by  their  negligence 
in  keeping  a  dishonest  officer,15  or  by  keeping  silent  when  it 
is  their  duty  to  speak.16  They  have  the  power  finally  to 
make  a  general  assignment  of  the  bank's  property  for  the 
benefit  of  creditors,17  or  they  may  authorize  and  direct  a  cer- 
tain officer  to  do  it ;  and  they  may  in  such  an  assignment,  if 
the  act  be  not  forbidden  by  law,  make  preferences  among 
creditors  if  the  same  be  not  fraudulent.18 

§  98.  President. —  The  president  is  one  of  the  general 
executive  officers  of  a  bank,  but  in  the  case  of  banking  presi- 
dents a  very  restrictive  rule  is  put  upon  their  powers.  It  is 
agreed  that  he  has  the  power  to  control  and  direct  the  liti- 

8  Western    Nat.    Bank   v.   Arm-  Nat   Bank  v.  First  Nat.  Bank,  82 
strong,  152  U.  S.  346.  Fed.  R.  961. 

9  State  v.  Bank  of  La.,  5  Mart.  (N.  14  First  Nat.  Bank  v.  Graham,  79 
S.)  344  But  they  have  no  power  to  Pa.  106,  a  case  where  cashier  re- 
pledge  the  future  earnings  of  the  ceived  special  deposits;  Neiffer  v. 
bank  without  authority  from  the  Bank  of  Knoxville,  1  Head,  162,  a 
stockholders.    Brown  v.  Bradford,  case  where  president  acted  instead 
103  Iowa,  378.  of  cashier.  See  §§  105,  109,  infra, 

w  Even  verbally.    Stamford  Bank      wPrather   v.    Kean,  29    Fed.  R. 
v.  Benedict,  15  Conn.  437.  498;  Steffe  v.  Bank  of  Conneaut- 

11  First  Nat.  Bank  v.  Kimberlands,    ville,  22  Pitts.  L.  J.  157. 

16  W.  Va.  555;  Merrick  v.  Bank  of  16Kelsey  v.  National  Bank,  69  Pa. 

Metropolis,  8  Gill,  59 ;  Northampton  426. 

Bank  v.  Pepoon,  11  Mass.  288.  17  Merrick  v.  Bank  of  Metropolis, 

12  Wallace  v,  Exchange  Bank,  126  8  Gill,  59;  Dana  v.  Bank  of  U.  S.,  5 
Ind.  265 ;  Waxahachie  Bank  v.  Vick-  Watts  &  S.  223. 

ery,  26  S.  W.  R.  876.  »  See  2  Cook  on  Corp.,  sec,  691. 

13  See  §  109,  infra,  and  Am.  Ex. 


BANKS   AND   BANKING. 


[§98. 


gation  of  the  bank ; l  to  employ  counsel,2  and  to  appear  for 
the  bank.3  Why  this  is  so  is  not  apparent.  If  given  the 
power  to  convey  land  he  may  make  a  deed  in  the  name  of 
the  bank  and  affix  the  corporate  seal.4  He  has  power  to  re- 
ceive a  deposit,  but  he  has  no  power  to  bind  the  bank  by 
admissions  of  a  different  contract  than  the  one  made  when 
the  deposit  was  received.5  If  he  has  the  authority  to  trans- 
fer the  bank  paper  to  a  creditor  as  collateral,  the  power  to 
indorse  it  will  be  presumed.6  His  guaranty  of  the  payment 
of  a  note  by  the  bank's  indorsement  was  in  one  case  pre- 
sumed to  be  authorized.7  But  the  cases  are  more  numerous 
on  a  negative  construction  of  iiis  powers.  If  he  transfers  a 
judgment  of  the  bank  without  collecting  it  the  transfer  is 
presumed  to  be  unauthorized,8  since  he  has  no  power  to  sell 
the  corporate  property  or  exchange  it.9  Nor  has  he  author- 
ity to  mortgage  the  real  estate  of  the  bank,10  nor  the  power 
to  assign  its  property  for  the  benefit  of  creditors,11  unless  au- 
thorized by  the  charter  or  by  the  board  of  directors.12  He 


1  Citizens'  Bank  v.  Berry,  53  Kan. 
696;    Savings   Bank  v.  Benton,  2 
Met   (Ky.)    240;    Merchants'  Nat 
Bank  v.  Eustis,  8  Tex.  Civ.  App.  350. 
But  not  where  the  by-laws  give 
this   authority   to   the    directors. 
Citizens'  Bank  v.  Keim,  1  Wkly. 
Notes  Cas.  263.    He  has  been  held 
to  have  power  to  offer  a  reward  for 
the  arrest  of  a  defaulting  teller. 
Bank  of  Minneapolis  v.  Griffin,  168 
III  314. 

2  See  cases  last  cited. 

3  See  cases  last  cited. 

<Burill  v.  Nahant  Bank,  2  Met 
163.  But  his  lease  of  an  elevator 
where  no  authority  has  been  given 
to  him  by  the  board  of  directors  is 
not  binding  on  the  bank.  Tulley  v. 
Citizens'  State  Bank,  18  Ind.  App. 
240. 

5Hazleton  v.  Union  Bank,  32 
Wis.34. 


6  Irons    v.    Manufacturers'    Nat 
Bank,  27  Fed.  R  591. 

7  City  Nat.  Bank  v.  Thomas,  46 
Neb.  861 ;  People's  Bank  v.  National 
Bank,  101  U.  S.  181,  as  to  vice-presi- 
dent 

8  Cox  v.  Robinson,  70  Fed.  R  760. 
He  has  no  power  to  release  a  claim 
upon  part  payment  State  Sav.  Co. 
v.  Stewart,  65  111  App.  391. 

9Greenawalt  v.  Wilson,  52  Kau. 
109;  Asher  v.  Sutton,  31  Kan.  286. 
The  property  in  this  latter  case 
was  the  bank  safe.  The  exceeding 
value  attached  to  the  safe  may  be 
the  basis  of  the  popular  supersti- 
tion that  the  only  capital  needed 
to  start  a  bank  in  Kansas  is  a  safe. 

10  Leggett  v.  New  Jersey,  etc.  Co., 
Saxt  541. 

11  Gibson  v.  Goldthwaite,  7  Ala. 
281;  Hallowell  Bank  v.  Hamlin,  14 
Mass.  180. 

12  See  cases  last  cited. 


§§  99,  100.]  OFFICERS   AND   AGENTS.  151 

has  no  power  to  compromise 13  or  release  claims  of  the  bank,14 
unless  the  bank  ratifies  the  act,15  or  authorizes  it  by  a  course 
of  dealing.16  He  cannot  waive  a  stipulation  in  the  bank's 
contract  for  the  sale  of  land.17  His  prima  facie  authority 
does  not  extend  to  any  acts  which  are  usually  within  the 
scope  of  the  cashier's  powers,  such  as  indorsing  or  transfer- 
ring the  bank's  paper.18 

§  99.  Vice-president. —  The  vice-president,  as  a  general 
rule,  acts  simply  in  the  place  of  the  president.  All  the  fore- 
going section  is  applicable  to  the  vice-president  when  acting 
as  president,  and  all  the  decisions  which  follow  are  appli- 
cable to  the  president  as  well.  He  has  no  prima  facie  power 
to  borrow  money  for  the  bank,1  nor  to  use  the  bank's  assets 
as  collateral  to  raise  funds  for  the  bank.2  He  has  no  au- 
thority to  guarantee  the  payment  of  the  bank  paper  except 
as  a  part  of  a  transfer,  where  he  has  been  authorized  to 
make  the  transfer.3 

§  100.  Cashier. —  The  cashier  is  the  general  executive  of- 
ficer of  the  bank.  He  is  the  general  agent  of  the  bank  in 
dealing  with  its  customers,  and  the  general  rule  resulting 
from  his  situation  is  that  his  contractual  acts  bind  the  bank, 
unless  they  are  contrary  to  law  or  to  what  stands  for  the 
bank's  charter  or  to  public  policy.1  He  is  not  the  agent  cf 

13  Wheat  v.  Bank  of  Louisville,  5  strong,  152  U.   S.  346,  except  by 

S.  W.  R.  305.    But  for  a  peculiar  usage. 

case  where  the  contrary  was  held,  2  Stewart  v.  Armstrong,  56  Fed. 

see  Chem.  Nat.  Bank  v.  Kohner,  85  R.  167,  though  bank  was  held  be- 

N.  Y.  189.    And  see  Case  v.  Haw-  cause  it  got  the  money,  although 

kins,  53  Miss.  702;  Farmers'  Nat.  its    cashier  wrongfully  gave    the 

Bank  v.  Templeton,  40  S.  W.  R.  412.  money  away. 

14Olney  v.  Chadsey,  7  R.  L  224;  *  People's  Bank  v.  National  Bank, 

Loomis  v.  Fay,  24  Vt.  240.  101  U.  S.  181,  also  a  case  of  estoppel. 

15  Winton  v.  Little,  94  Pa.  64  *  Squires  v.  First  Nat  Bank,  59 

16  Martin  v.  Webb,  110  U.  S.  7,  as  III  App.  134;  Wakefield  Bank  v. 
to  cashier.  Truesdell,  55  Barb.  602.     Under  a 

17  Chadbourne  v.  Stockton    Sav.  statutory  system  in  Louisiana  see 
Soc.,  36  Pac.  R.  127.  Union  Bank  v.  Bagley,  10  Rob.  (La.) 

18  Smith  v.  Lawson,  18  W.  Va.  212.    45;  Clinton  Co.  v.  Kernam,  10  Rob. 
'Western   Nat.   Bank    v.    Arm-    (La.)  176;  Ried  v.  Powell,  10  Rob. 


152  BANKS   AND   BANKING.  [§  100. 

the  board  of  directors,  but  of  the  bank  itself.2  His  general 
powers  are  not  affected  by  statutes  or  charters  which  require 
the  agreements  or  contracts  of  the  bank  to  be  executed  in  a 
certain  way.8  In  spite  of  such  statutes  he  may  sign  and  issue 
checks  of  his  bank  upon  another  bank.4  lie  has  power  to 
borrow  money  for  the  bank  when  the  act  is  done  in  the 
usual  course  of  business,  but  not  otherwise,5  and  he  has  power 
to  certify  checks  upon  the  bank.6  He  has  power  to  transfer 
the  bank's  paper  by  indorsing  it,7  and  he  has  power  to  re- 
ceive paper  for  collection  and  to  do  all  acts  proper  in  making 
the  collection.8  It  is  one  of  the  usual  duties  of  the  cashier 
to  transfer  stock  on  the  books  of  the  bank,9  and  the  bank  is 
bound  by  his  wrongful  refusal  to  make  a  transfer,10  just  as 
it  is  bound  by  his  transfer  even  in  a  case  where  the  bank 
lost  its  lien  by  the  transfer  and  the  cashier  was  a  member 
of  the  firm  to  which  the  stock  was  transferred.11  He  may 
extend  the  time  of  payment  upon  the  bank's  paper,12  and  he 
may  bind  the  bank  by  his  statements  made  at  the  time  of 
selling  bills  and  notes  sold  by  the  bank.13  He  has  power  to 

(La.)  98;  Union   Bank  v.  Jones,  4  Austin,  21  Barb.  241.   He  has  power 

La.  Ann.  220.  to    indorse  paper  in  payment  of 

2  Bissell  v.  First  Nat.  Bank,  69  Pa.  bank's  debts.    Fleckner  v.  United 
415.  States  Bank,  8  Wheat.  338.    But  it 

3  See  note  10  to  §  96,  supra.  is  said  he  has  no  power  to  indorse 

4  See  note  10  to  §  96,  supra,  to  a  third  party  except  for  collec- 
s  Barnes  v  Ontario  Bank,  19  N.  Y.    tion.  See  Elliot  v.  Abbott,  12  N.  H. 

152,  a  certificate  of  deposit;  Don-  549;  State  Bank  v.  Farmers'  Bank, 

nell  v.  Lewis  Co.  Sav.  Bank,  80  Mo.  36  Barb.  332. 

165.    Compare  Ballston  Spa  Bank  8  Warren  v.  Oilman,  17  Me.  360; 

v.  Marine  Bank,  16  Wis.  125;  East-  Brudenbecker  v.  Lowell,  32  Barb.  9. 

ern  Township  Bank  v.  Vernon  Nat.  9  National  Bank  v.  Watsontown 

Bank,  22  Fed.  R.  186;  Singling  v  Bank,  105  U.  S.  217. 

Kohn,  6  Mo.  App.  333.  ™  Case  v.  Citizens'  Bank,  100  U.  S. 

6  Merchants'  Bank  v.  State  Bank,  446. 

10  Wall.   604;    Farmers'   Bank  v.  u  National  Bank  v.  Watsontown 

Butchers' Bank,  16  N.Y.I  25.  Contra,  Bank,  105  U.  S.  217. 

Mussey  v.  Eagle  Bank,  9  Met.  306.  12  Wakefield  Bank  v.  Truesdell,  55 

7  Bank  of  Genessee  v.  Patchen  Barb.  602. 

Bank,  19  N.  Y.  812;  Wild  v.  Passa-  "Sturges  v.  Bank  of  Circleville, 
maquoddy  Bank,  3  Mason,  505,  and  11  Ohio  St.  153;  Union  Nat.  Bank 
many  other  cases.  See  Barrick  v.  v  First  Nat  Bank,  45  Ohio  St.  236. 


§  100.]  OFFICERS   AND   AGENTS.  153 

employ  special  counsel  to  collect  a  claim  for  the  bank.14  And 
if  he  receives  checks  signed  in  blank  by  a  customer,  who 
desires  to  go  abroad  and  leaves  the  signed  checks  with  the 
cashier  to  dispose  of  as  she  should  direct,  and  if,  after  the 
customer  has  returned,  he  fraudulently  fills  up  one  of  the 
checks  and  draws  and  appropriates  the  money  obtained  upon 
it  from  the  bank,  the  bank  cannot  claim  such  money  as 
against  the  customer.15  But  a  large  number  of  acts  have 
been  held  to  be  not  within  the  scope  of  his  general  author- 
ity. He  has  no  power  to  transfer  judgments  of  the  bank 
or  to  dispose  of  its  property  other  than  its  paper;16  he  can- 
not buy  real  estate  for  or  sell  the  real  estate  of  the  bank,17 
nor  may  he  mortgage  its  real  estate  ;18'but  he  may  properly 
acknowledge  an  authorized  deed  of  the  bank.19  If  author- 
ized to  borrow  money  out  of  the  usual  course  of  business  he 
may  do  so,  and  the  bank  is  liable  even  though  he  misappro- 
priates the  money.20  But  he  cannot  give  the  bank's  note  to 
the  president  to  enable  that  officer  to  pay  his  own  debt. 
Such  an  act  does  not  release  the  maker  of  the  note.21  He 
cannot  make  a  contract  in  the  bank's  name  for  transferring 
money  for  the  government;22  he  cannot  compromise  or  set- 
tle the  claims  of  the  bank,23  or  release  its  claims,24  unless  au- 

14  Root  v.  Olcott,  42  Hun,  536,  115  "  Winson  v.  Lafayette  Co.  Bank, 
N.  Y.  635.  18  Mo.  App.  665. 

15  Daniels  v.  Empire  City  Bank,  92  18  Leggett  v.  New  Jersey,  etc.  Co., 
Hun,  450.    This  seems  a  very  close  Saxt.  541. 

case.    The  decision  might  just  as      19  Sheehan  v.  Davis,  17  Ohio  St. 

well  have  been  that  the  customer  571. 

constituted  the  cashier  her  agent  to  20  Chemical  Nat.  Bank  v.  Arm- 
draw  checks.  Information  which  strong,  56  Fed.  R  392, 16  U.  S.  App. 
he  received  as  her  agent  would,  465. 

however,  be  imputable  to  the  bank       '2l  Rhodes  v.  Webb,  24  Minn.  292. 
if  he  alone  acted  in  cashing  the      22  United  States  v.  City  Bank,  21 

check.    The  decision  can  be  justi-  How.  356.    Nor  can  he  bind  the 

fled  upon  that  ground  and  on  no  bank  by  agreeing  to  pay  usurious 

other.     Compare  with    this  case,  interest.    Hanson  v.  Heard,  38  AtL 

Alpena  Nat  Bank  v.  Greenbaum,  R.  788. 
80  Mich.  1.  *>Bank  of  Commerce  v.  Hart,  37 

16  Holt    v.   Bacon,  25   Miss.   567;  Neb.  197. 

Asher  v.  Sutton,  31  Kan.  286.    See      24  Thompson  v.  McKee,  5  Dak.  172; 

Bank  v.  Warren,  7  Hill,  91.  Ecker  v.  First  Nat.  Bank,  59  Md. 


BANKS   AND   BANKING.  [§  100. 

thorized  so  to  do  by  the  rules  and  usages  of  the  business,2* 
or  in  payment  of  the  bank's  claim,  when  he  may  do  all  acts 
required  to  complete  the  payment;26  he  has  no  power  to 
make  purchases  for  the  bank  not  in  the  line  of  acquiring 
bankable  securities;27  he  has  no  power  to  assign  the  bank's 
property  unless  it  be  in  the  usual  course  of  business.28  It 
was  held  in  one  case  that  he  had  no  power  to  pledge  the 
assets  of  the  bank  to  secure  an  antecedent  debt,29  and  in 
another  that  he  had  no  power  to  make  acceptances  at  all;3(> 
certainly  he  has  no  power  to  make  accommodation  accept- 
ances,31 except  of  course  to  a  bonafide  holder;  he  has  no 
general  power  to  receive  special  deposit  of  papers.32  It  was 
held  in  one  case  that  he  had  no  power  to  make  an  answer 
to  a  garnishment.33  He  cannot  bind  the  bank  by  signing  its 
name  to  an  indemnity  bond  given  upon  an  execution  in  the 
bank's  favor;34  nor  has  he  power  to  bind  his  bank  to  defend 
a  suit  for  a  correspondent,  where  the  correspondent  is  sued 
for  negligence  in  collecting.35  But  this prima facie  power 
or  lack  of  power  is  capable  of  variation  by  the  course  of 
dealing  in  a  bank,  as  we  shall  hereafter  see.36 

291 ;  Cocheco  Nat.  Bank  v.  Harkel,  31  Farmers'  Bank  v.  Troy  Bank,  1 

51  N.  a  116;  Hodge  v.  First  Nat  Doug.  457. 

Bank,  22  Grat.  51.  32  Lloyd  v.  West  Branch  Bank,  15 

25  Ryan  v.  Dunlap,  17  111.  40.  Pa.  172. 

26  Matthews  v.  Massachusetts  Nat.  33  Branch  Bank  v.  Poe,  1  Ala.  396. 
Bank,  Fed.  Gas.  No.  9286.  But  his  affidavit  for  a  capias  is 

27  Lionberger   v.  Maxer,  12    Mo.  proper   on    behalf   of   the    bank. 
App.  575;  North  Star  Co.  v.  Steb-  Wachsmuth    v.    Merchants'    Nat- 
bins,  2  S.  Dak.  74.     Contra,  Crystal  Bank,  96  Mich.  426. 

Plate  Glass  Co.  v.  First  Nat.  Bank,  u  Watson  v.  Bennett,  12  Barb.  196. 

6  Mont.  303,  semble.    The  purchase  &  First  Nat.  Bank  v.  Manufact- 

was  for  a  third  party,  and  hence  urers'  Nat.  Bank,  10  Ohio  Cir.  Ct.  R 

the  case  is  wrong  because  the  cash-  233.     But  if  the  cashier  had  made 

ier  had  no  such  power.  the  agreement  as  part  of  the  consid- 

28  Hartford    Bank    v.    Barry,    17  eration  for  receiving  the  draft  for 
Mass.  94.     See  Lamb  v.  Cecil,  25  collection,  there  seems  to  be  no  rea- 
W.  Va.  288.  son  why  such  an  act  should  not  be 

29  State  of  Tennessee  v.  Davis,  50  within  the  scope  of  his  general  au- 
How.  Pr.  447.  thority,  provided  the  engagement 

80  Pendleton  v.  Bank  of  Kentucky,    were  otherwise  enforceable. 
1  T.  B.  Mon.  171,  under  a  statute.          36See  §  105,  infra. 


§§  101,  102.]  OFFICERS   AND   AGENTS.  155 

§  101.  Treasurer  of  savings  bank  and  other  general 
agents. —  The  treasurer  of  a  savings  association  is  an  officer 
with  general  powers  analogous  to  the  cashier's  powers  in  a 
bank.  A  suit  instituted  on  behalf  of  the  savings  association 
by  its  treasurer  is  presumed  to  be  authorized.1  He  may  au- 
thorize the  attorney  of  the  corporation  to  levy  execution  upon 
land  and  to  purchase  the  same  for  the  bank,  and  in  pursuance 
thereof  to  bring  a  writ  of  entry.2  A  manager  of  a  branch 
bank  has  power  to  bind  the  bank  as  an  accommodation  in- 
dorser  upon  a  draft  payable  at  a  branch  bank.3  In  fact  the 
manager  of  a  branch  bank  must  necessarily  represent  for 
that  branch  all  the  corporate  power.  It  would  be  difficult 
to  find  a  corporate  officer  with  as  much  authority,  for  as  ta 
the  branch  he  must  to  the  general  public  be  a  board  of  direct- 
ors, a  president  and  a  cashier.4  An  agent  with  a  general 
authority  binds  the  bank  by  his  transfer  as  a  matter  of 
course.5  An  authority  given  to  an  agent  carries  with  it  the 
powers  necessary  or  fairly  adapted  to  carrying  out  the  au- 
thority.6 But  a  clerk  acting  as  cashier  in  place  of  an  absent 
cashier  has  authority  to  indorse  the  bank's  paper  only  for 
collection.7 

§  102.  Tellers  and  book-keepers. —  In  banks  where  one 
teller  acts  at  both  the  receiving  and  the  paying  counter, 
there  can  be  no  discrimination  between  the  paying  and  the 
receiving  teller,  but  in  many  banks  the  two  functions  are  in 
separate  officers,  and  in  some  banks  these  officers  each  have 

1  Bangor  Sav.  Bank  v.  Wallace,  7  Potter  v.  Merchants'  Bank,  28 
87  Me.  28.    See  also  §  232,  post.  N.  Y.  641.    This  is  one  of  the  de- 

2  Bristol  Co.  Sav.  Bank  v.  Keavy,  cisions  resulting  from  the  mistaken 
128  Mass.  298.  New  York  doctrine  that  a  deposit 

3  Canadian  Bank  v.  Coumbe,  47  for  credit  passes  complete  title  to 
Mich.  358.  the  bank.    This  ruling  can  be  cor- 

4  Such  officers  are  the  managers,  rect  only  as  to  one  who  knew  a 
for  instance,  of  Wells,  Fargo  &  Co.,  clerk  was  temporarily  acting.    A 
at  Salt  Lake  City,  or  New  York  or  person  who  comes  into  a  bank  and 
London.  finds  a  man  acting  as  cashier  has 

6  Smith  v.  Lawson,  18  W.  Va.  212.    the  right  to  assume  he  has  the  pow- 
6  Burrill  v.  Nahant  Bank,  2  Met.    ers  of  cashier. 


156  BANKS   AND   BANKING.  [§  102. 

assistants.  But  the  public  are  not  supposed  to  know  the 
functions  of  those  various  officers  in  the  bank.1  It  is  the  busi- 
ness of  the  receiving  teller  to  receive  all  the  deposits  at  the 
bank,  in  subordination,  of  course,  to  the  cashier.  Therefore 
the  bank  is  liable  for  the  teller's  receipt  of  packages  for  safe- 
keeping* where  no  order  has  been  given  to  the  contrary.2  He 
is  also  charged  with  the  duty  of  receiving  notes  and  drafts 
for  collection,  as  a  general  rule ;  and  it  has  been  held  that 
the  bank  was  responsible  for  a  note  left  with  the  paying  teller 
for  collection,  although  it  was  indorsed  by  a  general  indorse- 
ment ; 3  and  the  bank  is  also  liable  for  a  collection  left  with 
the  assistant  receiving  teller  who  was  temporarily  acting.4 
The  paying  teller  is  the  proper  officer  to  make  payments 
over  the  counter  for  checks  drawn  upon  the  bank.  He  is  the 
proper  officer  to  whom  to  apply  as  to  the  genuineness  of  a 
certificate  upon  a  check ;  but  if  he  fails  to  state  that  a  check 
has  been  stopped  to  one  who  merely  inquires  as  to  the  gen- 
uineness of  the  signature,  the  bank  is  not  bound  by  his  fail- 
ure.5 The  note  teller  of  the  bank  cannot  erase  a  name  of  a 
maker  on  a  note  so  as  to  bind  the  bank.6  It  would  seem  to 
follow  as  a  general  principle  that  an  act  of  alteration  made 
by  any  officer  of  a  bank,  who  had  not  the  power  to  make 
the  alteration,  would  be  an  act  of  spoliation  by  a  stranger. 
A  paying  teller,  or  any  other  officer  of  a  bank,  cannot  bind 
his  bank  by  an  act  unlawful  and  unauthorized,  unless  the 
act  be  a  tort.7  A  paying  teller  has  no  authority  to  certify  a 
check  where  the  drawer  of  the  check  has  not  sufficient  funds 
to  meet  it,  although  he  has  general  authority  to  certify 

1  See  the  next  case.  Daly»  476.    The  lower  court  made 

2  Pattison  v.  Syracuse  Bank,   1  the  correct  decision.  The  bank  was 
Hun,  606.  Compare,  however,  Lloyd  afterward  held  liable  on  the  ground 
v.  West  Branch  Bank,  15  Pa.  172.  of  negligence.    See  Clews  v.  Bank, 

3  City  Nat   Bank  v.  Mastin,  70  105  N.  Y.  398,  114  N.  Y.  70.    The 
Tex.  643.  court  reversed  itself,  but  would  not 

4  Hotchkiss  v.  Artisans'  Bank,  2  admit  it. 

Keyes,  564  6  Marine  Bank  v.  Terry,  40  111.  255. 

5  Clews  v.   New  York   Banking       7  Clark  v.  Metropolitan  Bank,  3 
Ass'n,  89  N.  Y.  418,  reversing  8    Duer,  241. 


§  103.] 


OFFICERS   AND    AGENTS. 


15T 


checks;8  and  it  seems  that  the  paying  teller  binds  the  bank, 
where  a  check  is  left  with  him.  for  collection  upon  a  depos- 
itor, where  the  paying  teller  agreed  that  he  would  cause  the 
check  to  be  paid  during  the  day  if  the  depositor  should  have 
sufficient  funds  during  the  day  in  the  bank.9  But  the  pay- 
ing teller  has  no  authority  to  receive  deposits,  and  where  he 
takes  a  deposit,  but  embezzles  it,  the  bank  is  not  liable ; 10  nor 
is  the  bank  liable  where  the  book-keeper  takes  a  deposit,  and 
enters  it  upon  the  customer's  pass-book  and  in  the  ledger, 
but  in  no  other  place.11 

§  103.  Place  of  acting. —  Every  bank  has  a  well-known 
place  of  business,  and,  as  a  general  rule,  any  act  done  by  an 
agent,  unless  specially  authorized  or  ratified  by  the  bank, 
away  from  the  place  of  business,  ought  not  to  be  binding 
upon  the  bank.1  But  there  are  exceptional  cases,  such  as 
that  of  a  cashier  going  to  another  bank  to  buy  gold,2  or  going 
to  another  place  to  settle  business  of  the  bank.  The  bank 


8  Clarke  Nat.  Bank  v.  Albion  Bank, 
52  Barb.  592.    It  would  have  been 
good  if  the  holder  was  a  bonafide 
holder.    Farmers'  Bank  v.  Butch- 
ers' Bank,  16  N.  Y.  125.    But  the 
form  of  the  check   was  notice  in 
the  former  case. 

9  Washington  Nat.  Bank  v.  Aver- 
ell,  2  App.  D.  C.  470. 

1°  Thatcher  v.  State  Bank,  5  Sandf. 
121.  This  case  cannot  be  justified 
on  principle.  See  the  next  note. 
Compare  City  Nat.  Bank  v.  Mastin, 
70  Tex.  043.  This  latter  case  states 
the  sound  reason  why  the  bank 
should  be  held. 

11  Manhattan  Co.  v.  Lydig,  4  Johns. 
377.  Although  Chancellor  Kent  was 
one  of  the  concurring  judges,  this 
case  as  well  as  the  latter  seems  open 
to  objection.  Of  course  it  may  be 
said  a  man  dealing  with  a  bank  is 
bound  to  know  the  powers  of  its  dif- 


ferent officers;  but  suppose  an  ig- 
norant man  knowing  nothing  of 
banks  should  come  into  a  bank  with 
a  check  or  draft  to  collect  and 
should  go  up  to  a  window  and  hand 
his  check  or  draft  to  the  wrong  clerk, 
who  should  tell  him  to  indorse  it  to 
himself, the  bank  would  be  liable  for 
the  clerk's  action.  See  note  3,  supra* 
But  if  it  were  money  or  something 
else  for  deposit  these  cases  say  the 
bank  would  not  be  liable.  It  is 
right  that  the  bank  should  be  lia- 
ble, because  it  impliedly  represents 
its  employees  to  be  something  bet- 
ter than  mere  confidence  men.  See 
the  last  note. 

1  Sandy  River  Bank  v.  Merchants' 
Bank,  1  Biss.  146.    The  general  rule 
is  stated  in  Merchants'  Bank  v.  Ru- 
dolf, 5  Neb.  527. 

2  Merchants'  Nat.  Bank  v.  State 
Nat.  Bank,  10  Wall.  604 


158  BANKS   AND   BANKING.  [§  104. 

has  been  held  for  an  indorsement8  or  an  admission  made  by 
the  cashier  upon  the  street,4  and  other  cases  exceptional  in 
their  nature  are  likely  to  happen,5  such  as  torts. 

§  104.  Surrendering  the  bank's  rights. —  There  are  cer- 
tain cases  which  use  language  to  the  effect  that  the  officers 
of  the  bank  have  not  the  right  to  surrender  the  rights  of  the 
bank  on  a  note  by  statements  made  at  the  making  of  it.  But 
this  statement  is  inaccurate.  In  a  leading  case  where  the 
language  is  used,  the  judge  deciding  the  case  did  not  under- 
stand the  point  he  was  deciding.1  The  case  was  one  where 
the  officers  of  a  bank  represented  to  an  indorser  or  agreed 
with  the  indorser  that  the  indorser  would  not  be  liable.  The 
real  point  was  that  the  party  was  seeking  to  contradict  the 
effect  of  the  written  document  by  parol  evidence.  But  other 
courts  have  followed  this  deliverance,2  and  it  is  possible  that 
courts  may  go  on  repeating  it.  The  rule  as  to  parol  evidence 
to  vary  a  written  contract  is  that  it  is  not  admissible  except 
in  cases  of  fraud  or  mistake.  But  a  representation  by  a  bank 
officer  that  a  person  indorsing  a  note  would  not  be  liable  on 
it  is,  of  course,  not  a  fraudulent  representation,  or  a  repre- 
sentation of  a  fact  at  all,  or  a  representation  upon  which  the 
indorser  had  a  right  to  rely.  Yet  if  at  the  time  the  indorse- 

3  Bissell  v.  First  Nat.  Bank,  69  Pa.  other  party  had  no  right  to  rely 
415.  upon  such  an  agreement.    That  is 

4  Kingston  v.  First  Nat.  Bank,  26  true.    But  the  theory  of  the  law  is 
Wis.  663.  that  the  note  cannot  be  varied  by 

5  Pendleton  v.  Bank  of  Kentucky,  such    evidence.    Other   cases   say 
1  T.  B.  Mon.  171.  that  the  act  was  beyond  the  scope 

1  Bank  of  U.  S.  v.  Dunn,  6  Pet.  51,  of  the  officer's  duty,  but  that  is 
by  Justice  McLean.    He  did  not  re-  simply  petitio  principii.    Suppose 
peat  this  statement  in    Bank   of  a  benefit  was  granted  to  the  bank 
Metropolis  v.  Jones,  8  Pet.  12.  for  such  an  agreement    The  other 

2  Loomis  v.  Fay,  24  Vt  240.    This  cases  which  follow  Bank  of  U.  S.  v. 
case  advances  the  theory  that  such  Dunn  are  Whitehall  Bank  v.  Tis- 
an  agreement  would  be  a  fraud  on  dale,  18  Hun,  151;  Mapes  v.  Second 
the  bank.  That  is  no  reason  for  not  Nat.  Bank,  80  Pa,  163;  and  see  Comp. 
holding  the  bank  liable.    It  is  lia-  v.  Carlisle  Bank,  94  Pa.  409,  which 
ble  for  many  acts  of  its  agents  that  was  clearly  a  case  under  parol  evi- 
are  a  fraud  upon  it.    Other  cases  dence  rule. 

put  forward  the  theory  that  the 


§  105.]  OFFICERS   AND -AGENTS.  159 

ment  is  given  an  actual  fraudulent  representation  is  made  by 
an  officer  of  the  bank  who  has  the  power  to  act  in  regard  to 
the  note,  the  bank  will  be  responsible  for  the  fraudulent  rep- 
resentation.3 This  is  the  general  rule  now  fully  established, 
that  a  corporate  officer  perpetrating  a  tort  in  the  perform- 
ance of  the  business  of  the  corporation  which  he  is  qualified 
to  perform  renders  the  corporation  liable.4 

§  105.  Special  course  of  dealing. —  Although  the  appar- 
ent scope  of  the  authority  of  bank  officers  is  as  stated  in  the 
preceding  section,  that  apparent  authority  may  be  greater 
owing  to  the  fact  that  the  governing  authority  in  the  cor- 
poration has  permitted  to  the  particular  officer  an  apparent 
authority  greater  than  he  would  otherwise  enjoy.  The  cor- 
poration is  bound  by  the  action  of  its  governing  body.  That 
governing  body  permits  an  agent  to  assume  greater  power 
than  he  is  entitled  to  enjoy.  From  such  conduct  an  agency 
by  estoppel  arises.1  On  principle  it  makes  no  difference 
whether  the  agent's  acts  are  authorized  by  the  special  char- 
ter or  articles  of  agreement,  or  are  contrary  thereto;  the 
corporation  is  bound  as  to  third  parties,  just  as  the  princi- 
pal would  be  bound  who  defined  his  agent's  authority  in  a 
written  document  and  then  knowingly  permitted  him  to  ex- 

3  First  Nat.  Bank  v.  Pegram,  118  oque  Bank  v.  First  Nat.  Bank,  36 
N.  C.  671.    This  case  must  decide  Conn.  325.   See  the  preface  to  Cook 
that  the  cashier  had  power  to  make  on  Corporations.    It  is  not  neces- 
the  representation,  for  it  is  not  con-  sary  here  to  recapitulate  the  au- 
ceivable  that  the  court  would  know-  thorities  upon  this   question.     Of 
ingly  permit  a  wrong  judgment  to  course,  to  make  the  corporation  re- 
stand.    Grant  v.  Cropsey,  8  Neb.  sponsible  for  punitive  damages,  the 
205.  This  last  case  is  questionable  as  corporation  must  have  authorized 
an  authority.    If  the  bank  receives  or  ratified  the  tort.   Lake  Shore  Ry. 
a  benefit,  the  bank  will  be  bound  Co.  v.  Prentice,  147  U.  S.  101.    But 
even  though  the  officer's  act  was  a  other  authorities  are  contra.    See 
fraud.    But  the  making  of  the  con-  note  11  to  §  96,  supra. 

tract  is,  as  a  matter  of  considera-  *  This  form  of  agency  is  a  matter 

tion,  the  reception  of  a  benefit  by  of  common  application  in  the  law  of 

the  bank.  See  Manhattan  Life  Ins.  principal  and  agent.    SeeBronson's 

Co.  v.  Farmers'  Bank,  10  Blatch.  344.  Executor  v.  Chappell,  12  Wall.  681 ; 

4  See,  for  the  principle,  Pahqui-  Johnson  v.  Hurley,  115  Mo.  513. 


160 


BANKS   AND    BANKING. 


[§  105. 


ercise  a  greater  authority.2  A  corporation,  by  a  course  of 
dealing,  can  commit  the  whole  corporate  authority  to  one 
particular  officer.  The  limitation  is  that  the  officer  be  not 
forbidden,  by  an  express  general  statute  or  rule  of  law,  from 
exercising  the  particular  authority.3  So  it  is  held  that  the 
directors  of  a  bank,  by  allowing  its  cashier  to  exercise  the 
whole  corporate  authority,  make  the  bank  responsible  for 
the  acts  of  the  cashier  beyond  the  scope  of  his  usual  author- 
ity in  other  banks.4  But  in  order  to  bind  the  bank,  where 
an  officer  acts  outside  the  usual  scope  of  his  authority,  the 
bank  must  be  a  party  to  the  circumstances,  or  chargeable 
in  some  way  with  knowledge.5  Since  such  action  is  by  the 
implied  authority  of  the  board  of  directors,  it  follows  that 
the  bank  is  bound,  where  it  receives  a  benefit,  whether  the 
act  is  contrary  or  not  to  the  special  charter  or  to  the  articles 
of  agreement.6  The  same  result  ought  to  follow  as  to  any 


2  See  note  9  to  §  120,  post,  and 
note  3  following  this  note.    By  the 
rule  laid  down  in  §  33,  ante,  the 
bank  receiving  a  benefit  would  be 
held  to  be  bound,  except  where  the 
transaction  was  forbidden  by  a  pos- 
itive rule  of  law  or  a  statute,  and 
was  not  purely  ultra  vires.    That 
is  the  doctrine    of   the   Supreme 
Court  of  the  United  States,  and  yet 
it  is  not. 

3  If  he  is,  no  estoppel  arises.    Bur- 
rows v.  Niblack,  84  Fed.  R.  Ill, 
senible;  and  Kennedy  v.  California 
Bank,  167  U.  S.  362,  applies  the 
principle  to  a  purchase  merely  be- 
yond the  corporate  power.    But  the 
latter  case  is  wrong  on  that  point. 
See  §  33,  ante,  and  s.  C.,  101  Cal.  495. 

4  Pattison  v.  Syracuse  Nat  Bank, 
80  N.  Y.  82;  Davenport  v.  Stone, 
104   Mich.  521,    rediscounting    by 
cashier;  City  Nat.  Bank  v.  National 
Park  Bank,  32  Hun,  105,  borrowing 
money  by  president  and  fraudu- 
lent representations  binding  on  the 


bank,  because  the  president  was 
permitted  to  absorb  all  the  corpo- 
rate power.  See  also  Cox  v.  Rob- 
inson, 82  Fed.  R.  277;  Armstrong  v. 
Cache  Valley  Co.,  48  Pac.  R.  690; 
National  Bank  v.  First  Nat.  Bank, 
79  Fed.  R.  961 ;  Carpey  v.  Dowell,  115 
CaL  677. 

5  Wheat  v.  Bank  of  Louisville,  5 
S.  W.  R.  305.  Compare  Robinson 
v.  Bealle,  20  Ga.  575.  But  if  the 
facts  are  on  the  books  of  the  bank, 
knowledge  of  the  directors  is  pre- 
sumed. Bank  of  Carlisle  v.  Flem- 
ing, 44  S.  W.  R.  961. 

6Hagerstown  Bank  v.  Loudon 
Sav.  Soc.,  3  Grant  Cas.  135.  This 
idea  seems  to  contradict  the  propo- 
sition that  every  man  dealing  with 
a  corporation  is  bound  to  know  the 
authority  of  its  agents  as  defined  in 
the  articles  of  agreement  or  char- 
ter. But  the  two  things  may  be 
reconciled  by  the  consideration 
that  the  representation  has  pre- 
vented the  ascertainment  of  the 


§  106.]  OFFICERS   AND   AGENTS.  101 

particular  course  of  action  with  reference  to  special  matters 
permitted  by  the  corporate  direction.7  The  bank  is  likewise 
bound.  These  cases  may  be  also  treated  as  cases  of  acquies- 
cence by  the  bank. 

§  106.  Officer  agent  for  another. —  When  the  officer  of 
a  bank  in  a  particular  transaction  acts  as  agent  or  trustee 
for  another,  and  also  as  agent  for  the  bank,  the  question  in- 
volved is  more  frequently  one  of  notice  than  of  power  in  the 
agent;  but  it  may  serve  a  useful  purpose  to  collect  some  of 
the  cases  in  one  section  in  order  to  illustrate  the  general 
principle.  Some  of  the  cases  are  decided  on  the  question  of 
which  party  has  received  a  benefit.  Thus,  where  the  treas- 
urer of  one  company  was  the  cashier  and  manager  of  a  bank, 
and  took  the  bonds  of  the  company  and  pledged  them  in  the 
name  of  the  bank,  and  secured  advances  to  be  made  to  the 
bank,  the  directors  of  the  bank  as  well  as  the  directors  of 
the  corporation  being  ignorant  of  the  whole  matter,  the 
bank  was  held  liable  for  the  bonds,  on  the  plain  ground  that 
it  had  received  a  benefit.1  Again,  a  cashier  was  the  agent 
of  a  trustee.  He  received  trust  moneys  into  the  bank,  and 
knowingly  allowed  the  trust  money  to  be  taken  to  pay  the 
private  debt  of  the  trustee,2  and  his  bank  was  held  liable. 
This  is  a  simple  case  of  notice  to  the  bank,  where  the  agent 
had  acquired  his  knowledge  while  acting  upon  the  bank's 
business,  and  his  knowledge  was  therefore  imputable  to 
the  bank.  In  another  case  a  town  treasurer  was  the  cashier 
of  a  bank.  He  drew  a  note  as  town  treasurer  and  discounted 

fact.    See  note  2,  supra.    The  dis-  checks  and  receiving  payments  in- 

tinction  should  be  that  the  act  be  stead  of  cashier.    Iowa  State  Bank 

not  forbidden  by  a  statute  or  rule  v.  Black,  91  Iowa,  490,  is  not  contra, 

of  general  law.  because  there  was  no  course  of  deal- 

7  Caldwell  v.  National  Mohawk  ings.    See  also  First  Nat.  Bank  v. 

Val.  Bank,  64  Barb.  333;  Martin  v.  Stone,  106  Mich.   367;  Winton  v. 

Webb,  110  U.  S.  7;  Mercantile  Bank  Little,  94  Pa,  64 

v.  McCarthy,  7  Mo.  App.  318;  First  iFishkill  Sav.  Inst  v.  Bostwick, 

Nat.  Bank  v.  Graham,  79  Pa.  106;  80  N.  Y.  162. 

Neiffer  v.   Bank    of    Knoxville,  1  2  Loring  v.  Brodie,  134  Mass.  453, 
Head,  162,  as  to  president  signing 
11 


162  BANKS   AND   BANKING.  [§  106. 

it  at  his  bank  and  pocketed  the  proceeds;  the  board  of  di- 
rectors of  his  bank  was  ignorant  of  the  transaction,  he  alone 
acting.3  This  is  a  case  of  notice,  and  it  was  rightly  held  that 
the  bank  could  not  sue  on  the  note,  the  reason  being  that, 
the  cashier  having  acted  for  the  bank  in  discounting  the 
note,  whatever  he  knew  the  bank  must  be  held  to  know. 
It  will  be  seen  from  the  preceding  cases  that  where  two  cor- 
porations have  common  officers,  and  are  dealing  with  each 
other,  the  question  that  arises  is  sometimes  a  question  of 
power  in  the  officer  and  sometimes  a  question  of  notice  to 
the  bank  through  an  officer.  If  it  is  a  question  of  power  in 
the  agent,  two  conditions  of  fact  may  arise.  The  two  cor- 
porations may  have  a  common  officer,  but  the  common  offi- 
cer does  not  act  for  either  corporation.  In  such  case  the 
fact  of  the  common  officer  existing  is  wholly  immaterial.4 
Or,  again,  the  common  officer  may  act  for  the  one  corpora- 
tion and  other  officers  may  act  for  the  other  corporation. 
In  such  case  the  fact  of  the  common  officer  existing  is  wholly 
immaterial  as  to  the  corporation  for  which  the  common  offi- 
cer does  not  act.  But  where  the  same  officer  acts  for  both 
corporations,  the  rule  to  be  applied  is  that  the  agent  may 
contract  with  himself  as  agent  to  the  extent  of  his  power; 
that  is  to  say,  the  binding  force  of  the  contract  upon  each 
corporation  is  to  be  determined  solely  by  the  question  of 
the  agent's  power  given  him  by  that  particular  corporation.5 
If  any  question  of  notice  arises  the  rule  is  very  simple.  All 
the  knowledge,  though  uncornmunicated,  that  its  agent  had 
present  in  his  mind  at  the  time  of  the  transaction  is  to  be 
imputed  to  each  corporation.  Thus,  calling  the  bank  B. 
and  the  other  corporation  A.,  all  that  the  officer  knew, 

3  First  Nat.  Bank  v.  New  Milford,  ion  it  could  have  recovered.    But 

36  Conn.  93.    The  opinion  puts  the  it  could  not  because  it  had  notice, 

case  on  the  ground  that  by  suing  4  First  Nat.  Bank  v.  Christopher, 

on  the  note  it  ratified  the  fraud.  40  N.  J.  Law,  435. 

But    that    ground    seems    hardly  8  Thus  Fort  Dearborn  Nat.  Bank 

sound.    Suppose  the  bank  had  sued  v.  Seymour,  73  N.  W.  R  724,  is  a 

for  money  had  and  received,  not  question  of  power, 
ratifying  the  fraud,  under  the  opin- 


§  106.]  OFFICERS   AND   AGENTS.  163 

whether  he  gained  his  knowledge  on  the  affairs  of  the  bank 
or  the  other  corporation  B.,  if  the  latter  was  present  in  his 
mind,  is  to  be  imputed  to  the  bank  A.,  and  all  that  he  knew 
as  agent  of  the  other  corporation  B.,  or  as  agent  of  the  bank 
A.,  if  it  was  present  in  his  mind,  is  to  be  imputed  to  B.6 
Thus,  the  cashier  of  a  bank  makes  a  contract  with  the  di- 
rectors of  a  corporation,  of  which  he  is  also  a  director,  but 
in  regard  to  which  he  acted  solely  for  the  bank;  his  power  is 
to  be  determined  by  the  general  scope  of  his  authority,  the 
particular  course  of  dealing  as  to  the  allowance  of  power  to 
the  cashier  in  that  bank  in  connection  with  the  consider- 
ations of  express  or  implied  authorization  or  of  ratification  or 
of  retention  of  benefits  by  the  bank.  But  if  the  cashier  of 
the  bank  makes  a  contract  with  a  corporation  of  which  he 
is  an  officer,  and  he  acts  on  both  sides,  his  power  to  make 
the  contract  is  still  to  be  determined  by  the  rules  of  law 
stated  as  to  the  last  illustration,  with  the  limitation  that  if 
he  knows  that  as  officer  of  the  bank  he  has  not  the  power 
to  make  the  contract,  although  it  would  generally  be  lawful 
for  him  to  make  it,  his  knowledge  is  to  be  imputed  to 
the  other  corporation,  if  present  in  his  mind,  and  that 
corporation's  rights  are  to  be  treated  as  if  he  knew  the 
cashier's  lack  of  power;  and  conversely,  if  he  knew  that  he, 
as  officer  of  the  other  corporation,  or  the  other  officers  with 
whom  he  was  acting  for  the  other  corporation,  had  not  the 
power  to  make  the  contract,  his  knowledge  is  to  be  imputed 
to  the  bank  if  present  in  his  mind,  and  the  bank  is  to  be 
treated  as  if  it  knew  that  he,  as  the  officer  of  the  other  cor- 
poration, had  not  the  power  to  make  the  contract.  The 
cases  applicable  to  banks  it  is  believed  bear  out  this  state- 
ment of  the  law.  Thus,  it  is  held  that  if  the  bank  officer 
dealing  as  officer  for  another  corporation  with  the  bank 
does  not  communicate  his  knowledge  to  the  bank,  the  bank 
is  not  bound,  where  the  lank  officer  did  not  act  in  the  partic- 
ular transaction  for  the  lank.1  But  if  in  such  a  dealing  of 

6  Murray  v.  Pauly,  56  Fed.  R.  962,    Mass.  74;  Innerarity  v.  Merchants' 
illustrates  this  point  Nat.   Bank,   139   Mass.   332;    First 

7  Corcoran  v.  Snow  Cattle  Co.,  151    Nat.  Bank  v.  Loyhetl,  28  Minn.  396; 


164  BANKS   AND   BANKING.  [§  107. 

the  bank  with  another  corporation,  the  bank  officer  acting 
for  the  other  corporation  also  acted  for  the  bank,  the  bank  is 
chargeable  with  whatever  knowledge  the  bank  officer  had.8 
But  the  limitation  by  some  of  the  cases  is  made  that  the 
common  officer  must  alone  act  for  both  corporations.9  This 
limitation  is  not  logical  for  this  reason :  If  the  officer  is  act- 
ing as  one  of  a  board  of  directors  or  one  of  a  committee,  the 
knowledge  of  one  member  of  the  committee  is  the  knowl- 
edge of  all  of  them;  and  so  one  case  plainly  recognizes,10 
where  the  point  was  drawn  to  its  attention,  while  it  was 
not  carefully  or  at  all  examined  in  the  other  cases,  in  both 
of  which  the  assertion  is  the  purest  dictum.n  But  it  should 
appear  that  the  knowledge  was  present  in  the  mind  of  the 
agent  when  he  acted,  unless  the  court  of  the  particular  juris- 
diction recognizes  a  presumption  of  communication. 

§  107.  Officer  acting  about  his  private  affairs. — An  offi- 
cer of  a  bank  has  ne  right  to  use  the  bank  or  its  funds  for 
his  private  advantage,  and,  as  we  shall  see  in  the  next  sec- 
tion, any  person  who  has  knowledge  of  such  a  fact  can  claim 
nothing  against  the  bank  from  such  a  transaction.  But 
without  reference  to  the  question  as  to  who  is  claiming  the 
benefit  of  the  transaction,  but  simply  considering  the  matter 
as  a  question  of  power  in  the  officer  as  the  bank  agent,  the 
rule  above  stated  is  uniform.  Thus,  the  president  of  a  bank 

Benton  v.  German-American  Bank,  the  particular  officer  is  not,  this 
122  Mo.  832;  Oak  Grove  Cattle  Co.  rule  is  very  proper, 
v.  Foster,  41  Pac.  R  522;  Bank  v.  "Le  Due  v.  Moore,  111  N.  C.  516, 
Blake,  60  Fed.  R.  78.    Owensboro  v.  overruling  on  ttiis  very  point,  Corn- 
Da  viess  Co.  Court,  12  S.  W.  R  930,  mercial  Bank  v.  Burgwyn,  110  N.  C 
13  S.  W.  R  101,  seems  to  be  contra,  267. 

but  is  too  vague  to  afford  much  u  See  statement  of  facts  in  both 

light.    See  also  Wilson  v.  Bank,  7  cases,  cited  in  note  9,  supra.    Inao 

Atl.  R  145.  cordance  with  the  rules  in  this  sec- 

8  Le  Duo  v.  Moore,  111  N.  C.  516.  tion,  Niblack  v.  Cosier,  80  Fed.  R 

9  Corcoran  v.  Snow  Cattle  Co.,  151  596;  Broston  v.  Penniman,  97  Ga. 
Mass.  74;  Bank  v.  Blake,  60  Fed.  R  527;  Detroit  Motor  Co.  v.  Third  Nat 
78.     Wherever  there    is  any  pre-  Bank,  69  N.  W.  R  726;  Withers  v. 
sumption  from  the  fact  that  others  Lafayette  Co.  Bank,  67  Mo.  App.  115, 
are  acting  for  the  bank  and  that  and  Leonard  v.  Lattimer,  67  Mo. 

App.  138,  are  correct 


§  107.]  OFFICERS   AND  AGENTS.  165 

cannot  appropriate  the  bank's  note  to  pay  his  own  debt,1  nor 
can  the  cashier2  or  the  president  bind  by  contract  the  bank 
in  a  transaction  where  the  bank  is  not  interested ; s  but  of 
course  the  bank  may  ratify  such  a  transaction,4  or  permit  it 
by  the  conduct  of  its  governing  body,5  which  is  ratification 
in  advance,  if  the  phrass  be  permissible.  An  agent  author- 
ized to  certify  checks  cannot  bind  the  bank  by  certifying 
his  own  check  or  indorsing  his  own  note,6  or  by  issuing  cer- 
tificates of  deposit  to  himself,7  or  by  certifying  checks  when 
the  drawer  has  no  funds;8  or  by  paying  checks  of  a  creditor 
of  the  president  when  the  creditor  has  no  funds  in  the  bank,9 
nor  by  paying  his  own  debts  with  the  bank's  funds  without 
authority,10  nor  by  a  promise  to  pay  a  check  if  sent  through 
the  clearing-house  regardless  of  the  presence  in  the  bank  of 
funds  to  meet  the  check,11  nor  by  drawing  drafts  to  use  in 
his  private  business,12  nor  by  drawing  drafts  to  cover  his 
own  embezzlement,13  nor  by  entering  into  a  conspiracy  to 
swindle  creditors.14  In  all  such  cases  if  the  bank  is  to  be 
held  it  must  be  on  grounds  of  ratification,  or  of  a  course  of 
dealing  permitting  the  acts,  or  of  estoppel  by  the  retention 
of  benefits  received  by  the  acts,  or  because  the  party  claim- 
ing under  the  contract  is  recognized  by  the  law  to  be  in 

1  Rhodes  v.  Webb,  24  Minn.  292.  ">  Christie  v.  Foster,  61  Fed.  E.  551. 

2  State  Nat.  Bank  v.  Newton  Nat.  u  Morse  v.  Mass.  Nat.  Bank,  Fed. 
Bank,  66  Fed.  R.  691,  32  U.  S.  App.  Gas.  No.  9857.    It  would  not  bind 
52.  the  bank  if  authorized,  unless  in 

8  Kennedy  v.  Otoe  Co.  Nat.  Bank,  writing,  because  if  there  were  no 

7  Neb.  59.  funds  it  would  be  within  the  stat- 

4  Winton  v.  Little,  94  Pa.  64.  ute  of  frauds. 

6  Martin  v.  Webb,  110  U.  S.  7.  12  Anderson  v.  Kissam,  35  Fed.  R 
6Claflin  v.  Farmers'  Bank,  2  Am.  699;  Lamson  v.  Beard,  94  Fed.  R 

Law  Reg.  (N.  S.)  92;  West  St.  Louis  30;  United  States  v.  Johnson,  Fed. 

Sav.  Bank  v.  Shawnee  Co.  Bank,  95  Cas.  No.  15,483;  Ruohs  v.  Third  Nat 

U.  S.  557.  Bank,  94  Tenn.  57. 

7  Lee  v.  Smith,  80  Mo.  304  "Faneuil  Hall  Bank  v.  Bank  of 

8  Clarke    Nat    Bank  v.    Albion  Brighton,  16  Gray,  534.    The  bank 
Bank,  52  Barb.  592;  Pope  v.  Bank  would  be  held  to  a  bond  fide  holder, 
of  Albion,  57  N.  Y.  126.  "Johnston-Fife  Hat  Co.  v.  Nat 

9  Dowd  v.  Stephenson,  105  N.  C.  Bank  of  Guthrie,  4  OkL  17. 
407. 


166  BANKS   AND   BANKING.  [§  108. 

good  faith,  through  lack  of  notice  and  the  payment  of  value, 
or  the  suffering  of  a  detriment  on  the  faith  of  the  act.u 

§  108.  Bona  fide  third  parties. —  In  the  case  of  commer- 
cial paper  or  other  property  of  the  bank,  whenever  it  comes 
into  the  hands  of  a  third  party  who  had  no  notice  of  the 
corporate  officer's  lack  of  authority,  and  who  is  a  holder  for 
value,  the  bank  is  bound  by  the  transaction.1  But  whenever 
the  paper  on  its  face  shows  that  in  the  transaction  there 
must  have  been  a  want  of  authority,  such  fact  gives  full  no- 
tice to  every  one  who  deals  with  the  paper,2  such  as  drafts 
of  a  bank  in  favor  of  the  president  of  the  bank  and  signed 
by  himself  as  president,  erasing  the  word  "  cashier," 8  or  post- 
dated checks  certified  before  they  could  be  cashed.4  And 
it  is  stated  that  those  having  notice  of  the  officer's  want  of 
authority,  where  there  is  a  want  of  authority,  by  knowing 
the  circumstances  of  the  act  cannot  claim  as  against  the 
bank,8  if  the  validity  of  the  act  depends  solely  upon  the  ques- 
tion of  power  and  not  of  ratification  or  authorization. 

15  See  the  succeeding  section.  that  some  officer  had  power  to  in- 

1  Faneuil  Bank  v.  Bank  of  Brigh-  dorse.    The  case  is  hardly  sound, 
ton,  16  Gray,  534;  Phillips  v.  Merc.  See  West  St.  Louis  Bank  v.  Shaw- 
Nat  Bank,  140  N.  Y,  556;  Goshen  nee  Co.  Bank,  95  U.  S.  557.    One 
Nat  Bank  v.  State,  141  N.  Y.  379;  court  puts  forward  the  queer  idea 
Blair  v.  First  Nat.  Bank.  2  Flip,  that  such  an  indorsement  is  merely 
111;  Houghton  v.  First  Nat  Bank,  voidable.    Preston  v.  Cutter,  64  N. 
26  Wis.  663;  Central  Trust  Co.  v.  H.  461.    It  is  void. 

Cook  Co.  Nat  Bank,  15  Fed.  R  885;  *  Lamson  v.  Beard,  94  Fed.  R  30. 

Farmers'  Bank  v.  Butchers'  Bank,  *  Clarke    Nat    Bank   v.  Albion 

16  N.  Y.  125.    See  Dime  Sav.  Inst  Bank,  52  Barb.  592. 

v.  Allentown  Bank,  65  Pa.  116.  6  Bank  of  E.  Tenn.   v.  Hook,  1 

2  Anderson  v.  Kissam,  35  Fed.  R.  Cold.  156.    One  case,  Williams  v. 
699;  Clarke  Nat   Bank  v.  Albion  Dorrier,  135  Pa.  445,  is  decided  on 
Bank,  52  Barb.  592;  Pope  v.  Bank  the  basis  of  uti  possidetis.    It  is 
of  Albion,  57  N.  Y.  126.    The  iden-  partly   right    and    partly    wrong, 
tity  of  name  is  notice.    Claflin  v.  Breyfogle  v.  Walsh,  71  Fed.  R  898, 
Farmers'  Bank,  2  Am.  Law  Reg.  is  rightly  decided  by  reason  of  the 
(N.  S.)  92;  Lee  v.  Smith,  84  Mo.  304.  fact  that  the  parties  knew  the  lack 
Contra,  Central  Trust  Co.  v.  Cook  of  authority.    The  reasons  given 
Co.  Nat  Bank,  15  Fed.  R  885.    But  by  the  court  for  its  judgment  are 
in  this  latter  case  it  might  be  said  absurd. 


§  109.]  OFFICERS   AND   AGENTS.  167 

§  109.  Ratification. —  The  bank  may  ratify  an  act  which 
it  could  have  authorized,  and  even  those  acts,  which  are  ultra 
vires  in  the  sense  of  being  merely  beyond  the  corporate 
power,1  it  may  ratify.  This  ratification  may  be  express,  or 
may  be  implied  from  long  acquiescence  or  delay  in  objecting, 
or  by  the  retention  of  a  benefit  received  under  the  unau- 
thorized contract,  or  by  insisting  upon  it  as  valid.  This 
species  of  ratification  is  in  the  nature  of  an  estoppel.  Cases 
where  the  act  is  held  authorized  by  a  course  of  dealing  might 
be  called  a  species  of  ratification.2  But  leaving  out  these 
latter  cases,  and  considering  the  other  instances  mentioned, 
it  is  plain  that  in  the  case  of  an  express  ratification  the  proof 
can  never  be  difficult.  The  action  of  the  board  of  directors 
or  of  any  other  officers  competent  to  act  determines  the  fact. 
In  cases  of  implied  ratification  the  existence  of  the  fact  is  to 
be  deduced  from  circumstances.  A  long  delay  or  failure  to 
object  to  an  unauthorized  act  will  estop  the  corporation, 
especially  where  the  other  party  has  altered  his  situation 
with  reference  to  the  matter.3  The  reception  of  a  benefit 
by  the  corporation  will  estop  the  corporation  from  object- 
ing.4 Thus  if  the  corporation  retains  the  consideration  re- 
ceived for  a  deed,  it  cannot  object  that  the  officer  was  un- 
authorized to  make  the  deed.5  Even  if  the  officer  deceived 

1  See  §  88,  ante,  for  many  cases  of  Bank  v.  Me Anulty,  31 S.  W.  R.  1091 ; 
this  nature.  Bank  of  New  London  v.  Ketcham, 

2  See  §  105,  ante.  64  Wis.  7;  Johnston-Fife  Hat  Co.  v. 

3  Peninsular  Bank  v.  Hanmer,  14  National  Bank,  4  Okl.  17,  where  the 
Mich.  208;  Bank  of  Pa.  v.  Reed,  1  bank    received    the    benefit    of  a 
Watts  &  S.  101;  Parker  v.  Donelly,  swindling  conspiracy;   Manhattan 
4  W.  Va.  648;  Kelsey  v.  Nat.  Bank  Life  Ins.  Co.  v.  Farmers'  Bank,  10 
of  Crawford  Co.,  69  Pa.  426.    One  Blatch.  344;  Hughes  v.  First  Nat. 
case  says  want  of  objection  alone  Bank,  110  Pa.  428;  Owens  v.  Stapp, 
not  sufficient.    Tifft  v.  Quaker  City  32  111.  App.  653;  Johnston  v.  South- 
Bank,  8  Pa,  Co.  Ct.  R.  606.    But  that  western  Bank,  3  Strob.  Eq.  263 ;  Cut- 
is  not  an  accurate  statement.  ting  v.  Marlor,  78  N.  Y.  454;  Haw- 

4  Peninsular  Bank  v.  Hanmer,  14  kins  v.  Fourth  Nat.  Bank,  49  N.  E. 
Mich.  208;  Tradesmen's  Nat.  Bank  R.  957. 

v.  Bank  of  Commerce,  39  N.  Y.  Supp.        5  Akers  v.  Ray  Co.  Bank,  63  Mo. 
554;  Gold  beck  v.  Kensington  Nat.    App.  316. 
Bank,  147  Pa.  267;  Merchants'  Nat. 


168  BANKS   AND   BANKING.  [§  109. 

the  bank,  and  the  bank  retains  the  benefit  of  his  act,  it  is 
liable  for  the  act  as  authorized.6  For  although  ratification 
must  be  with  knowledge,7  yet  where  it  retains  a  benefit  it 
will  not  be  heard  to  say  it  had  not  knowledge.  Where  a 
bank  receives  and  keeps  the  sura  or  consideration  paid  for 
an  extension  of  payment  on  its  claim,  it  ratifies  the  extension 
though  unauthorized.8  So  where  the  bank  retains  the  money 
derived  from  the  unauthorized  pledge  of  another  corpora- 
tion's securities,  it  must  answer  to  that  corporation  for  the 
securities.9  On  the  same  principle,  if  the  corporation  at- 
tempts to  enforce  an  unauthorized  contract,  it  binds  itself 
to  the  contract.10  It  cannot  approbate  and  reprobate  in  the 
same  breath.  If  the  bank  protests  a  draft  received  for  col- 
lection, it  ratifies  the  receipt  for  collection.11  It  was  held  in 
the  case  of  a  town  treasurer,  who  was  also  cashier  of  a  bank, 
and  who  drew  a  note  as  town  treasurer  and  signed  it  as 
such,  but  discounted  it  to  his  bank  for  his  own  individual 
profit,  that  the  bank  by  bringing  suit  on  the  note  ratified 
its  cashier's  fraud.12  Whenever  a  ratification  is  shown  in 
this  manner  it  amounts  to  a  prior  authority.13  There  are 
other  cases  which  may  be  called  cases  of  ratification.  Thus 
a  cashier  pledged  bonds  of  the  customer  deposited  for  safe 
keeping  with  the  bank.  The  pledge  was  for  the  benefit  of 
the  bank  and  the  pledgee  acted  in  good  faith.  The  cashier 
afterwards  got  the  bonds  back  by  a  fraud,  and  it  was  held 
that  the  bank  could  not  object  to  the  pledgee's  title  while 

6  Kennedy  v.   First   Nat.   Bank,    v.  Sharp,  4  Smedes  &  M.  75;   Le 
Fed.  Gas.  No.  7701o.  Grande  Nat.  Bank  v.  Blum,  27  Oreg. 

7  Western   Nat.   Bank    v.    Ann-    215. 

strong,  152  U.  S.  346.  u  Averell  v.  Second  Nat.  Bank,  6 

8  Perkins  v.  Bank  of  La.,  6  La.    Mackey,  358. 

Ann.  222.  12  First  Nat  Bank  v.  Milford,  36 

9  Fishkill  Sav.  Inst.  v.  Bostwick,  Conn.  93.    This  case  is  put  on  the 
80  N.  Y.  162.    It  cannot  deny  an  of-  wrong  ground.    The  cashier  alone 
fleer's  authority  to  make  a  loan  for  acted  for  both  parties.    The  bank 
it,  where  it  receives  the  money  upon  had  notice  of  the  lack  of  authority 
the  loan.  Blanchard  v.  Commercial  of  town  treasurer.  See  note  3,  §  106, 
Bank,  75  Fed.  R.  249.  ante. 

to  Wilson  v.  Pauly,  72  Fed.  R  129,       w  See  preceding  note. 
87  U.  S.  App.  642;  Planters'  Bank 


§  110.]  OFFICERS   AND   AGENTS.  169 

it  retained  the  bonds  and  ratified  the  cashier's  fraud.14  Two 
cases  that  are  at  first  glance  irreconcilable  decide  the  effect 
of  a  cashier's  act  in  receiving  money  into  the  bank  and 
then  wrongfully  passing  it  out.  Thus  the  president  of  a 
bank  discounted  his  notes  to  another  bank,  claiming  that  his 
bank  would  not  pay  the  notes.  The  money  was  deposited 
with  his  bank  to  the  president's  credit.  It  was  held  that 
the  bank  was  not  liable  for  the  loan,  as  there  was  no  evidence 
that  it  retained  the  proceeds.  It  was  simply  the  medium  of 
transference.15  In  the  other  case  the  vice-president  made  a 
loan  in  the  bank's  name  and  the  money  was  put  to  the  bank's 
credit  and  the  cashier  notified.  The  vice-president  thereupon 
caused  the  cashier  to  put  the  money  to  his  (the  vice-pres- 
ident's) credit,  and  he  used  the  money  for  private  purposes. 
It  was  held  that  the  bank  having  received  the  money  was 
liable.16  A  yet  different  case  was  caused  by  the  astute  opera- 
tion of  a  couple  of  tellers  and  a  broker.  The  paying  teller 
of  the  first  bank  was  short  in  his  accounts.  A  complaisant 
broker  drew  a  check  on  the  first  bank.  The  paying  teller 
marked  it  good.  Then  the  broker  took  the  check  to  the 
teller  of  a  second  bank,  who  cashed  it.  The  broker  took 
the  money  to  the  paying  teller  of  the  first  bank,  who  de- 
posited it  amongst  his  cash.  It  was  held  that  the  second 
bank  could  recover  the  money  from  the  first  bank-  The  first 
bank  by  retaining  the  money  ratified  the  fraud.17 

§  110.  Admissions  of  bank  officers. —  The  general  rule 
is  that  the  admission  of  an  agent  while  he  is  acting  within 
the  scope  of  his  authority  and  in  regard  to  a  matter  then 
depending,  or,  as  it  is  expressed,  dum  fervet  opus,  is  binding 
upon  his  principal.1  An  admission  that  is  merely  a  state- 

14  Ringling  v.  Kohn,  4  Mo.  App.  59.  Bank,  10  Gray,  532.  Accord,  Skinner 

15  First  Nat.  Bank  v.Hanover  Nat  v.  Merchants'  Bank,  4  Allen,  290. 
Bank,  66  Fed  R.  34,  13  C.  C.  A.  313.  Contra,  Bank  of  Charleston  v.  State 
Compare  Western    Nat.  Bank   v.  Bank,  13  Rich.  Law,  291,  an  inde- 
Armstrong,  152  U.  S.  346.  fensible  ruling. 

16  Stewart  v.  Armstrong,  56  Fed.        1  Another  statement  of  the  rule 
R.  167.  which  amounts  to  the  same  thing 

17  Atlantic    Bank    v.    Merchants'  is  that  the  admission  must  be  a 


170  BANKS   AND   BANKING.  [§  110. 

ment  or  narration  of  a  past  occurrence  is  not  admissible,  be- 
cause the  agent  is  not  authorized  to  make  admissions  of  that 
character.2  But  if  the  agent  has  authority  to  act  about  a 
particular  matter,  his  statements  made  while  acting  as  agent 
in  regard  to  the  matter  are  binding  upon  the  bank,  whether 
the  statements  are  an  admission  as  to  a  past  or  a  present 
occurrence.3  It  must  be  shown  that  the  declaration  was  in 
regard  to  a  matter  within  the  legal  sphere  of  action  of  the 
corporate  agent.4  It  is  upon  this  ground,  perhaps,  that  it 
has  been  held  that  the  admission  of  the  genuineness  of  an 
indorsement  by  the  bank  teller  is  not  binding  upon  the 
bank;5  and  the  admission  by  a  single  director  not  author- 
ized to  act  for  the  bank  has  been  held  not  to  be  binding 
upon  the  bank.6  In  one  case  of  doubtful  authority  it  has 
been  held  that  a  bank  cashier  who  rented  premises  for  the 
bank  did  not  bind  the  bank  by  admissions  as  to  the  pur- 
pose of  the  bank  in  renting  the  premises,  or  as  to  the  terms 
of  a  previous  renting.7  It  would  seem,  too,  that  the  state- 
ment sought  to  be  considered  an  admission  must  have  been 
made  to  the  party  relying  upon  it,  or  to  some  one  for  him ; 8 
but  this  statement  is  not  entirely  free  from  doubt.9  Stock- 
holders are  not  authorized  merely  in  their  capacity  as  stock- 
part  of  the  res  gestce.  Railroad  to  a  signature  of  a  drawer  of  a 
Co.  v.  O'Brien,  119  U.  S.  99;  Idaho  check. 

Forwarding  Co.  v.  Insurance  Co.,  6  East  River  Bank  v.  Hoyt,  41 
8  Utah,  41.  Courts  sometimes  Barb.  441. 

stretch  the  rule  as  to  what  is  a        7  Union  Banking  Co.  v.  Gillings, 
part  of  the  res  gestce  to  an  unwar-    45  Md.  181.    Compare  Merchants* 
ranted    length.    See  Huffcutt  on    Bank  v.  Marine  Bank,  3  Gill,  96. 
Agency,  sees.  136-139.  84  Thompson  on  Corp.,  sec.  4918; 

2  Franklin  Bank  v.  Steward,  37    Carrol  v.  Railroad  Co.,  82  Ga.  452. 
Ma  519.  9  Keysor  v.  Railroad  Co.,  66  Mich. 

3  Morse  v.  Railroad  Co.,  6  Gray,    390;  but  this  case  is  so  confused 
450;  Malecek  v.  Tower  Grove  R.  R.    that  the  reporter  of  the  court  de- 
Co.,  57  Ma  17.  spaired  of  a  syllabus.   See  also  Lin- 

4  Wyman  v.  Hallowell  Bank,  14    derberg  v.  Crescent  Mining  Co.,  9 
Mass.  58;  Salem  Bank  v.  Gloucester    Utah,  163,  which  case  was  a  most 
Bank,  17  Mass.  21.  laughable  judicial  aberration,  and 

6  Walker  v.  St.  Louis  Nat  Bank,    is  now  overruled.  People  v.  Kessler, 
5  Mo.  App.  214    But  the  principle    13  Utah,  69. 
of  the  decision  could  not  be  applied 


§  111.]  OFFICERS    AND   AGENTS.  171 

holders  to  bind  the  corporation  in  any  way ;  but  when  the 
stockholders  are  assembled  as  the  ultimate  governing  body 
of  the  corporation  in  a  stockholders'  meeting,  an  admission 
made  by  such  a  body  is  under  some  circumstances  an  ad- 
mission binding  upon  the  corporation.10 

§  111.  Notice  to  a  bank. —  This  question  is  frequently  of 
controlling  importance  in  the  law  of  banking,  because  much 
of  the  bank's  business  consists  of  dealings  with  negotiable 
instruments,  or  collateral  deposited  as  security.  If  the  bank 
is  that  of  a  private  banker  or  a  partnership,  notice  to  the 
banker  himself,  or  notice  to  one  of  the  partnership,  is,  of 
course,  notice  to  the  bank.  It  is  the  case  of  notice  to  any 
other  individual.  This  is  so  in  the  case  of  an  unincorpo- 
rated association,  even  though  the  particular  partner  has  an 
interest  in  the  transaction  adverse  to  the  partnership.1  But 
both  private  bankers  and  corporations,  the  former  by  choice 
and  the  latter  by  necessity,  deal  with  the  public  through 
agents.  A  private  banker  may  receive  notice  through 
an  agent,  the  incorporated  bank  can  receive  notice  only 
in  this  way.  The  rules  governing  the  question  in  the  case 
of  both  private  bankers  and  corporations  are  identical.  The 
first  inquiry  must  always  be  whether  the  agent  received  the 
notice  in  the  line  of  his  duties  in  the  bank,  or  whether  he 
obtained  his  knowledge  in  his  private  capacity.  At  the  out- 
set it  is  necessary  to  lay  down  the  principle  clearly  that 
where  the  agent  receives  notice  of  a  fact  while  he  is  acting 
upon  the  bank's  business,  being  duly  authorized  to  act,  he  is- 
identical  with  the  corporation,  and  notice  received  by  the 
agent  under  such  circumstances  is  notice  once  for  all  to  the 
corporation.  Secondly,  where  an  agent  acts  for  the  cor- 
poration, and  the  corporation  insists  upon  his  act  as  giving 
it  a  right,  it  adopts  his  act  in  toto.  It  cannot  adopt  what  is 
favorable  to  itself  and  repudiate  what  is  not  favorable.  If 
the  notice  was  received  by  the  agent  in  the  line  of  his  duty, 
the  bank  will  be  bound  by  notice  so  received.2  Within  this 

10  4  Thompson  on  Corp.,  sec.  4919.        2Ihl  v.  St.  Joseph  Bank,  26  Mo, 
1  Stockdale  v.  Keyes,  79  Pa.  251.     App.  129.    If  the  notice  is  comma- 


172  BANKS    AND   BANKING.  [§  111. 

rule  it  is  held  that  notice  of  facts  to  the  general  officers  of 
the  bank,  such  as  cashier,  president,  or  any  active  managing 
officer,  received  while  such  officer  was  acting  in  regard  to 
the  bank's  business,  is  notice  of  such  facts  to  the  bank  itself.* 
So  notice  of  facts  stated  in  a  letter  received  at  the  bank 
and  there  opened  by  the  head  book-keeper,  whose  duty  it 
was  to  open  and  distribute  the  mail,  is  imputable  to  the 
bank.4  And  notice  to  a  receiving  teller  as  to  the  disposi- 
tion of  a  check  received  by  him  is  notice  to  the  bank.5  It 
is  also  true  that  notice  of  facts  to  an  officer  of  the  bank, 
whose  duty  it  is  to  act  upon  such  notice  or  to  transmit  it  to  the 
bank,  will  be  considered  as  notice  received  in  the  line  of  his 
duty,6  however  it  was  received,  unless  the  officer  received  the 
notice  not  in  his  official  capacity  and  has  an  interest  in  the 
matter  adverse  to  the  bank  itself.  This  proposition  leads  us 
to  the  second  consideration,  and  that  is  whether  the  knowl- 
edge was  received  by  the  officer  of  the  bank  in  his  official 
capacity.  Mere  private  knowledge  of  some  officer  of  the 
bank  is  not  necessarily  imputable  to  the  bank.  It  is  impu- 
table to  the  bank  when  such  officer  communicated  the  knowl- 
edge to  some  officer  or  officers  of  the  bank,  whose  duty  it 
was  to  act  upon  the  notice,  or  in  whose  line  of  duty  in  the 

nicated  to  the  officer  for  the  bank,  81  S.  W.  R  1091.  As  to  any  act- 
the  bank  is  bound.  National  Bank  ive  managing  officer.  Second  Nat. 
v.  Norton,  1  Hill,  578.  Bank  v.  Howe,  40  Minn.  390;  Sav- 
3  As  to  cashier.  McLeod  v.  Fourth  ings  Bank  v.  Holt.  58  Vt.  166;  New- 
Nat  Bank,  20  Fed.  R  225;  New  port  Nat.  Bank  v.  Tweed,  4  Houst. 
Hope  Co.  v.  Phoenix  Bank,  3  Comst.  225;  Branch  Bank  v.  Steele,  10  Ala. 
156;  Stebbins  v.  Lardner,  2  S.  D.  915. 

127;  Fall  River  Bank  v.  Sturtevant,  4  First  Nat.  Bank  v.  Fourth  Nat 

12  Gush.  372;  Loring  v.  Brodie,  134  Bank,  16  U.  S.  App.  1,  56  Fed.  R  967. 

Mass.  453;  Gaston  v.  American  Ex.  6  Strauss     v.    Tradesmen's    Nat 

Bank,  29  N.  J.  Eq.  98;    Veasy  v.  Bank,  122  N.  Y.  379. 

Graham,  17  Ga.  99;  Bank  of  Amer-  6  Fulton  Bank  v.  New  York  Canal 

ica  v.  McNeil,  10  Bush,  54.    As  to  Co.,  4  Paige,   127;   National  Bank 

president     Bartlett  v.   Woodbine  v.  Norton,  1  Hill,  572;  Bartlett  v. 

Bank,  57  III  App.  425;  Louisiana  Woodbine  Bank,  57  III  App.  425. 

State  Bank  v.  Senecal,  13  La.  525;  If  received  by  him   officially,  his 

McCann  v.  State,  4  Neb.  324;  Porter  adverse  interest  is  wholly  immate- 

v.  Bank  of  Rutland,   19  Vt  410;  rial.    See  Atlantic  State  Bank  v. 

Merchants'  Nat  Bank  v.  McAnulty,  Savery,  82  N.  Y.  291. 


§  111.]  OFFICERS   AND   AGENTS.  173 

bank  the  reception  of  such  notice  lay.  Another  statement 
of  the  rule  would  be  that  the  knowledge  must  be  received 
by  the  agent  in  his  official  capacity.7  The  private  knowl- 
edge gained  by  a  director,  outside  of  his  duties  at  the  bank, 
unless  communicated  to  the  board  or  to  some  officer  whose 
duty  it  was  to  receive  the  notice,  is  not  binding  upon  the 
bank.8  But  this  latter  statement  must  be  taken  with  the 
limitation  that  the  particular  officer  who  has  the  private 
knowledge  did  not  act  in  the  particular  transaction  in  re- 
gard to  which  notice  of  the  facts  within  such  officer's  private 
knowledge  is  sought  to  be  imputed  to  the  bank.9  This  dis- 
tinction between  the  reception  of  knowledge  by  the  bank 
officer  in  the  line  of  his  official  duty  in  the  bank  and  the  re- 
ception of  knowledge  on  his  private  affairs  is  one  of  the 
greatest  importance.  In  the  first  instance  the  knowledge 
of  the  agent  is  imputed  to  the  bank  on  the  principle  of 
identity.  The  agent,  while  acting  in  the  line  of  his  dutyy 
is  the  bank.  Notice  so  received  by  the  bank  is  absolute.  It 
cannot  bs  disputed;  it  binds  all  other  officers  of  the  bank 
in  their  dealings ; 10  it  is  binding  upon  all  subsequent  boards 
of  directors.11  But  in  the  second  case,  where  the  agent's 
knowledge  is  gained  in  his  private  affairs  and  wholly  out- 
side of  the  scope  of  his  duties  as  an  officer  of  the  bank,  the 
fact  of  knowledge  on  the  part  of  the  principal  depends  upon 

7  Merchants' Nat.  Bank  v.  Clark,  Cushman,  121  Mass.  490;   Clerk's 
139  N.  Y.  314;   Bank  of  U.  S.  v.  Sav.  Bank  v.  Thomas,  2  Mo.  App. 
Davis,  2  Hill,  452;  Washington  Nat.  367.    These  cases  are  wrong  if  they 
Bank  v.  Pierce,  6  Wash.  491 ;  West-  mean  to  hold  that  the  presumption, 
field  Bank  v.  Cornen,  37  N.  Y.  320.  of  notice  is  absolute.    As  we  will 
Goodloe  v.  Godley,  13  Smedes  &  see  later  on  in  this  section  the  pre- 
M.  233,  is  a  case  in  accord  with  the  sumption  of  the  communication  of 
general  rule,  where  agent  was  not  an  officer's  private  knowledge  may- 
authorized  to  act.  be  rebutted  by  proof.     See   Fair- 

8  First  Nat.  Bank  v.  Christopher,  field  Sav.  Bank  v.  Chase,  72  Me.  226. 
40  N.  J.  Law,  435;  Farmers'  Bank  Some  cases  deny  this  presumption, 
v.  Payne,  25  Conn.  444;   Shaw  v.  10  Gibson  v.  National  Park  Bank, 
Clark,  49  Mich.  384;  Mercer  v.  Ca-  98  N.  Y.  87. 

nonge,  8  La.  Ann.  37.  n  Merchants'  Bank  v.  Seton,  1  Pet. 

»  Bank  of  U.  S.  v.  Davis,  2  Hill,    299. 
452;    National   Security    Bank    v. 


174:  BANKS    AND   BANKING.  [§  111,. 

the  fact  as  to  whether  or  not  the  agent,  if  he  did  not  act  in 
regard  to  the  particular  matter,  has  communicated  his  knowl- 
edge to  the  principal.12  Judges  have  confused  the  two  things. 
If  they  are  not  kept  distinct,  a  person  dealing  through  an 
agent  is  either  in  a  better  or  a  worse  position  than  if  he 
dealt  in  the  matter  himself.  The  failure  to  observe  this  very 
plain  distinction  between  a  fact  acquired  by  the  agent  in 
the.  line  of  his  duty  as  agent,  and  the  effect  of  the  agent's 
private  knowledge,  has  caused  some  exceedingly  unjust  de- 
cisions, as  will  appear  in  the  next  section.  It  is  to  be  no- 
ticed further  that  officers  of  a  bank  performing  a  continuous 
course  of  service  for  the  bank  are  within  this  rule  consid- 
ered as  being  engaged  in  one  transaction.  If  the  knowledge 
of  such  an  officer  of  a  fact  has  been  acquired  during  the 
course  of  his  authorized  dealings  for  the  bank,  his  knowl- 
edge is  treated  as  if  it  were  a  part  of  each  particular  transac- 
tion of  the  bank.13  This  rule  certainly  applies  to  all  the  general 
executive  officers  of  the  bank  as  well  as  to  those  agents  whose 
duties  require  them  to  be  engaged  in  a  continuous  line  of 
service  for  the  bank.  It  follows  that  the  bank  will  not  be 
heard  to  dispute  its  knowledge  received  in  this  way.14  But 
there  are  cases  which  have  lost  sight  of  this  distinction  and 

12  Some  cases  put  the  case  of  does  not  exist  Pollock  &  Mait- 
knowledge  received  during  the  land,  Hist.  Eng.  Law,  529  et  seq. 
course  of  the  agent's  business  for  But  it  did  exist  in  the  Roman  law, 
the  bank  upon  this  ground  also,  and  the  experience  of  the  ages  has 
See  Pierce  v.  Red  Bluff  Hotel  Co.,  31  decided  that  the  Roman  law  was 
CaL  160, 166.  But  this  is  wrong.  If  correct.  "Eadem  est persona  domini 
it  were  a  mere  question  of  commu-  et  procuratoris.  Eadem,  inquam, 
nication,  the  presumption  would  be  non  rei  veritate,  sedfictione,"  quoted 
open  to  dispute,  or  the  communi-  7  Am.  Law  Rev.  63. 
cation  would  need  to  be  proven.  13Holden  v.  New  York  &  Erie 
This  conclusion  is  escaped  by  call-  Bank,  72  N.  Y.  286;  Craigie  v.  Had- 
ing it  a  conclusive  presumption,  ley,  99  N.  Y.  131;  First  Nat.  Bank 
But  the  calling  of  it  a  conclusive  v.  Peisert,  2  Penny.  277. 
presumption  only  amounts  to  say-  14  Strauss  v.  Tradesmen's  Bank, 
ing  that  the  identity  exists.  Why  122  N.  Y.  379;  First  Nat.  Bank  v. 
does  it  exist  ?  is  the  question.  The  Peisert,  2  Penny.  277,  and  Winslow 
only  answer  we  can  make  is  that  v.  Harrimon  Iron  Co.,  42  S.  W.  R. 
originally  in  the  English  law  it  698. 


§  111.]  OFFICERS   AND   AGENTS.  175 

cannot  be  considered  as  properly  decided.15  If  the  bank  has 
once  acquired  knowledge  through  an  agent  competent  to 
receive  it,  who  receives  it  officially,  the  notice  is  always 
binding  upon  it.  Yet  it  has  been  held  that  if  the  particular 
officer  with  the  knowledge  did  not  know  of  the  transaction, 
or  was  not  present  in  the  bank  at  the  time,  and  did  not  act. 
in  the  transaction,  his  knowledge  received  in  the  course  of 
his  duties  will  not  be  imputable  to  the  bank.16  These  cases 
cannot  be  sound,  and  are  not  in  accordance  with  authority,17 
for  notice  once  given  to  the  bank,  or  received  by  it,  is  there- 
after not  dependent  upon  the  continuous  presence  of  the 
officer  through  whom  the  notice  was  derived.  It  follows 
also,  in  regard  to  such  notice,  that  it  is  perfectly  immaterial 
that  the  officer  through  whom  the  notice  came  to  the  bank 
had  an  interest  adverse  to  the  bank  in  the  particular  trans- 
action wherein  notice  was  acquired.  He  was  identical  with 
the  bank,  where  he  acquired  the  knowledge,  and  the  ques- 
tion of  communication  is  not  involved,  and  the  bank,  by 
adopting  the  transaction,  adopts  his  act.  While,  perhaps, 
no  case  holds  this  exact  language,  it  is  the  necessary  result 
of  the  principle  and  the  decisions.18  Turning  now  to  the 
case  where  an  officer  has  acquired  knowledge  in  his  own 

15  See  cases  in  note  16.  not  act  for  the  bank,  is  not  imput- 

16  Memphis  Nat.  Bank  v.  Sneed.  97    able  to  the  bank. 

Tenn.  120;  Fulton  Bank  v.  New  is  Twenty-Sixth  Ward  Bank  v. 
York  Canal  Co.,  4  Paige,  127.  These  Stearns,  148  N.  Y.  515;  Nesbit  v. 
cases  can  be  considered  correct  Macon  Bank,  12  Fed.  R.  686;  Hoi- 
only  on  the  theory  that  the  court  den  v.  New  York  &  Erie  Bank,  72 
held  that  the  officer  had  not  re-  N.  Y.  286;  Stebbins  v.  Lardner,  2 
ceived  the  knowledge  officially.  S.  D.  127.  The  analogy  of  a  pri- 

17  Bank  of  America  v.  McNeil,  10  vate  principal  is  the  same.    Stock- 
Bush,   54;    Central  Nat.   Bank  v.  dale    v.   Keyes,  79    Pa.   251.    See 
Levin,  6  Mo.  App.  543;  First  Nat.  Huffcutt  on  Agency,  sees.  144,  145, 
Bank    v.   Peisert,    2    Penny.    277;  and  First  Nat.  Bank  v.  Allen,  100 
Strauss  v.  Tradesmen's  Bank,  122  Ala.  476.    But  Louisville  Trust  Co. 
N.  Y.  379.    Holm  v.  Atlas  Bank,  84  v.  Louisville  R.  R,  75  Fed.  R  433, 
Fed.  R  119,  correctly  decides  that  overlooks  this  distinction  and  is 
the  knowledge  received  hy  an  offi-  wrong. 

cer  not  officially,  and  where  he  did 


176  BANKS   AND   BANKING.  [§  111. 

private  affairs,  whether  or  not  such  knowledge  will  .be  im- 
puted to  the  bank  depends  upon  circumstances.  His  private 
knowledge  will  never  be  imputed  to  the  bank  unless  he 
communicated  it,  or  unless  he  acted  in  the  particular  trans- 
action wherein  it  is  sought  to  impute  knowledge  to  the 
bank.19  If  he  did  not  act  in  the  transaction,  the  fact  of  his 
communication  of  his  knowledge  must  be  proven  as  a  fact.20 
The  burden  of  proof  is  on  the  person  claiming  the  communi- 
cation.21 It  may  be  inferred  from  the  fact  that  the  agent 
had  such  private  knowledge;22  but  that  seems  an  extreme 
rule.  If  the  officer  having  the  knowledge  acquired  outside 
of  his  duties  as  agent  acted  in  the  particular  transaction, 
the  bank  will  not  be  bound  unless  it  appears  that  such 
knowledge  was  present  in  the  mind  of  the  officer  when  he 
acted.23  This  may  be  inferred  from  circumstances  and  his 
recent  acquisition  of  the  knowledge.24  It  makes  no  differ- 
ence, in  case  the  officer  acted,  how  he  acquired  his  knowl- 
edge, whether  in  a  transaction  adverse  to  the  interest  of  the 
bank  or  not,25  because  the  bank's  knowledge  does  not  depend 
upon  the  fact  of  communication,  but  on  the  fact  of  an  offi- 
cer acting  as  to  a  transaction  with  the  knowledge  upon  it, 
which  gives  the  bank  notice.26  A  limitation  is  put  upon 
this  rule  by  some  courts  to  the  effect  that  the  agent  with 

19 If  it  is  communicated,  of  course,  22  Continental  Nat.  Bank  v.  Mo 

the  bank  has  knowledge.    Bank  of  Geoch,  92  Wis.  286.    Compare  Cus- 

Pittsburgh  v.  Whitehead,  10  Watts,  ter  v.  Tompkins  Co.  Bank, 9  Barr,  27. 

897.    The  principle  is  laid  down  in  23  The  Distilled  Spirits,  11  Wall. 

Fairfield  Sav.   Bank  v.  Chase,  73  356;  Campbell  v.  First  Nat.  Bank, 

Me.  226;  Atlantic  State  Bank  v.  22  Colo.  177. 

Savery,  82  N.  Y.  291.  u  Brothers  v.  Bank,  84  Wis.  381. 

20  See  cases  cited  in  note  8.  But  see  note  9  to  §  111,  ante,  as  to 

21  Constant  v.  University,!!  1  N.  Y.  a  presumption. 

604.    But  some  courts  say  there  is  25  Union  Bank  v.  Wando  Mfg.  Co., 

a  presumption  of  communication  17  S.  C.  339;  Hughes  v.  Settle,  8& 

if  the  officer  in  the   transaction  S.  W.  R.  577.    The  rule  presupposes 

wherein  notice  is  sought  to  be  im-  that  the  agent  acquired  his  knowl- 

puted  had  no  adverse  interest  or  edge  in  his  own  private  affairs, 

no  duty  or  reason  to  conceal  the  x  Union    Bank   v.    Campbell,   4 

knowledge.  Humph.  392. 


§  112.]  OFFICERS   AND   AGENTS.  177 

the  knowledge  must  alone  have  acted  for  the  bank;27  but 
there  is  no  reason  for  such  a  rule,  and  it  is  not  sound.28 

§  112.  Agent  with  adverse  interest. —  We  have  already 
discussed  the  question  of  the  bearing  of  the  agent's  adverse 
interest  in  another  transaction  wherein  he  acquired  knowl- 
edge which  is  sought  to  be  imputed  to  a  bank  in  a  transac- 
tion wherein  he  acted,  where  he  had  no  interest.  Such 
knowledge  was  seen  to  be  a  case  of  knowledge  acquired 
either  in  his  course  of  acting  as  agent,  or  as  knowledge  ac- 
quired about  his  private  affairs.  But  where  an  agent  is  acting 
in  a  particular  transaction  wherein  he  has  an  interest  adverse 
to  the  bank,  two  cases  may  arise.  The  person  with  whom 
the  agent  is  transacting  business  may  know  of  the  agent's 
adverse  interest  or  he  may  not.  "We  have  already  seen  what 
facts  may  show  that  the  agent's  interest  is  adverse,  in  a  case 
where  the  agent's  power  to  act  is  in  question.1  In  such  a 
case  the  person  having  the  knowledge  of  the  agent's  lack  of 
power  is  a  wrong-doer  with  the  agent,  and  he  can  claim 
nothing  against  the  bank  unless  the  bank  insists  upon  the 
transaction.2  But  the  question  as  to  notice  is  a  different 
one.  The  bank  in  the  first  instance  may  have  a  right  to  re- 
scind or  to  refuse  to  be  bound  by  the  transaction,  because 
the  agent  acted  upon  both  sides ;  but  this  right  it  waives 

27  Atlantic  Cotton  Mills  v.  Indian  case  of  Graham  v.  Orange  Co.  Nat. 
Orchard  Mitts,  147  Mass.  268.  Bank,  35  Atl.  R.  1053,  can  only  be 

28  Le  Due  v.  Moore,  111  N.  C.  516.  considered    sound  on    the  theory 
See  notes  8,  8  and  9,  §  106,  supra,  that  the  officer  with  the  adverse 
But  perhaps  these  cases  are   bet-  interest  acted  for  himself  and  some 
ter  authorities  upon  the  proposi-  other  officer  acted  for  the  bank, 
tion  that  an  agent  may  act  in  a  l  See  §§  107,  108,  ante. 
particular  transaction  wherein  he  2  Savannah  Bank  v.  Hartridge,  75- 
is  interested,  if  the  bank  ratifies  it,  Ga.  149;  First  Nat.  Bank  v.  Gifford, 
and  his  knowledge,  however  ao  47  Iowa,  575.    But  it  must  be  re- 
quired, where  he  acts  for  the  cor-  membered  that    the  fact    of  the 
poration,  is  imputable  to  the  corpo-  agent's   adverse    intent   does    not 
ration,  whether  the  person  treating  make  him  a  wrong-doer.   The  trans- 
with  the  corporation  had  notice  of  action  must  be  one  where  he  is 
his  lack  of  knowledge  or  not.    The  using  the  bank  for  his  own  ben  efit.. 

12 


178  BANKS    AND   BANKING.  [§  112. 

when  it  adopts  the  transaction  and  insists  upon  it.  Having 
adopted  its  agent's  act,  it  adopted  it  altogether.  This  mat- 
ter must  be  kept  plainly  in  view,  or  only  confusion  will 
result.  It  presupposes  the  agent's  power  to  act;  but  the 
question  is  whether  facts  that  the  agent  knows  will  be  con- 
sidered facts  known  to  the  bank,  where  the  agent  is  acting 
upon  a  matter  where  he  is  bound  not  to  disclose  such  facts, 
or  is  interested  in  concealing  his  knowledge,  and  the  bank 
is  enforcing  such  a  transaction.  It  presupposes  also  that  the 
third  person  who  is  acting  with  the  agent  is  not  a  wrong- 
doer as  to  the  bank.  If  the  third  person,  who  claims  that 
the  bank  had  notice  of  certain  facts  through  its  agent,  had 
no  notice  of  the  agent's  adverse  interest,  the  fact  of  such  in- 
terest is  immaterial  as  to  him.8  That  rule  applies  both  to 
the  transaction  in  which  the  notice  of  the  fact  was  acquired, 
and  to  the  after  transaction  in  which  the  notice  or  knowl- 
edge acquired  in  the  former  transaction  is  sought  to  be  im- 
puted to  the  bank.  In  the  latter  transaction  it  is  plain  that 
the  same  or  different  officers  may  be  acting  for  the  bank. 
But  if  the  third  person  has  notice  of  the  agent's  adverse  in- 
terest in  a  former  transaction  in  regard  to  which  the  agent 
was  acting  not  for  the  bank,  and  the  knowledge  gained  in 
such  a  transaction  is  such  that  needs  to  be  communicated  to 
the  bank  in  order  to  bind  it,  that  is  to  say,  if  it  is  knowledge 
acquired  by  the  officer  outside  of  his  duties,  there  will  be  no 
presumption  of  a  communication  where  the  officer,  has  an  in- 
terest4 or  a  duty5  in  concealing  the  matter.  But  where  the 
fact  is  not  one  that  needs  communication,  but  is  imputed  to 
the  bank  by  reason  of  the  fact  that  it  is  within  the  officer's 

'This  result  follows  from  the  Hummel  v.  Bank  of  Monroe,  75 

power  of  the  agent  to  act  in  regard  Iowa,  689.  But  if  the  wrongful  act 

to  a  matter  within  the  scope  of  his  was  perpetrated  for  the  benefit  of 

authority.  See  United  States  Nat.  the  bank,  the  bank  has  notice.  Mer- 

Bank  v.  First  Nat.  Bank,  79  Fed.  R  chants'  Nat  Bank  v.  Tracy,  77  Hun, 

296;  Chemical  Nat.  Bank  v.  Arm-  443.  Compare  City  of  New  York 

strong,  76  Fed.  R  339.  v.  Tenth  Nat  Bank,  111  N.  Y.  446. 

4  American  Surety  Co.  v.  Pauly,  8  Constant  v.  University,  111  N.  Y. 

72  Fed.  R  470,  38  U.  S.  App.  254;  604. 


§   112.]  OFFICERS   AND   AGENTS.  179 

knowledge  by  reason  of  facts  learned  in  the  discharge  of 
his  duties,  or  by  reason  of  the  fact  that  the  officer  has  the 
power  to  act  and  is  acting  about  the  particular  transaction 
with  the  knowledge  present  in  his  mind,  the  third  person 
who  charges  such  notice  to  the  bank  adopting  the  transac- 
tion, where  he  is  himself  acting  in  good  faith  and  not  a 
wrong-doer,  will  be  held  entitled  to  claim.6  Courts  have 
not  kept  distinct  the  two  transactions,  the  first  being  the 
transaction  of  which  notice  is  to  be  imputed  to  the  bank, 
the  second  being  the  transaction  wherein  notice  is  to  be  im- 
puted to  the  bank.  The  same  rule  holds  good  as  between 
two  corporations  dealing  with  each  other  through  a  com- 
mon officer,  as  has  been  heretofore  stated.7  This  case  is  one 
where  the  officer  of  the  bank  is  also  acting  as  agent  for  an- 
other. It  is  merely  one  phase  of  an  agent  acting  in  a  mat- 
ter wherein  he  has  an  adverse  interest,  as  was  pointed  out 
in  section  106,  ante.  The  cases  ought  to  distinguish  between 
knowledge  acquired  by  the  officer  officially  in  the  perform- 
ance of  his  duties  in  the  bank,  and  knowledge  acquired  by 
him  outside  of  those  duties ;  as,  for  example,  while  acting 
as  agent  for  another.  In  the  former  case  the  agent's  knowl- 
edge of  the  former  transaction  is  imputable  to  the  bank  in 
the  particular  transaction,  regardless  of  any  adverse  inter- 
est of  the  agent  in  the  latter  transaction.  But-the  principle 
does  not  differ  in  the  least  whether  the  officer  acts  for  an- 
other corporation  as  well  as  for  the  bank,  or  for  another 
person  as  well  as  for  the  bank.  There  are  certain  cases, 

6  First  Nat.  Bank  v.  Blake,  60  Fed.  Mills,  147  Mass.  268.  See  §  106,  ante. 

R  78;  Black  Hills  Nat.  Bank  v.  In  29  Am.  Law  Rev.  528,  will  be 

Kellogg,  4  S.  D.  312;  Nesbit  v.  found  an  article  by  a  well-known 

Macon  Bank,  12  Fed.  R.  686;  First  text  writer  which  displays  more 

Nat.  Bank  v.  Babbidge,  160  Mass,  confusion  upon  this  subject  than  it 

563;  Tilden  v.  Bernard,  43  Mich.  376.  is  possible  to  find  elsewhere.  Every 

7Le  Due  v.  Moore,  111  N.  C.  516;  case  that  he  states,  except  one  or 

Corcoran  v.  Snow  Cattle  Co.,  151  two,  is  capable  of  being  fully  ex- 

Maas.  74;  Oak  Grove  Cattle  Co.  v.  plained,  if  the  distinctions  sug- 

Foster,  41  Pac.  R  522;  Atlantic  gested  in  this  section  are  kept 

Cotton  Mills  v.  Indian  Orchard  clearly  before  the  mind. 


180  BANKS   AND   BANKING.  [§  112. 

however,  which  are  palpably  erroneous3  and  they  all  show 
how  the  principles  of  the  law,  when  misunderstood,  can  be 
made  the  engine  of  gross  injustice.  The  case  of  First  Na- 
tionalBank  v.Foote,  12  Utah,  157,  discloses  that  a  note  had 
been  executed  to  the  bank  by  the  president  thereof,  the 
cashier  thereof,  and  two  other  parties.  The  last  two  parties 
were  accommodation  makers,  without  any  personal  interest 
in  the  loan.  After  the  note  had  been  renewed  several  times, 
always  by  the  same  parties,  the  cashier  had  the  two  parties 
sign  a  new  note,  and  informed  them  so  as  to  make  the  mat- 
ter an  agreement  that  he,  the  cashier,  would  sign  it,  and 
that  the  president's  signature  would  be  obtained,  and  then 
the  note  would  be  delivered  to  the  bank.  The  cashier  did 
sign  it,  but,  without  obtaining  the  president's  signature,  put 
the  note  among  the  bank's  discounts.  This  transaction  was, 
of  course,  not  binding  on  the  bank,  because  the  cashier  had 
no  power  to  take  the  new  note  and  release  the  president. 
But  the  president,  being  in  control  of  the  bank,  had  the  bank 
adopt  the  transaction  by  suing  upon  it.  The  cashier  was 
then  a  felonious  bankrupt,  but  the  president  was  perfectly 
solvent.  The  whole  transaction  could  have  been  found  to 
be  a  scheme  to  let  the  president  escape  liability.  It  was  held 
that  the  bank  took  the  note  as  a  ~bonafide  holder,  and  that 
the  knowledge  of  the  cashier  could  not  be  imputed  to  the 
bank  because  he  was  on  the  note.  But  the  question  of  no- 
tice was  not  really  in  the  case.  The  question  involved  was 
one  of  power,  and  that  was  granted  by  the  bank  ratifying 
and  adopting  the  transaction  by  suing  on  the  note.  The 
note  was  not  made  to  a  third  party  and  negotiated  to  the 
bank,  but  was  made  directly  to  the  bank.  Hence  the  bank, 
having  adopted  the  note,  adopted  the  cashier's  agreement  in 
regard  to  the  note,  and  consequently  there  was  never  any 
delivery  of  the  note.  The  bank  still  had  the  right  to  sue  on 
the  former  note.  But  the  real  question  involved,  even  if  it  were 
considered  one  of  notice,  was  whether  the  cashier's  knowl- 
edge, he  alone  having  acted  for  the  bank,  was  the  knowledge 
of  the  bank.  The  transaction  having  been  adopted  by  the 


§  112.]  OFFICEBS   AND  AGENTS.  181 

bank,  the  whole  of  it  was  binding.  The  knowledge  of  the 
cashier  was  binding  on  the  bank  for  two  reasons :  First,  it 
was  knowledge  gained  in  the  general  line  of  his  duty,  and 
therefore  the  question  of  his  interest  was  immaterial ;  sec- 
ond, even  if  not  gained  in  the  line  of  his  duty,  it  was  prior 
knowledge,  which  he  must  have  had  when  he  alone  was  act- 
ing for  the  bank  in  taking  the  note  for  the  bank,  and  how 
he  acquired  the  knowledge  was  immaterial.  The  court  cites 
Claflin  v.  Bank,  25  N.  Y.  293,  where  the  president  of  a  bank 
having  certified  his  own  check,  the  form  of  the  check  was 
held  notice  of  his  lack  of  authority  as  to  a  holder  of  the  check; 
the  bank  did  not  adopt  the  certification,  but  repudiated  it; 
Voltz  v.  Blackmar,  64  N.  T.  440,  where  the  rule  of  an  agent's 
lack  of  power  was  held  as  against  the  agent  himself;  and 
Bank  v.  Shawnee  Co.  Bank,  95  U.  S.  557,  where  the  form  of 
the  paper  was  notice  to  the  indorsee  of  the  officer's  lack  of 
authority,  the  bank  repudiating  the  transaction.  It  is  pain- 
ful to  think  that  a  court  would  cite  cases  which  had  so  little 
application.  The  case  denounces  Atlantic  Cotton  Mills  v. 
Indian  Orchard  Mills,  147  Mass.  268.  It  is  contrary  also 
to  Twenty-sixth  Ward  Bank  v.  Stearns,  148  ~N.  Y.  515, 
and  a  number  of  other  cases.8  This  is  one  of  those  crude 
and  ill-advised  products  of  inadequate  knowledge  which 
bring  so  much  discredit  upon  the  law.  Another  case  is  Ter- 
rell  v.  Branch  Bank,  12  Ala.  502.  There  a  customer  of  the 
bank  handed  a  note  signed  in  blank  to  a  director  of  a  bank, 
and  asked  him  to  fill  it  in  with  a  certain  sum  and  renew  his 
note  at  the  bank.  The  director  took  the  note,  filled  it  in 
with  a  larger  sum,  and  discounted  it  for  his  own  benefit. 
The  director  acted  for  the  bank  in  the  discount  as  well  as 
for  himself.  It  was  held  that  the  bank  had  no  notice.  This 

8  First  Nat.  Bank  v.  Blake,  60  Fed.  the  ground  that  there  was  no  evi- 

R.  78;  Le  Due  v.  Moore,  111  N.  C.  516;  dence  to  show  the  knowledge  pres- 

National  Security  Bank  v.Cushman,  ent  in  the  mind  of  the  president 

121  Mass.  490.    The  case  of  Louis-  when  he  acted.    But  the  court's 

ville  Trust  Co.  v.  Louisville  R.  Co.,  language,  general  as  it  is,  even  if 

75  Fed.  R.  433,  may  be  justified  on  dictum,  is  erroneous. 


182  BANKS    AND   BANKING.  [§  112. 

case  is  an  exceedingly  incorrect  and  unjust  decision,  although 
one  text- writer  upon  banking  law  has  been  so  misled  as  to 
give  it  his  earnest  approbation.  It  may  be  said  that  the  di- 
rector had  no  power  to  bind  the  bank,  and  that  the  knowl- 
edge which  he  had  was  not  acquired  in  the  line  of  his  duty. 
But  if  he  acted  for  the  bank  in  the  discount  of  the  note,  and 
the  bank  adopted  the  transaction,  as  it  did,  his  knowledge 
ought  to  have  been  held  to  be  the  bank's  knowledge  if  the 
circumstances  showed,  as  they  did,  that  it  was  present  in  his 
mind.  The  case  of  Commercial  Baiik  v.  Burgwyn,  110 
N.  C.  267,  may  be  justified  on  the  ground  that  the  director 
with  knowledge  did  not  act  for  the  bank,  but  it  is  now  over- 
ruled. The  foregoing  statement  of  the  law  applies  where 
the  officer  who  has  an  adverse  interest  acts  for  the  bank  as 
well  as  in  his  own  interest.  But  where  the  officer  does  not 
act  for  the  bank,  but  adversely  thereto,  while  other  officers 
act  for  the  bank,  the  knowledge  which  the  officer  has  gained 
in  his  private  affairs,  and  not  in  the  course  of  his  duties  at 
the  bank,  will  not  be  imputed  to  the  bank,9  and  the  rule  is 
not  changed  by  the  fact  that  the  officer  acted  for  another 
corporation  instead  of  for  himself  individually.10  For  the 
same  reason,  practically,  it  was  held  that  where  an  officer 
of  the  bank  gave  to  a  mortgagee  certain  worthless  securi- 
ties in  release  of  a  mortgage,  whereupon  the  bank  purchased 
the  premises  for  full  value,  the  bank  is  not  charged  with  no- 
tice of  its  officer's  acts.11  While  under  some  circumstances 
the  form  of  negotiable  paper  may  be  notice  to  third  parties 

•Atlantic  State  Bank  v.  Savery,  Nat.  Bank  v.  Loyhed,  28  Minn.  396; 

82  N.  Y.  291;  National  Bank  v.  Lov-  Benton  v.  German  Am.  Bank,  122 

ett,  21  S.  W.  R  825;   Buffalo  Co.  Mo.  332;  Wilson  v.  Bank,  7  Atl.  R 

Bank  v.  Sharpe,  40  Neb.  123;  City  145;    Owensboro    v.    Daviess    Co. 

Bank  v.  Barnard,  1  Hall,  80;  Lyne  Court,  12  S.  W.  R  930,  13  S.  W.  R 
v.  Bank  of  Kentucky,  5  J.  J.  Marsh.  _  101 ;  Washington  Bank  v.  Lewis, 

545;  Louisiana  State  Bank  v.  Sen-  22  Pick.  24;  Waynesville  Bank  v. 

ecal,  13  La.  525.  Irons,  8  Fed.  R  1;  Third  Nat.  Bank 

10  Innerarity  v.  Merchants'  Nat.  v.  Harrison,  10  Fed.  R  243. 
Bank,  139  Mass.  332;    Corcoran  v.        u  Staples  v.  Huron  Nat  Bank,  66 
Snow  Cattle  Co.,  151  Mass.  74;  First    N  W.  R  314. 


§  112.]  OFFICERS   AND   AGENTS.  183 

where  executed  by  the  bank  in  favor  of  its  officers,  yet  the 
fact  that  a  director  was  an  indorser  on  a  note  is  no  notice 
to  any  one  that  the  note  was  for  his  accommodation.12  This 
question  of  notice  may  be  looked  at  from  the  standpoint  as 
to  whether  the  officer  will  be  charged  in  his  own  private 
affairs  with  notice  of  facts  known  to  the  bank.  The  rule  on 
principle  would  be  that  he  could  be  charged  with  notice  only 
of  those  facts  as  to  which  he  had  knowledge,  and  it  would 
seem  that  this  knowledge  ought  to  be  either  actual  or  notice 
of  such  facts  as  it  would  be  negligent  in  him  to  overlook.13 
A  final  caution  should  be  added  in  these  matters  of  repre- 
sentation of  a  bank  by  its  officers,  and  that  is,  to  look  only 
to  the  facts  of  the  case  and  the  decision ;  the  reasoning  and 
remarks  of  the  court  are  too  often  not  valuable. 

12  Commercial  Bank  v.  Cunning-       13  Holland  v.  Citizens'  Sav  Bank, 
ham,  24  Pick.  270.  17  R  L  87. 


CHAPTER  VI. 

DEALINGS  OF  BANKS. 
ARTICLE  I. —  INFLUENCE  OF  CUSTOMS. 

§  113.  In  general. —  There  is  no  branch  of  business,  un- 
less it  be  shipping,  where  customs  and  usages  cut  so  large  a 
figure  as  in  banking.  In  a  former  chapter  the  influence  of 
usage  in  determining  the  duties  of  the  various  officers,  as 
well  as  their  powers,  has  been  noticed.  Customs  have  a 
large  influence  in  governing  the  dealings  of  customers  and 
traders  at  the  bank.1  The  general  principles  of  law  as  to 
usages  are  comparatively  well  settled,  yet  even  here  courts 
display  a  tendency  in  some  instances  to  disregard  the  settled 
law.  In  the  following  sections  cases  are  examined,  but  oth- 
ers will  be  found  below.2 

§  114.  Usage  must  be  lawful. —  A  usage  or  a  custom  can- 
not change  the  express  rule  of  law  or  statute.1  Days  of 
grace  are  sometimes  established  by  statute,  and  therefore  a 
custom  cannot  change  that  law;2  but  a  custom  can  add  an- 
other day  to  the  three  days  allowed  by  statute  or  by  the 
general  rule  of  law.3  But  where  days  of  grace  are  estab- 
lished merely  by  the  general  local  usage,  a  particular  cus- 
tom may  exonerate  a  bank  for  failing  to  allow  days  of  grace, 

1  Allen   v.   Merchants'  Bank,  22    Ala.  180;    Allen  v.  St  Louis  Nat. 
Wend.    215;    Bell  v.  Hagerstown    Bank,  120  U.  S.  20. 

Bank,  7  Gill,  216.  2  Morrison  v.  Bailey,  5  Ohio  St.  13 , 

2  See  §§  261  and  288,  post.  Bowen  v.  Newell,  8  N.  Y.  190;  Me- 
1  Piscataqua  Ex.  Bank  v.  Carter,    chanics'  Bank  v.  Merchants'  Bank, 

20  N.  H.  246;  Bank  of  Alexandria  6  Met.  13;  Perkins  v.  Franklin  Bank, 

v.  Deneale,  2  Cranch,  C.  C.  488;  Ma-  21  Pick.  483. 

rine  Bank  v.  Chandler,  27  III  525;  8  Renner  v.  Bank  of  Columbia,  9 

First  Nat  Bank  v.  Taliaferro.  72  Wheat  581;  Bank  of  Washington 

Md.  164;  Shaw  v.  Jacobs,  89  Iowa,  v.  Triplett,  1  Pet  25. 

713;  First  Nat  Bank  v.  Nelson,  105 


§§  115,  116.]        DEALINGS  OF  BANKS.  185 

thereby  discharging  an  indorser.4  T\vo  cases  are  found 
which  solemnly  hold  that  a  bank  cannot  increase  the  legal 
rate  of  interest  by  a  custom.5  It  ought  not  to  require  a 
judicial  decision  to  determine  that  a  man,  by  habitually  vio- 
lating a  law,  cannot  obtain  the  right  to  violate  it,  and  thus 
repeal  it  as  to  himself. 

§  115.  Usage  must  be  uniform,  certain  and  general. — 

It  is  said  that  a  usage  must  be  general ;  that  one  instance 
does  not  make  a  usage.1  This  means  that  a  usage  must  be 
uniform  and  certain,  and  uniformly  acted  upon.2-  But  it 
may  very  well  be  that  the  usage  may  be  that  of  all  the  banks 
at  one  place  or  a  particular  bank  at  a  place.3  But  even  if 
the  usage  is  a  general  one  among  banks,  if  a  particular  bank 
has  abandoned  it  the  usage  is  non-existent  as  to  that  bank.4 
Nor  will  the  usage  of  any  number  of  banks  control  a  bank 
which  has  not  adopted  it.5  A  person  dealing  with  a  particu- 
lar bank  is  said  to  be  presumed  to  know  the  usage  of  that 
particular  bank,6  and  it  has  been  held  that  the  bank  may 
abrogate  its  usage  without  notice  to  its  customer;7  but  this 
decision  cannot  be  correct  because  the  customer  is  held  to 
know  the  usage,  and  after  he  has  found  it  out,  by  some  spe- 
cies of  omniscience,  he  is  required  to  know  that  the  bank 
has  abrogated  it.  The  contrary  rule  is  correct.8 

§  116.  Usage  must  be  reasonable. —  There  is  a  saying 
ascribed  to  a. noted  political  thinker  that  "man  is  a  reason- 

4  Haddock  v.  Citizens'  Bank,  53  4Isbell  v.  Lewis,  98  Ala.  550. 

Iowa,    542.     Compare   Merchants'  5  Williams  v.  National  Bank,  70 

Bank  v.  Woodruff,  6  Hill,  174,  which  Md.  343. 

is  contra,  and  cases  in  note  1.  6  Patriotic     Bank    v.     Farmers' 

5 Niagara  Co.  Bank  v.  Baker,  15  Bank,  2  Cranch,  C.  C.  560;  Kilgore 

Ohio  St.  68;   Talbot  v.  First  Nat.  v.  Buckley,  14  Conn.  363.    Compare 

Bank,  76  N.  W.  R.  726.  Sahlien  v.  Bank  of  Lonoke,  90  Tenn. 

1  Duvall  v.  Farmers'  Bank,  9  Gill  221;   Howard  v.  Walker,  92  Tenn. 
&  J.  81.  452. 

2  Grissom    v.    Commercial   Nat.  7  Citizens'  Bank  v.  Graffin,  31  Md. 
Bank,  87  Tenn.  350.  507. 

3  See  Williams  v.  National  Bank,  8  Barnes  v.  Ontario  Bank,  19  N. 
70  Md.  343.  Y.  152,  169. 


186  BANKS   AND   BANKING.  [§  117. 

ing  and  not  a  reasonable  animal."  The  fact  that  banks  have 
sometimes  tried  to  insist  upon  customs  which  are  not  reason- 
able from  any  standpoint,  not  even  their  own,  may  be  proof 
of  the  aphorism.  Thus  it  was  once  insisted  that  a  bank  by 
custom  could  establish  the  rule  that  it  would  not  correct 
mistakes  after  a  customer  had  left  the  banking  room.  Such 
an  alleged  custom  was  held  to  be  "  immoral,"  unreasonable 
and  void.1  Such  was  the  wrongful  holding  as  to  a  usage  to 
treat  the  passing  of  checks  to  the  credit  of  the  depositor  as 
a  receipt  and  not  a  transfer;2  and  a  custom  among  banks  to 
examine  a  check  indorsed  by  another  bank  and  to  return  it 
after  having  credited  it  is  unreasonable.3  On  the  same 
ground,  probably,  a  bank's  custom  to  notify  a  non-resident 
of  the  maturity  of  a  note  instead  of  demanding  payment 
was  judicially  condemned4  where  it  was  sought  to  hold  the 
indorser. 

§  117.  Usage  must  foe  known. —  Even  if  a  usage  be  law- 
ful, reasonable  and  uniform,  it  does  not  necessarily  bind  any 
one,  unless  it  can  be  shown  that  the  party  sought  to  be 
charged  with  notice  of  the  usage  dealt  with  reference  to  it. 
It  is  apparent  that  a  usage  of  this  kind  is  only  of  value  in 
interpreting  a  contract;  it  does  not  make  a  contract  or  prove 
one.1  If  it  is  shown  that  the  parties  had  either  actual  or 
constructive  knowledge  of  the  usage,  it  will  be  presumed, 
nothing  else  appearing,  that  they  contracted  with  reference 
to  the  custom,  which  will  be  considered  as  written  into  the 
contract.  The  question  is  therefore  one  of  fact.  The  bank 
will  be  presumed  to  know  its  own  customs  or  the  customs 
of  its  business.2  Such  a  custom  may  put  it  upon  notice  of 

1  Gallatin  v.  Bradford,  1  Bibb,  209.        *  Comm.  Ex.  Bank  v.  Nassau  Bank, 
See  Second  Nat.  Bank  v.  Western    91  N.  Y.  74. 

Nat  Bank,  51  Md.  128.  4  Bank  of  Alexandria  v.  Deneale, 

2  Shaw  v.  Jacobs,  89  Iowa,  713.    2  Cranch,  C.  C.  488. 

The  principle  of  the  decision  was  *  Harper  v.  Calhoun,  7  How.  (Miss.) 

correct,  but  the  great  weight  of  au-  203. 

thority  is  that  a  deposit  of  a  check  2  Pope  v.  Bank  of  Albion,  57  N.  Y. 

upon  another  bank  for  credit  is  not  126;  Kilgore  v.  Buckley,  14  Conn, 

a  sale  but  a  bailment  363;  Marrett  v.  Brackett,  60  Me.  524. 


§  117.]  DEALINGS  OF  BANKS.  1ST 

certain  facts  which  it  would  otherwise  have  no  notice  of.* 
The  bank  is  bound  by  its  own  usages,4  and  cannot  abrogate 
them  without  notice  to  parties  dealing  with  it.5  But  as  to- 
third  persons  dealing  with  the  bank  the  question  of  knowl- 
edge of  the  usage  becomes  of  prime  importance.  If  a  third 
person  has  actual  knowledge  of  a  customary  mode  of  deal- 
ing of  a  bank  he  will  be  bound  by  the  custom.6  This  actual 
knowledge  will  be  inferred  from  the  fact  that  he  has  chosen 
a  particular  bank  with  which  to  do  business.7  It  may  also 
be  inferred  from  the  fact  that  the  usage  was  a  general  one 
in  the  business,8  or  was  so  notorious  that  a  person  in  the 
position  of  the  thy-d  party  should  have  known  it.9  Thus, 
the  usages  of  a  bank  as  to  demand,  notice  of  non-payment 
and  protest  are  valid  as  to  those  who  voluntarily  select  that 
bank  to  do  business  with,10  and  as  to  those  who  reside  in 
the  particular  place11  as  well  as  to  those  who  have  actual 
knowledge  of  the  usage.12  But  if  the  third  party  has  no 
knowledge  of  the  usage,  and  cannot  be  charged  with  notice 
of  it  in  the  ways  above  indicated,  he  cannot  be  bound  by 
it.13  ]STor  if  a  local  usage  has  once  been  established  by  ju- 

3  Taliaferro  v.  First  Nat.  Bank,  71  Wheat.  481 ;  Gindrat  v.  Mechanics' 
Md.  200.  Bank,  7  Ala.  324. 

4  See  cases  cited  in  last  two  notes.  8  Sahlien  v.  Bank  of  Lonoke,  9fr 

5  Barnes  v.  Ontario  Bank,  19  N.  Y.  Tenn.  221. 

152:  Hotchkiss  v.  Artisans' Bank,  9  Citizens'    Bank   v.  Graffin,  31 

42    Barb.    517.      Contra,  Citizens'  Md.  507;  Grissom  v.  Commercial 

Bank  v.  Graffin,  31  Md.  507.  Nat.  Bank,  87  Tenn.  350. 

6  Sahlien  v.  Bank  of  Lonoke,  90  10  See  cases  cited  in  note  7,  supra* 
Tenn.    221;    Bridgeport    Bank    v.  "Gindrat  v.  Mechanics'  Bank,  7 
Dyer,  19  Conn.  136;  Pope  v.  Bank  Ala.  324;  Gallagher  v.  Roberts,  11 
of  Albion,  57  N.  Y.  131;  Renner  v.  Me.  484;  Marine  Bank  v.  Smith,  la 
Bank  of  Columbia,  9  Wheat.  581;  Me.  99;  Shove  v.  Wiley,  18  Pick. 
Warren  Bank  v.  Suffolk  Bank,  10  558;  Wild  v.  Gorham,  10  Mass.  366. 
Cush.  582.  12  Lincoln  Bank  v.  Page,  9  Mass. 

7  Patriotic  Bank  v.  Farmers' Bank,  155;  City  Bank  v.  Cutler,  3  Pick. 
2  Cranch,  C.   C.  560;    Kilgore  v.  414;  Bank  of  United  States  v.  Nor- 
Buckley,  14  Conn.  367.    This  rule  wood,  1  Harr.  &  J.  423. 

applies  to  those  who  make  notes  13  Bank  of  Alexandria  v.  Deneale, 

payable  at  a  bank  as  well  as  to  2  Cranch,  C.  C.  488;  Lawrence  v. 

those  who  indorse  such  notes.    See  Stonington  Bank,  6  Conn.  521. 
Mills  v.  Bank  of  United  States,  11 


188  BANKS  AND  BANKING.        [§§  118,  119. 

dicial  decision  can  a  third  party  be  affected  by  a  change  of 
that  custom,  where  he  is  not  shown  to  have  been  cognizant 
of  the  change.14 

ARTICLE  II. — BANKING  POWERS. 

§  118.  In  general. —  The  various  functions  of  a  bank  are 
largely  a  matter  of  usage  as  established  by  judicial  decision. 
The  matters  of  deposit,  discount  and  issue  will  be  treated 
under  appropriate  heads.  But  there  are  yet  other  transac- 
tions in  which  banks  have  sometimes  become  engaged  which 
have  required  the  judgment  of  the  courts  as  to  whether  they 
were  within  the  powers  of  a  bank  or  not."  Since  the  govern- 
ing statute  or  charter  generally  defines  the  powers  of  a  bank 
by  general  phrases,  such  as  "  the  business  of  banking,"  or  a 
"  general  banking  business,"  the  courts  must  in -such  cases  be 
guided  by  the  limits  of  the  business  as  defined  by  general 
custom  or  the  decisions  of  courts.  Custom  may  be  appealed 
to  to  show  that  an  act  is  within  the  ordinary  business  of  a 
bank.1  Whenever  the  statute  or  the  charter  permits  an  act 
to  be  done  by  a  bank,  the  terms  of  the  statute  or  charter 
must  govern.  The  same  rule  holds  as  to  acts  forbidden  to 
a  bank.  The  governing  statute  or  charter  may  forbid  an 
act  by  implication  as  well  as  by  a  direct  prohibition,  as  in 
the  case  of  national  banks,  which  are  by  the  terms  of  the 
national  bank  act  impliedly  forbidden  to  loan  on  real-estate 
security.  The  effect  of  an  unauthorized  act  of  banking  has 
already  been  discussed.2 

§  119.  Dealing  in  its  own  stock. —  A  bank  may  purchase 
its  own  shares  unless  the  statute  expressly  or  by  implication 
forbids  it,1  but  of  course  if  the  act  is  expressly  or  impliedly 

14  Cookendorfer  v.  Preston,  4  How.  the  effect  of  unauthorized  acts  of 

317.  banking,   where  the  objection   is 

1  Grain  v.  First  Nat.  Bank,  114 11L  made  on  behalf  of  the  state.    The 
516.  powers  of  savings  banks  are  noticed 

2  See  the  former  chapter  entitled  in  the  chapter  upon  Savings  Banks. 
"  Unauthorized    Banking."     In   a  l  Farmers'   Bank    v.    Champlain 
later  chapter  will  be   considered  Transp.  Co.,  18  Vt.  131;  Robinson 


§  119.]  DEALINGS    OF   BANKS.  -    * 

forbidden  .by  its  charter  or  by  a  governing  statute  it  may 
not  do  so.2  But  how  such  a  purchase  can  be  a  banking 
transaction,  unless  the  stock  is  taken  to  cancel  a  stockhold- 
er's debt  to  the  corporation,3  or  as  collateral  to  a  debt,  is 
hard  to  understand.  There  seems  to  be  no  difficulty  in  hold- 
ing that  a  bank  may  take  a  lien  upon  its  own  shares  to  secure 
a  previously  existing  debt,4  or  that  it  may  take  its  own  shares 
to  cancel  a  debt  from  a  stockholder.5  National  banks  are 
prohibited  from  purchasing  their  own  .shares,  nor  can  the 
bank  by  such  a  purchase,  it  has  been  held,  vest  title  in  an- 
other.6 But  this  latter  case  is  wrong,  because  a  national 
bank  may  under  some  circumstances  sell  its  shares,  and  a 
purchaser  in  good  faith  would  obtain  a  good  title,  whatever 
might  be  the  holding  as  to  one  cognizant  of  the  defect  in 
the  title.7  It  has  been  held  that  one  who  sells  to  a  broker, 
who  is  really  acting  for  the  bank,  stock  in  the  bank,  makes 
a  valid  sale,  where  he  did  not  know  the  broker  was  acting 
for  the  bank.8  Of  course  the  bank  can  sell  its  own  stock, 
even  upon  credit,  where  it  has  lawfully  acquired  it.9  Even 
if  the  purchase  by  bank  officers  were  illegal  it  has  been  held 
that  the  bank  may  ratify  the  act;10  but  an  illegal  act,  our 

v.  Beall,  26  Ga.  17.    Contra,  German  stances  the  bank  can  acquire  its 

Sav.  Bank  v.  Wulfekuhler,  19  Kan.  own  stock,  and  in  any  event  its 

60.    See  also  Bundy  v.  Jackson,  24  transfer  is  good.    Wallace  v.  Hood, 

Fed.  R.  628,  as  to  a  ratification.  89  Fed.  R.  11. 

2Gillett  v.  Moody,  3  Comst.  479;        ?If  cognizant  of  the  defect  the 

Myers  v.  Valley  Nat.  Bank,  Fed.  purchaser  could  be  said  to  be  a 

Cas.  No.  9519.  party  to  an  illegal  transaction,  yet 

3  Taylor  v.  Miami  Ex.  Co.,  6  Ohio,  it  is  the  purchase  and  not  the  sale 
177.  which  is  illegal.  But  the  bank  can- 

4  German  Sav.  Bank  v.  Wulfekuh-  not  agree  to  take  shares  in  pay- 
ler,  19  Kan.  60.  ment  of  a  note  which  has  been 

8  Taylor  v.  Miami  Ex.  Co.,  6  Ohio,  given  to  it  for  shares  sold.    Att- 

177.  water  v.  Stromberg,  77  N.  W.  R. 

6  Myers  v.  Valley  Nat.  Bank,  Fed.  963. 

Cas.  9519.    This  case  holds  that  a  na-  8  Johnson  v.  Laflin,  103  U.  S.  800, 

tional  bank  cannot  be  sued  in  trover  3  Dili  65. 

for  conversion  of  its  shares,  because  9  Union  Bank  v.  Hunt,  7  Mo.  App. 

judgment  satisfied  passes  title  to  42. 

bank.    But  the  case  is  hopelessly  10  Bundy  v.  Jackson,  24  Fed.  R. 

wrong,  because  under  some  circum-  628. 


190  BANKS   AND   BANKING.  [§  120. 

highest  court  holds,  cannot  be  ratified  by  the  bank  so  as  to 
make  itself  liable  on  a  contract.11  Sometimes  the  statute 
forbids  a  bank  to  loan  money  upon  its  own  shares,  and  such 
a,  loan  is  illegal  though  made  in  the  form  of  a  deposit  in  an- 
other bank.12 

§120.  Purchasing  stock  of  corporations. —  A  banking 
corporation  has  not  the  right  to  become  a  stockholder  in 
another  corporation,1  unless  the  act  is  made  necessary  to 
preserve  a  security 2  which  it  has  taken  in  a  banking  trans- 
action, or  unless  it  is  permitted  to  do  so  in  order  to  make  a 
deposit  of  securities  under  a  banking  law.3  It  has  no  power 
to  subscribe  for  stock  in  a  railroad  corporation,4  nor  to  engage 
in  the  business  of  buying  and  selling  stocks  for  profit; 5  and  if 
a  bank  buys  stock  in  its  own  name  which  it  has  no  authority 
to  buy  it  will  not  be  held  as  a  stockholder.6  Where  the  bank 
is  prohibited  from  purchasing  or  holding  stock  in  another 
bank,  it  has  been  held  that  the  bank  cannot  take  a  pledge 
of  such  stock.7  National  banks  have  no  power  to  engage 
in  the  selling  of  stocks8  or  railroad  bonds  on  commission,9 

11  See  §  33,  ante,  and  note  3,  §  105,       »  Talmage  v.  Pell.  7  N.  Y.  328. 
ante.    But  if  it  converts  property       6  Cal.  Bank  v.  Kennedy,  167  U.  S. 
it  has  agreed  to  sell,  it  is  liable  in    362. 

conversion.    First    Nat.    Bank   v.  1  Franklin  Bank  v.  Commercial 

Anderson,  172  U.  S.  573.  Bank,  36  Ohio  St.  350. 

12  Bank  v.  Lanier,  11  Wall   369.  sgearle  v.  First    Nat.   Bank,   9 
See  also  Bridgeport  Bank  v.  New  Walk.  (Pa.)  395;  First  Nat  Bank  v. 
York,  etc.  R  R  Co.,  30  Conn.  270.  Nat  Ex.  Bank,  92  U.  S.  122. 

1  Bank  of  Commerce  v.  Hart,  37        9  Weckler  v.  First  Nat.  Bank,  42 
Neb.  197;  Franklin  Bank  v.  Com-  Md.  581.    This  case  was  very  well 
mercial  Bank,  36  Ohio  St.  350,  and  argued.    It  holds  that  a  represen- 
cases    cited   therein.     But    on    a  tation  never  ratified  made  by  an 
wrong  construction  of  a  statute  it  is  agent  as  to  an  ultra  vires  contract 
held  that  the  bank  can  do  so.    Lati-  is   not  within    the   scope    of  the 
mer  v.  State  Bank,  71  N.  W.  R  225.  agent's  authority  and  therefore  not 

2  See  cases  in  notes  10,  11  and  12,  binding  on  the  bank.    See  Willett 
infra.  v.  Farmers'  Sav.  Bank,  77  N.  W.  R 

3  Curtis  v.  Leavitt,  17  Barb.  809.  519.    The  case  is  rightly  decided 

4  Nassau  Bank  v.  Jones,  95  N.  Y.'  as  to  that  point    The  third  person 
115.     But  see  City  of  Goodland  v.  had  no  right  to  rely  on  the  repre- 
Darlington  Bank,  74  Mo.  App.  365.  sentation.    See  also  Farmers'  Nat. 


§  121.]  DEALINGS    OF    BANKS.  191 

because  such  banks  have  only  the  powers  that  are  granted 
to  them  by  the  national  banking  act.10  Yet  those  banks 
may  accept  stocks  in  satisfaction  of  a  doubtful  debt,  and 
may,  in  order  to  settle  claims  wherein  the  bank  is  interested, 
pay  a  larger  amount  than  would  otherwise  have  been  ex- 
acted and  take  stocks  as  part  of  the  settlement,  provided  the 
stocks  are  taken  to  be  sold  afterwards  and  the  act  is  neces- 
sary to  avert  loss.11  National  banks  may  loan  money  on 
the  security  of  stocks,  and  may  sell  the  same  under  a  power,12 
and  may  purchase  the  same  in  order  to  protect  their  own 
interests.13 

§  121.  Other  mercantile  and  banking  transactions. —  It 

is  perhaps  needless  to  say  that  a  bank  cannot  buy  and  sell 
merchandise,1  but  it  may  under  peculiar  circumstances  have 
a.  single  transaction  of  purchase,2  and  it  may  take  charge  of 
a,  shipment  of  goods  in  order  to  credit  the  amount  on  a  bill 
which  it  holds,3  and  if  goods  are  taken  as  collateral  the 
bank  may  ship  and  sell  them.4  But  a  bank  by  merely  col- 
lecting a  draft  attached  to  a  bill  of  lading,  where  the  col- 
lection is  made  in  order  to  credit  a  depositor,  does  not 
become  liable  as  the  seller  of  the  goods,5  although  in  such 
cases  the  bank  has  the  power  to  take  a  bill  of  lading  as  col- 
lateral security.6  The  bank,  it  seems,  would .  not  be  held 

Bank  v.  Smith,  77  Fed.  R.  129,  ac-  vires,  the  bank  is  not  liable  even 

cord.  though  the  cashier  and  president 

10  Matthews  v.   Skinner,  62   Mo.  agree    to  defraud    the    customer, 
329;  First  Nat.   Bank  v.  Nat.  Ex.  where  the  bank  is  not  benefited. 
Bank,  92  U.  S.  122.  Grow  v.  Cockrill,  63  Ark.  418. 

11  First    Nat.   Bank  v.    Nat.  Ex.  2  Sackett's  Harbor  Bank  v.  Lewis 
Bank,  92  U.  S.  122;  s.  c.,  39  Md.  600.  Co.  Bank,  11  Barb.  213. 

12  Canfield  v.  State   Nat.   Bank,  3  Bates  v.  State  Bank,  2  Ala.  451. 
Fed.  Cas.  No.  2382;  Shoemaker  v.  *  Commercial  Bank  v.  Nolan,  7 
National     Mechanics'     Bank,     1  How.  (Miss.)  508.    If  the  bank  sells 
Hughes,  101.  it  may  give  a  warranty  of  its  title. 

13  See  cases  cited  in  note  11.    See  Talman    v.    Rochester    Bank,    18 
also  Farmers'  Bank  v.  Detroit  R.  R.  Barb.  123. 

Co.,  17  Wis.  383.  »  Fourth  Nat.  Bank  v.  Mayer,  89 

1  Bates  v.  State  Bank,  2  Ala.  451.  Ga.  108.     See  Addendum. 

The  act  of  a  cashier  in  agreeing  to  6  Freeman  v.  Bank,  3  Wills.  Civ. 

make  loans  for  a  person,  being  ultra  Cas.,  sec.  339. 


192  BANKS   AND   BANKING.  [§  12L 

upon  a  representation  as  to  what  was  being  forwarded  by 
the  drawer  of  a  draft  which  the  bank  was  collecting.7  Na- 
tional banks  being  endowed  with  general  banking  powers 
have  the  right  to  do  whatever  is  necessary  to  preserve  their 
claims.  Thus,  such  a  bank  may  take  an  elevator  stored  with 
grain  in  payment  of  its  claim.8  It  may  take  and  enforce  a 
chattel  mortgage  in  order  to  secure  a  previousl}7  existing 
debt.9  It  may  secure  itself  on  an  existing  indebtedness  by 
taking  an  assignment  from  contractors  with  a  city  of  money 
due  or  to  become  due  to  the  contractors.10  It  has  power  to 
engage  in  the  business  of  dealing  in  government  securities,11 
and  will  be  liable  for  a  failure  to  perform,  its  contracts  in 
regard  thereto.12  But  a  national  bank  has' no  power  to  make 
a  donation  to  a  manufacturing  plant  to  prevent  it  from  re- 
moving its  plant  from  the  city  where  the  bank  is  located.15 
It  cannot  make  a  valid  agreement  to  procure  insurance  for 
a  certain  person,  but  it  would,  of  course,  be  liable  in  quasi- 
contract  for  the  benefit  received.14  But  where  the  trans- 
•  action  can  fairly  be  said  to  be  connected  with  a  banking 
operation,  the  courts  are  liberal  in  permitting  it.  Thus  a 
bank,  where  it  has  acquired  property  lawfully  taken,  may 
do  what  is  necessary  to  make  the  property  productive.15  It 

7  Littleton  v.  People's  Bank,1  63    v.  Tamblyn,  7  Mo.  App.  570);  or  a 
N.  W.  R  666.    This  is  a  very  close    judgment.     Harwood  v.  Ramsey, 
case  and  might  just  as  well  have    15  S.  &  R  31. 

been  decided  otherwise.    The  real  ll  Van  Leuven  v.  First  Nat.  Bank, 

ground  of  the  decision  ought  to  54  N.  Y.  671;   Leach  v.   Hale,  31 

have  been  either  that  the  repre-  Iowa,  69;  Yerkes  v.  National  Bank, 

sentation  was  not  one  of  fact  or  69  N.  Y.  382. 

that   the   plaintiff   did    not   rely  12  See  cases  cited  in  last  note;  but 

upon  it.  compare  First  Nat.  Bank  v.  Hoch, 

8  German  Nat.  Bank  v.  Meadow-  89  Pa.  24. 

croft,  4  Bradw.  630.  13  McCory  v.  Chambers,  48  III  App. 

9Gaar    v.    Centralia    Bank,   20  445. 

Bradw.  611;  Spafford  v.  First  Nat.  "Dresser  v.  Traders'  Nat.  Bank, 

Bank,  37  Iowa,  181.  165  Mass.   120.    The  bank  should 

10  First  Nat  Bank  v.  Ottawa,  43  have  been  held  liable  on  the  con- 
Kan.  294.    Or  a  bank  may  take  an  tract  under  the  doctrine  stated  in 
assignment  of  any  account  to  pro-  section  33,  ante. 
tect  itself  (Bank  of  North  America  15  Reynolds  v.  Simpson,  74  Ga.  454. 


§  122.]  DEALINGS  OF  BANKS.  103 

may  contract  in  order  to  prevent  its  own  building  from 
being  injuriously  affected  by  the  erection  of  another  build- 
ing.16 It  may  receive  personal  property  in  exchange  for  its 
real  estate.17  It  may  assign  or  sell  its  own  judgment,18  or 
transfer  it  in  payment  of  its  own  debt.19  It  may  take  al- 
most any  species  of  property  as  collateral  security  unless 
forbidden  to  do  so,20  and  in  holding  escrows,  or  in  transactions 
analogous  thereto,  may  hold  securities  to  obtain  the  per- 
formance of  the  agreement.21  A  bank  may  sell  all  its  secu- 
rities to  another  bank  in  consideration  of  the  latter  assuming 
all  its  liabilities.22  In  Kansas  the  supreme  court  found  it 
necessary  to  decide  that  a  national  bank  could  agree  to  pay 
interest  on  a  city  deposit.23  The  power  of  an  ordinary  char- 
tered bank  to  maintain  a  savings  department  seems  not  to 
have  been  made  the  subject  of  adjudication.  But  since  the 
receiving"  of  deposits  is  a  banking  transaction,  and  since 
the  maintenance  of  a  savings  department  is  merely  one 
method  of  receiving  deposits,  there  ought  to  be  no  doubt  in 
the  mind  of  any  judge  that  such  a  proceeding  is  within  the 
corporate  power  of  either  a  national  or  a  state  chartered 
bank. 

§  122.  Dealings  in  real  estate, —  The  general  rule  appli- 
cable to  all  banking  institutions  which  are  incorporated  is 
that  they  can  acquire  land  only  as  permitted  by  their  char- 
ters or  governing  statutes.1  They  have  the  power  to  acquire 

This  case,  extraordinarily  enough,  would  seem  to  be  a  simple  process 

holds  that  the  question  may  be  left  for  putting  the  depositors'  money 

to  the  jury.  into  grain  speculations. 

16  First    Presby.   Church  v.  Nat.  21  Bushnell  v.  Chatauqua  Co.  Nat. 

State  Bank,  57  N.  J.  Law,  27,  58  N.  Bank,  74  N.  Y.  290. 

J.  Law,  406.  22  stetson  v.  City  Bank,  12  Ohio 

"First    Nat.  Bank  v.    Reno,    73  St.  577.    Compare  Mitchell  v. Beck- 
Iowa,  145.  man,  64  CaL  117,  where  it  was  held 

18  Emory  v.  Joice,  70  Mo.  537.  that  after  a  long  lapse  of  time  the 

19  Gillett  v.   Campbell,  1    Denio,  transaction  would  not  be  disturbed. 
520.  23  interstate  Nat.  Bank  v.  Fergu- 

20  Morris  v.  Dixon  Nat.  Bank,  55  son,  48  Kan.  732. 

111.  App.  298.    The  property  here        l  State  Bank  v.  Brackenridge,  7 
was  board  of  trade  options.    This    Blackf.  395.    A  law  against  a  bank's. 
13 


194 


BANKS   AND   BANKING. 


[§  122. 


land  and  buildings  only  for  the  accommodation  of  their  bank- 
ing business.2  It  is  a  well-known  fact  that  many  banks  have 
placed  a  large  part  of  their  capital  in  office  buildings,  a 
small  part  of  which  is  used  for  the  bank.  But  it  is  doubtful 
whether  such  a  dealing  can  be  justified  without  special  power 
given  in  the  charter.3  But  where  a  bank  has  lawfully  taken 
real-estate  security,  there  can  be  no  doubt  of  its  power  to 
purchase  at  its  own  sale.4  Or,  if  the  bank  has  a  lien  upon 
real  property,  it  may  pay  off  prior  liens  in  order  to  protect 
its  own  lien.5  There  ought  to  be  no  question  as  to  the  bank's 
power  to  purchase  at  any  execution  sale,  if  the  act  be  done 
to  secure  its  own  lien.6  While  a  bank  has  no  power  to  buy 
land  to  sell  it  again,  and  while  such  a  contract  will  not  be 
enforced  against  either  party,7  yet,  unless  prohibited  by  stat- 
ute, the  bank  may  take  real-estate  security  or  may  take  land 
in  payment  of  its  claim.8  If  a  national  bank  has  loaned 
money  to  a  purchaser  of  land  with  which  to  make  the  pur- 
chase, it  may  take  the  land  in  payment  of  its  debt.9  It  may 


acquiring  real  estate  applies  in  an. 
other  state.  Metropolitan  Bank  v. 
Godfrey,  23  III  579. 

2  Thweat  v.  Bank  of  Hopkinsville, 
81  Ky.  1.    Compare  Holt  v.  Win- 
field  Bank,  25  Fed.  R  812. 

3  See,  however,  Bands  v.  Poiteaux, 
3  Rand.  136,  where  it  is  held  that  a 
bank  may  buy  more  land  than  it 
needs  and  build  buildings  thereon 
and  sell  them  out    The  measure 
seems  to  have  been  taken  to  pro- 
tect its  own  building  by  erecting 
fire-proof  structures. 

4  Farmers'  Bank  v.  Detroit  R  R 
Co.,  17  Wis.  372;  Martin  v.  Branch 
Bank,   15    Ala.   587;  Ingraham   v. 
Speed,    30   Miss.   410;    Merchants' 
Bank  v.  Harrison,  39  Mo.  433. 

8  Brown  v.  Hogg,  14  111.  219;  Zant- 
zingers  v.  Gunton,  19  Wall.  32. 

6  Sherry  v.  Dunn,  8  Blackf.  542. 
The  same  rule  applies  to  national 


banks.  Heath  v.  Second  Nat.  Bank, 
70  IncL  106;  Holmes  v.  Boyd,  90 
Ind.  332;  Roebling  v.  First  Nat 
Bank,  30  Fed.  R  744. 

7  Bank  of  Michigan  v.  Niles,  1 
Doug.  401. 

8  Thomaston  Bank  v.  Stimpson,  21 
Me.  195;  Baird  v.  Bank  of  Wash- 
ington, 11  S.  &  R  411.    The  bank 
may  agree  to  secure  a  release  of  a 
mortgage  upon  land  covered  by  its 
own  lien.    McCraith  v.  Nat  Mo- 
hawk Valley  Bank,  104  N.  Y.  414 
It  may  take  real  estate  as  security, 
though  forbidden  to  own  it    Alex- 
ander v.  Brumnett,  42  S.  W.  R  63. 
And  if  it  takes  real  estate  from  a 
stockholder  to  cover  a  deficit  it 
may  hold  it    Brown  v.  Bradford, 
103  Iowa,  37a 

9  Turner  v.  First  Nat   Bank,  78 
Ind.  19. 


§  123.]  DEALINGS   OF   BANKS.  195 

take  the  land  and  pay  to  the  owner  the  difference  between 
the  value  of  the  land  and  its  own  claim,10  or  it  may  purchase 
its  debtor's  property  at  an  execution  sale,  paying  for  the 
land  more  than  its  debt.11  If  a  bank  acquires  land  it  may 
control  it  as  a  proprietor,12  and,  of  course,  may  sell  it.13  If 
it  sells,  it  may  take  a  mortgage  back  to  secure  the  purchase 
price.14  There  will  be  no  presumption  of  illegality  in  the 
transaction.  The  illegality  must  be  made  to  appear,15  and 
this  rule  applies  equally  well  to  every  other  transaction, 
whether  of  a  bank  or  any  one  else.  Finally,  it  is  said  to  be 
the  law  that  even  if  a  bank  takes  the  land  contrary  to  law, 
it  gets  a  good  title  against  everybody  except  the  state.16  But 
this  is  not  believed  to  be  true  where  there  is  an  acquisition 
of  land  in  violation  of  an  express  statute.17 

§  123.  Dealings  in  mortgages  on  realty. —  Where  there 
is  no  statute  either  expressly  or  impliedly  forbidding  the  ac- 
quisition by  a  bank  of  real-estate  security,  there  can  be  no 
objection  to  such  a  dealing  by  the  bank.1  This  right  would 
include  the  power  to  take  assignments  of  mortgages.2  The 
bank,  as  a  mortgagee,  is  entitled  to  the  same  remedies  that 
any  other  mortgagee  would  have.3  A  bank  may  take  real- 

10  Mapes  v.  Scott,  88  III  352 ;  Libby  w  Chatauqua  Co.  Bank  v.  Resly,  19 
v.  Union  Nat.  Bank,  99  111.  622.  N.  Y.  369;  Sparks  v.  State  Bank,  7 

11  Upton    v.   National  Bank,   120  Blackf.  469;  Perkins  v.  Church,  31 
Mass.  153.  Barb.  84;  Richards  v.  Kountze,  4 

12  Roebling  v.  First  Nat.  Bank,  30  Neb.  200. 

Fed.  R.  744.  16  Leazure  v.  Hillegas,  7  S.  &  R. 

13  Wherry  v.  Hale,  77  Mo.  20 ;  Jack-  313.   As  to  national  banks  the  rule  is 
son  v.  Brown;  5  Wend.  590.    If  the  the  same.  Mapes  v.  Scott,  94  111.  379. 
bank  conveys  land  it  may  make  17See  Zantzingers  v.  Gunton,  19 
covenants  of  warranty.    Talman  v.  Wall.  32. 

Rochester  Bank,  18  Barb.  123.    If  1  Baird  v.  Bank  of  Washington, 

the  deed  of  the  bank  is  insufficient  11  S.  &  R  411;  Thomaston  Bank  v. 

because  not  authorized,  the  deed  Stimpson,  21  Ma  195;  Merchants' 

may  take  effect  as  an  equitable  Bank  v.  Harrison,  39  Mo.  433. 

mortgage.    Stapylton  v.  Stockton,  2  Trenton  Banking  Co.  v.  Wood- 

$1  Fed.  R.  326.  ruff,  2  N.  J.  Eq.  117. 

14  National  Bank  v.  Raymond,  29  3Gage  v.  Sanborn,  108  Mich.  269; 
La.  Ann.  355;  First  Nat.  Bank  v.  Ahl  v.  Rhoads,  84  Pa.  319;  Lewis  v. 
Kidd,  20  Minn.  234  Jeffries,  86  Pa.  340. 


196  BANKS   AND   BANKING.  [§  123* 

estate  security  to  cover  anticipated  liabilities  if  not  forbid- 
den so  to  do.4  A  mortgage  given  directly  to  the  bank  is 
good,  although  the  statute  may  require  it  to  be  given  to  an 
officer.5  But  in  the  case  of  national  banks  there  is  an  im- 
plied prohibition  against  loaning  on  real-estate  security, 
except  to  secure  a  pre-existing  indebtedness.  Originally,  in 
New  York  under  a  similar  statute,  it  had  been  held  that  a 
loan  made  at  the  time  of  taking  the  security  was  a  pre- 
existing indebtedness.6  But  the  courts  at  first  held  that 
national  banks  could  not  take  real-estate  security,  either  to 
secure  an  indebtedness  concurrently  created  or  to  be  created 
in  the  future.7  But  this  statute  was  capable  of  producing  so 
much  injustice  that  it  was  authoritatively  decided  that  the 
debtor  could  not  make  the  objection.8  This  ruling  recon- 
ciles the  law  upon  this  subject  to  the  distinction  between 
ultra  vires  contracts  and  prohibited  contracts  stated  in  sec- 
tion 33,  ante.  There  never  was  any  doubt  as  to  the  right  of 
a  national  bank  to  take  real-estate  security  to  secure  a  past 
indebtedness;9  or  to  take  a  mortgage  made  to  a  third  party 
as  collateral  security  for  a  loan  to  the  mortgagee ; 10  or  to 
take  an  agreement  that  the  mortgage  security  should  ,inure 

4  Crocker  v.  Whitney,  71  N.  Y.  Flathers,  45  La.  Ann.  75;  First  Nat. 
161.  The  case  was  decided  wrongly.  'Bank  v.  Elmore,  52  Iowa,  541;  Old- 
's Kennedy  v.  Knight,  21  Wis.  345.  ham  v.  First  Nat.  Bank,  85  N.  C.  240. 
•Silver  Lake  Bank  v.  North,  4  The  same  rule  applies  to  a  mort- 
Johns.  Ch.  370.  gage  to   secure   future   advances, 
*  Matthews  v.  Skinner,  62  Mo.  329 ;  Sessions  v.  First  Nat.  Bank,  93  N.  Y. 
Kansas  Nat.  Bank  v.  Rowell,  2  Dill.  269;  National  Bank  v.  Whitney,  103 
371;  Fowler  v.  Scully,  72  Pa.  456;  U.  S.  99. 

Wood  v.  People's  Nat.  Bank,  83  Pa.  9  Owen  v.  Merchants'  Nat.  Bank, 

57.     The    statute    could    not    be  16  Kan.  341.    A  reorganized  stato 

evaded  by  taking  the  mortgage  to  bank  might,  as  a  national  bank, 

an  officer  of  the  bank.    Fridley  v.  take  the  assignment  of  a  note  along 

Bowen,  87  I1L  151.    One  case  held  with  the  real-estate  collateral  Sco- 

a  statute  to  be  directory.  Magruder  field  v.  State  Bank,  9  Neb.  316. 

v.  State  Bank,  18  Ark.  9.  i°Fortier    v.    New  Orleans   Nat. 

8  National  Bank  v.  Matthews,  98  Bank,  112  U.  S.  439;  Worcester  Nat. 

U.  S.  621;  National  Bank  v.  Whit-  Bank  v.  Chieney,  87  III  602;  Mer- 

ney,  103  U.  a  99;  Winton  v.  Little,  chants'  Nat.  Bank  v.  Mears,  8  Bias. 

94  Pa,  64 ;  Graha  m  v.  National  Bank,  158. 
5  Stew.  804;  State  Nat  Bank  v. 


§  124.]  DEALINGS   OF   BANKS.  197 

to  the  benefit  of  the  bank,  if  its  debtor,  owning  the  mort- 
gage, should  make  default.11  The  right  of  the  bank  to  be 
subrogated  to  the  rights  of  the  mortgagee  would  not  be  de- 
feated by  the  statute.12  It  was  also  held  that  the  bank  might 
take  an  assignment  of  a  mortgage  as  collateral  security  even 
though  the  mortgage  was  made  contemporaneously  with  the 
assignment.13  A  renewal  note  was  held  to  be  not  the  crea- 
tion of  a  new  indebtedness,  but  simply  evidence  of  the  past 
indebtedness,14  which  is,  of  course,  the  general  rule.  The 
effect  of  the  statute  against  taking  real-estate  security  is  re- 
duced to  the  effect  the  transaction  would  have  as  against  the 
state  complaining  of  a  violation  by  the  bank  of  its  charter. 
Such  a  statute  does  not,  however,  abridge  the  bank's  rights 
as  to  the  acquisition  of  personal  property,15  nor  does  it  en- 
large those  powers.16  It  should  be  stated  in  this  connection 
that  a  bank  has  the  undoubted  right  to  mortgage  its  real  es- 
tate to  secure  its  debts.17 

§  124.  Dealings  in  negotiable  paper. —  One  of  the  proper 
functions  of  a  banking  institution  being  the  acquisition  of 
commercial  paper,  there  can  be  no  doubt  as  to  the  general 
authority  of  a  bank  to  deal  in  promissory  notes; l  but  some 
courts  have  denied  the  power  of  a  bank  to  purchase  nego- 
tiable paper;2  but  the  better  reason  and  authority  is  that 
the  power  of  discounting  includes  the  power  of  purchasing 
paper.3  Sometimes  the  statute  prescribes  the  paper  in  which 

11  First    Nat.  Bank   v.  Haire,  36  17  Leggett  v.  New  Jersey,  etc.  Co., 
Iowa,  443.  Saxt.  541. 

12  Matthews  v.  Abbott,  Fed.  Gas.  1  State  Bank  v.  Criswell,  15  Ark. 
No.  9275.  230;     Commonwealth    v.    Comm. 

w  First  Nat.  Bank  v.  Andrews,  7  Bank,  28  Pa.  391. 
Wash.  261.    See  also  Richards  v.  2  Farmers'  Bank  v.  Baldwin,  23 
Kountze,  4  Neb.  200;   Oldham  v.  Minn.  198;  First  Nat.  Bank  v.  Pier- 
First  Nat.  Bank,  85  N.C.  240;  Thorn-  son,  24  Minn.  140.    See  also  §  34, 
ton  v.  Nat.  Ex.  Bank,  71  Mo.  221.  ante;  Lazear  v.  Nat.  Union  Bank, 

14  Howard  Nat.  Bank  v.  Loomis,  52  Md.  78. 

51  Vt.  349.  «Pape  v.  Capitol  Bank,  20  Kan. 

14  Farmers'  Bank  v.  Detroit,  etc.  440;  Atlantic  State  Bank  v.  Savery, 

R.  R.  Co.,  17  Wis.  372.  82  N.  Y.  291 ;  Salmon  Falls  Bank  v. 

^Talmage  v.  Pell,  7  N.  Y.  328.  Leyser,  116  Mo.  51;  First  Nat.  Bank 


198 


BANKS   AND   BANKING. 


[§125 


a  bank  shall  deal ;  but  such  a  provision  does  not  prevent  the 
bank  taking  other  paper  in  order  to  secure  a  previous  in- 
debtedness.4 A  bank  has  also  the  undoubted  right  to  trans- 
fer its  negotiable  paper  in  the  ordinary  course  of  business,5 
and  it  may  indorse  the  same,6  and  may  guaranty  the  paper  for 
its  own  benefit.7  One  case  holds  that  a  bank  may  not  as- 
sign its  notes,8  but  this  was  due  to  an  absurd  construction 
of  an  absurd  statute.  The  statute  sometimes  prohibits  a 
bank  from  issuing  its  bills  or  notes  except  in  certain  forms,9 
or  to  circulate  as  money,10  but  even  in  such  case  a  bank  may 
issue  its  note  in  the  ordinary  course  of  business.11 

§  125.  Borrowing  money. —  A  bank  with  general  bank- 
ing powers  may  undoubtedly  borrow  money,1  but  sometimes 
the  statute  forbids  the  borrowing  of  money  payable  at  a 
future  day  certain.2  A  national  bank  may  borrow  money  in 
order  to  loan  it  out  again  at  a  higher  rate  of  interest  than  it 


•v.  Sherbourne,  14  Bradw.  566 ;  Smith 
v.  Exchange  Bank,  26  Ohio  St.  141; 
Nicholson  v.  State  Bank,  92  Ky.  251. 
Bank  may  purchase  interest  cou- 
pons (First  Nat.  Bank  v.  Benning- 
ton,  16  Blatchf.  53);  or  a  check 
(First  Nat  Bank  v.  Harris,  108  Mass. 
514);  or  a  draft  (Union  Nat.  Bank 
v.  Rowan,  23  S.  C.  339). 

4  John  v.  Farmers'  Bank,  2  Blackf. 
867. 

6  Planters'  Bank  v.  Sharp,  6  How. 
301;  Mar  vine  v.  Hymers,  12  N.  Y. 
223;  Robb  v.  Ross  Co.  Bank,  41 
Barb.  586. 

6  Crocket  v.  Young,  1  Smedes  & 
M.  241.  See  next  section. 

?Dabney  v.  State  Bank,  3  S.  C. 
124 

8  Mclntyre  v.  Ingraham,  35  Miss. 
25.  The  opinion,  beyond  being  an 
excellent  specimen  of  state  rights, 
ante  bdlum  balderdash,  is  chiefly 
remarkable  for  speaking  of  the 
United  States  Supreme  Court  as 


"  she !  "  This  is  the  court  that  Sar- 
gent S.  Prentiss  was  wont  to  call 
the  Court  of  High  Errors  and  Ap- 
peals. 

9  See  James  v.  Rogers,  23  Ind.  451 ; 
Safford  v.  Wyckoff,  1  Hill,  It 

10  Rockwell  v.  Elkhorn  Bank,  13 
Wis.  731. 

"Rockwell    v.    Elkhorn    Bank, 
supra. 

1  Tuttle  v.  National  Bank  of  Re- 
public, 48  111.  App.  481.    This  opin- 
ion cites  a  work  called  "  Aloise  on 
Banking."   Ringling  v.  Kohn,  6  Mo. 
App.  333;  Donnell  v.  Lewis  Co.  Sav. 
Bank,  80  Mo.  165;  Leavitt  v.  Yates, 
4  Edw.  Ch.  134;  Barnes  v.  Ontario 
Bank,  19  N.  Y.  152;  Ward  v.  John- 
son, 95  III  215.     A  rediscount  is 
not  a  borrowing,  even  if  the  bank 
indorses.    It  is  a  sale.     National 
Bank  v.  First  Nat  Bank,  79  Fed.  R. 
296. 

2  Commonwealth  v.  Bank  of  Mut- 
ual Redemption,  86  Mass.  1. 


§  126.]  DEALINGS    OF   BANKS.  199 

pays.3  It  may  loan  borrowed  money  to  its  own  directors  if 
the  loan  is  not  otherwise  illegal.4  National  banks,  for  money 
loaned  to  them  or  deposited,  may  issue  certificates  of  deposit 
payable  on  demand  or  a  future  day.  Such  certificates  are 
not  post  notes  within  the  prohibition  of  section  5183  of  the 
Eevised  Statutes  of  the  United  States.5  But  such  certificates 
must  represent  an  actual  loan.6 

§  126.  Lending  of  credit. —  A  bank  has  not  the  right  to 
lend  its  credit  on  personal  security,  nor  can  it  become  an 
accommodation  maker  of  drafts,1  or  an  accommodation  in- 
dorser  of  commercial  paper ; 2  but  such  indorsement  or  such 
accommodation  draft  is  valid  in  the  hands  of  a  fiona  fide 
holder.3  Since  it  may  receive  special  deposits,  a  national 
bank  is  liable  for  its  negligence  where  it  undertakes  to  re- 
cover stolen  special  deposits.4  A  bank  may  guaranty  the 
payment  of  a  note  discounted  by  it8  or  sold  by  it.6  But  a 
guaranty  against  loss  given  by  the  president  to  sureties  upon 
a  note  to  the  bank,  or  upon  any  transaction  not  made  by  the 
bank,  is  beyond  the  power  of  the  bank.7  A  certification  of  a 
check  is  in  effect  a  guaranty  of  its  payment  by  the  bank, 
and,  as  such,  it  may  be  oral,8  if  the  drawer  has  funds,  or  con- 
ditioned upon  the  payment  of  a  draft  left  with  it  for  collec- 

1  National  Bank  of  Commerce  v.  6  Talman  v.  Kochester  City  Bank, 

National  Bank  of  Mo.,  Fed.  Gas.  No.  18  Barb.  123 ;  Dabney  v.  State  Bank, 

18,810.  3  S.  C.  124    The  rule  is  the  same 

4  Cases  last  cited.  as  to  national  banks.  People's  Bank 

6  Riddle  v.  First  Nat.  Bank,  27  v.  National  Bank,  101  U.  S.  181. 

Fed.  R.  503;  Hunt  v.  Appellant,  141  6  Thomas  v.  City  Nat.  Bank,  40 

Mass.  515.  Neb.  501. 

6  Logan  Nat.  Bank  v.  Williamson,  7  First  Nat.  Bank  v.  Bennett,  33 

2  Ohio  Cir.  Ct.  R.  118.  Mich.  520.    What  the  court  prob- 

1  Johnson  v.  Charlottesville  Nat.  ably  meant  to  decide  was  that  parol 
Bank,  3  Hughes,  657.  evidence  was  inadmissible  to  vary 

2  National  Bank  of  Commerce  v.  the  terms  of  the  written  contract. 
Atkinson,  55  Fed.  R  465.  Comm.  Nat.  Bank  v.  Pirie,  82  Fed. 

.3  Johnson  v.  Charlottesville  Bank,    R.  799. 

3  Hughes,  657.  8  Merchants'  Nat.  Bank  v.  First 
*Wylie    v.    Northampton    Nat.    Nat.  Bank,  7  W.  Va.  544 

Bank,  15  Fed.  R.  426,  reversed  119 
U.  S.  361,  holding  the  text. 


200  BANKS    AND   BANKING.  [§  127. 

tion.9  But  ofie  case  decides  that,  where  a  man  deposits 
securities  with  one  bank,  and  that  bank  guaranties  the  secu- 
rities to  a  second  bank,  which  thereupon  issues  a  letter  of 
credit  to  the  depositor  of  the  securities,  the  guaranty  is  not 
binding  upon  the  first  bank.10  This  case  is  clearly  wrong, 
because  the  transaction  was  in  effect  a  deposit  of  notes  with 
the  first  bank,  which  thereupon  discounted  or  transferred 
them  to  the  second  bank  by  guarantying  their  payment. 

§  127.  Collections. —  Since  a  bank,  as  one  of  its  ordinary 
powers,  has  the  right  to  receive  paper  for  collection,  it  can 
be  held  liable  for  its  neglects  in  performing  that  function.1 
There  would  seem  to  be  no  good  reason  why  a  bank  has  not 
the  power  to  guaranty  the  paper  it  takes  for  collection,  both 
as  to  the  person  depositing  the  paper  for  collection  and  as 
to  the  person  from  whom  it  collects. 

9  Case  last  cited.  man  v.  First  Nat  Bank,  86  Fed.  R. 

10  Seligman  v.  Charlottesville  Nat.    1013. 

Bank,  Fed.  Gas.  No.  12,642.  But  the  l  Exchange  Nat.  Bank  v.  Third 
court  was  in  error  in  calling  the  Nat.  Bank,  112  U.  S.  276;  Mound 
transaction  a  guaranty.  A  repre-  City  Paint  Co.  v.  Commercial  Nat. 
sentation  by  the  bank  as  to  the  sur-  Bank,  4  Utah,  353;  White  v.  Third 
plus  and  paid-up  capital  of  an  in-  Nat.  Bank,  4  Weekly  Law  Bui.  791. 
surance  company  is  ultra  vires,  but  The  power  is  incidental  to  bank- 
not  a  representation  that  the  insur-  ing.  Keyes  v.  Bank  of  Hardin,  52 
ance  company  has  so  much  money  Mo.  App.  323;  Yerkes  v.  National 
on  deposit  with  the  bank.  Hind-  Bank,  69  N.  Y.  382;  Tyson  v.  State 

Bank,  6  Blackf.  225. 


CHAPTER  YIL 

DEPOSITS. 

§  128.  Nature  of  relation. —  When  a  man  makes  a  gen- 
eral deposit  in  a  bank  the  relation  that  exists  between  the 
bank  and  him,  as  a  depositor,  has  not  been  accurately  de- 
fined. It  is  settled  that  the  relation  is  one  of  debtor  and 
creditor;1  so  far  all  the  courts  agree.  But  a  debtor,  if  he 
refuse  to  pay  his  creditor,  can  only  be  sued  for  the  debt.  A 
banker,  however,  can  be  sued  not  only  for  the  debt,  but  he 
can  be  sued  also  for  damages  for  refusing  to  pay  the  check 
which  demanded  the  debt.2  What  is  the  nature  of  this  fur- 
ther obligation?  It  is  not  one  of  contract  at  common  law, 
because  the  form  of  the  action  is  an  action  on  the  case.3  The 
banker  is  sued  for  a  violation  of  his  duty,  which  was  to  pay 
his  depositor's  checks  as  long  as  he  had  sufficient  funds 
rightfully  credited  to  the  depositor.  But  every  duty  owed 
has  its  correlative  right  in  the  person  to  whom  the  duty  is 
owed.  It  is  the  nature  of  this  right  that  is  in  question. 
Some  courts  have  said  it  is  a  contract  right  arising  out  of 
the  agreement  made  by  the  bank  with  its  depositor.4  It  is 
certainly  not  an  express  contract,  because  no  such  contract 
is  ever  made.  It  is  not  a  contract  implied  as  of  fact,  because 
the  measure  of  damages  is  that  of  tort  and  not  of  contract, 
and  because  wilfulness  and  maliciousness  are  a  part  of  the 
act;  not  actual  malice  necessarily,  but  the  malice  that  is  im- 
plied from  the  doing  of  a  wrongful  act.5  Therefore  the  dis- 

1  Bank  of  Kentucky  v.  Wister,  2  Ad.  415.  But  Taunton,  J.,  shows 

Pet.  324.  that  it  is  a  breach  of  duty. 

2Mt.  Sterling  Bank  v.  Green,  99  «Schaffnerv.  Ehrman,139Ill.  109. 

Ky.  262.  See  the  appellant's  brief  in  this  case 

3  First  Nat  Bank  v.  Shoemaker,  in  15  L.  R.  A.  134,  discussing  this 
117  Pa.  94  question,  but  only  succeeding  in 

4  Marzetti  v.  Williams,  1  Barn.  &  "  darkening  counsel."   The  opinion 

does  not  help  the  matter. 


202  BANKS    AND   BANKING.  [§  128. 

honoring  of  the  check  is  a  tort.  The  closest  analogous 
relations  are  the  duties  owed  by  a  common  carrier  or  an 
innkeeper.  In  those  cases  the  law  raises  the  duty  on  mo- 
tives of  public  policy  out  of  the  relation.  So  in  the  case  of 
a  banker  and  his  depositor  the  law  raises  the  duty  out  of 
the  relation.  Historically,  the  deposit  in  .the  bank  is  a  bail- 
ment, belonging  to  the  same  general  class  as  the  carrier's 
and  innkeeper's  bailment.  The  relation  of  bailor  and  bailee 
imposes  certain  duties,  a  breach  of  which  is  redressed  by  a 
common-law  action.  Although  the  bailment  has  been  in 
process  of  time  changed  to  a  debt,  certain  characteristic 
features  of  it  have  remained.  There  is  a  contract  only  in 
the  sense  of  a  ^wan'-contract.6  The  contract  is  wholly  ex  lege; 
it  is  not  the  result  of  any  agreement  between  the  parties. 
It  is  true  that  in  declaring  on  the  carrier's  duty  in  assumpsit 
a  contract  is  pleaded,  but  that  was  merely  the  statement  of 
the  duty  to  charge  an  assumpsit.  There  was  no  considera- 
tion pleaded.  Assumpsit  was  originally  an  action  on  the 
case,  and  the  promise  was  considered  important  after  the 
common-law  pleaders  had  lost  sight  of  this  fact.7  The  state- 
ment of  the  contract  is  now  merely  by  way  of  inducement 
to  show  the  relation  out  of  which  the  law  raises  the  duty. 
This  is  the  form  of  pleading  in  case.  So  the  ingredient  of 
malice  in  the  action  for  dishonoring  a  bank  check  and  the 
allegation  thereof  in  the  declaration  is  merely  a  method  of 
charging  a  failure  of  duty.8  It  is  wholly  dispensed  with  in 

6  See  Keener  on  Quasi-Contract,  7See  two  articles  on  assumpsit 

18,  and  the  introduction  to  the  pres-  by  a  very  great  authority  in  2  Har- 

ent  work.   He  makes  the  point  that  vard  Law  Rev.  1,  53. 

the  duty  enjoined  is  to  act,  which  8  The  failure  to  recognize    this 

makes  the  carrier's  duty  quasi-con-  very  palpable  fact  led  the  supreme 

tract.   One  case  recognizes  that  the^  court  of  Illinois  in  Schaffner  v.  Ehr- 

duty  of  a  bank  in  case  of  a  collec-  man,  139  111.  109,  to  call  this  suit 

tion,  which  depends  upon  the  same  one  in  slander.     It  is  no  more  a 

principle,  is  raised  out  of  the  rela-  slander  than  the  refusal   of  any 

tion,  because  where  a  contract  to  debtor  to  pay  his  debt  is  a  slander 

use  proper  steps  in  collecting  is  al-  upon  the  creditor.    It  merely  hap- 

leged  it  need  not  be  proven  if  the  pens  that  one  of  the  elements  of 

relation  is  proven.    Jagger  v.  Ger-  damage  is  loss  of  credit. 
man-American  Bank,  53  Minn.  386. 


§  129.]  DEPOSITS.  203 

code  pleading;  it  is  simply  a  way  of  saying  that  the  bank 
acted  unlawfully  in  violating  the  duty  which  the  law  raised 
out  of  the  relation.  The  duty  owed  by  a  bank  is  just  as  much 
the  result  of  a  custom  as  is  the  duty  of  a  common  carrier  or 
an  innkeeper.  The  old  form  of  declaration  against  an  inn- 
keeper was  on  the  common  custom  of  the  realm.  The  cus- 
tom simply  became  recognized  by  the  courts  and  thus  became 
a  rule  of  law.  Suppose  the  duty  had  been  originally  created 
by  a  statute ;  there  would  then  have  been  no  question  of  its 
g'w^-contractual  character.  Another  test  would  be  this: 
Suppose  a  state  statute  should  abolish  the  duty  of  a  bank  to 
honor  its  customer's  checks  and  leave  the  remedy  simply  one 
of  debt.9  It  certainly  could  do  so;  yet  if  the  relation  is  one 
of  contract  it  could  not  do  so  as  to  future  deposits ;  but  it 
could  not  abolish  the  debt  of  the  bank  to  its  depositor  as  to 
a  future  transaction.  If  a  statute  should  declare  that  a  de- 
posit of  money  in  a  bank  should  not  create  a  debt,  the  stat- 
ute would  be  void.  But  if  it  should  say  that  the  bank  should 
not  be  responsible  for  more  than  the  debt  on  failure  to  honor 
a  check,  the  statute  would  be  good.  The  debt  is  a  genuine 
contract,  therefore,  and  the  other  part  of  the  legal  relation  i& 
not.10  It  will  be  seen  later  that  this  question  is  not  a  mere 
academic  one,  but  has  an  important  bearing  upon  questions 
in  banking  law. 

§  129.  Kinds  of  deposits. —  Deposits  are  either  general  or 
special.    A  special  deposit  may  be  of  something  else  than 

9  Statutes  have  varied  the  duties  transactions;  that  obligation  is  pro- 
of innkeepers   and    carriers,  and  tected  by  the  clause  in  the  four- 
those  statutes  no  doubt  affected  all  teenth  amendment  as  well  as  by 
future  instances  of  the  relation.  the  clause  against  the  taking  of 

10  See  Louisiana  v.  New  Orleans,  private  property.     The  quasi-con- 
109  U.  S.  285,  as  to  gwcrsi-contracts  tract,  after  the  obligation  has  once 
not  being  within  the  protection  of  arisen,  is  property.    The  dissenting 
the  constitution   as  to  contracts,  opinion  of  Justice  Harlan  does  not 
The  case  itself  is  wrong,  however,  display  any  knowledge  of  the  nat- 
where  it  decides  that  a  quasi-con-  ure  of  a  gwasi-contract,  although 
tract  can  be  abolished  as  an  obliga-  he  was  right  in  his  conclusion, 
tion  by  statute,  except  as  to  future 


BANKS    AND    BANKING.  [§  130. 

money.  Its  characteristic  feature  is  that  title  to  the  thing 
does  not  pass  to  the  bank,  except  as  bailee.  We  are  con- 
cerned at  present  simply  with  general  deposits. 

§  130.  General  depositor's  rights. —  A  general  deposit  of 
money  in  a  bank  creates  a  debt  from  the  bank  to  the  de- 
positor. The  money  becomes  the  banker's  to  use  as  he  can.1 
Whether  interest  be  paid  or  not,2  whether  the  deposit  be  on 
an  open  checking  account  or  a  time  deposit,3  the  rule  is  the 
same.  If  it  be  a  deposit  in  a  savings  bank,  payable  upon 
notice,  the  money  belongs  to  the  bank.4  The  relation  is  not 
that  of  trustee  and  cestui  que  trust,5  although  in  some  cases 
money  placed  in  a  bank  by  a  depositor  becomes  a  common- 
law  trust.  Those  cases  are  where  a  specific  sum  of  money 
is  remitted  to  a  banker  to  pay  a  specified  debt,  the  relation 
is  that  of  bailor  and  bailee,  and  the  bank  is  a  trustee  for  the 
amount;6  or  where  a  person  deposits  money  with  one  bank 
for  transmission  to  his  own  bank,7  in  which  case  the  trans- 
mitting bank  is  not  relieved  from  responsibility  by  turning 
the  amount  over  to  another  bank  to  transmit,  acccording  to 
a  custom  not  known  to  the  person  depositing  the  money;8 
or  where  debts  were  due  to  a  former  owner  of  the  bank 
which  the  bank  collected  and  held  in  its  general  funds.9  The 
•engagement  of  the  banker,  which  is  merely  a  poor  phrase 
for  his  customary  and  lawful  duty,  is  to  honor  and  pay  all 
drafts  and  checks  drawn  by  the  depositor  upon  the  bank 
until  the  deposit  is  exhausted,  and  to  repay  upon  demand 
any  balance  that  remains  due  above  the  checks  and  drafts 

1  Bank  of  Kentucky  v.  "Wister,  2  6  City  of  St.  Louis  v.  Johnson,  5 
Pet.  324;  Dabney  v.  State  Bank,  3  Dill.  241.    Compare  ^Etna  Bank  v. 
S.  C.  124;  Robinson  v.  Gardner,  18  Fourth  Nat.  Bank,  40  N.  Y.  82. 
Gratt.   509,   and    numerous   other  'Drovers'  Nat  Bank  v.  O'Hare, 
cases.  119I1L646;  Cutler  v.  American  Ex. 

2  State  v.  Bartley,  39  Neb.  353.  Nat.  Bank,  113  N.  Y.  593.  See  §§  162, 

3  Williams  v.  Rogers,  14  Bush,  776 ;  163,  345,  post. 

Leaphart  v.  Commercial  Bank,  45  8  Union  Stock  Yards  Nat.  Bank 

S.  C.  563.  v.  Dumond,  150  111.  501. 

4  Johnson  v.  Ward,  2  Bradw.  261.  9  Parsons  v.  Treadwell,  50  N.  H. 
8  Buchanan  Farm  Oil  Co.  v.  Wood-  356. 

man,  1  Hun,  639. 


§  131.]  DEPOSITS.  205 

or  other  claims  lawfully  paid.10  This  relation  is  not  varied 
in  the  least  by  the  fact  that  the  deposit  may  be  or  become 
payable  to  some  one  else  than  the  depositor.11  The  bank 
may  select  its  own  depositors,12  and  the  depositor  is  always 
entitled  at  reasonable  hours  to  examine  the  books  of  the 
bank  in  order  to  ascertain  the  state  of  his  own  account.13 
Bank  bills  received  as  cash  are  money  deposited.14 

§  131.  When  the  deposit  is  made. —  "Where  money  is  de- 
posited the  deposit  dates  from  the  time  the  deposit  is  entered 
in  the  pass-book,1  or  where  not  entered  there  when  received 
whenever  the  duplicate  deposit  slip  is  delivered  to  the  de- 
positor, or  whenever  the  money  is  actually  received  at  the 
bank.  It  will  be  a  question  of  fact  whether  or  not  the  bank 
has  received  the  deposit.  Leaving  out  of  view  peculiar  cases, 
it  seems  plain  that  since  the  bank  has  a  business  house  and 
an  officer  to  receive  deposits,  a  deposit  is  not  made  until  it  is 
delivered  to  that  officer.  This  delivery  must  be  a  manual 
delivery.  There  being  a  window  for  the  reception  of  the 
deposit,  it  ought  to  be  the  rule  that  until  the  deposit  goes  to 
the  officer  it  is  not  made.  Suppose  a  man  puts  his  money 
before  the  window.  The  teller  takes  the  money  with  the 
deposit  slip.  Then  the  deposit  is  complete.  But  if  before 
that  delivery  is  actually  made  some  thief  should  snatch  the 
money,  the  bank  ought  not  to  be  responsible.  It  was  held 
in  an  old  case  that  the  money  is  not  deposited  until  it  comes 
to  the  proper  officer  of  the  bank,2  but  the  president 3  or  the 

N>Boyden  v.  Bank  of  Cape  Fear,  !Wasson  v.  Lamb,  120  Ind.  514. 

65  N.  C.  13.  But  the  money  must  have  reached 

11  Bushnell  v.  Chatauqua  Co.  Bank,  the  bank.    Thus  money  in  the  post- 
74  N.  Y.  290.  office  which  the  bank  has  refused 

12  Thatcher  v.  State  Bank,  5  Sandf.  to  receive  is  not  a  deposit  nor  is  the 
121.    The  rule  ought  to  be  that  an  bank  liable  for  its  loss.     Simpson 
incorporated  bank  could  not  make  v.  Pemegiwasset  Nat.  Bank,  88  AtL 
selection  as  to  its  depositors.  R.  1005. 

13  Union  Bank  v.  Knapp,  3  Pick.  96.  2  Manhattan  Co.  v.Lydig,  4  Johns. 

14  Corbet  v.  Bank  of  Smyrna,  2  377.    The  general  principle  of  this 
Harr.  (Del.)  235;  Way  v.  Tuskegee  case  is  right,  but  the  actual  decis- 
Ins.  Co.,  34  Ala.  58.  ion  is  wrong.  The  same  thing  may 

3  Hazleton  v.  Union  Bank,  32  Wis.  34. 


206  BANKS   AND   BANKING.  [§  131. 

cashier4  or  the  paying  teller5  can  receive  deposits  as  well  as 
the  receiving  teller;  and  even  if  money  is  received  without 
a  deposit  ticket  being  made  out  or  an  entry  in  the  pass-book 
being  made,  the  deposit  is  complete.6  But  it  must  be  the  in- 
tention of  the  party  to  make  a  deposit.7  Nor  will  the  alleged 
depositor  be  allowed  to  take  inconsistent  positions  in  trying 
to  hold  the  officers  personally  liable  and  at  the  same  time 
hold  the  bank  liable.8  Difficult  questions  sometimes  arise  on 
account  of  the  form  of  the  transaction.  A  check  in  favor 
of  the  cashier  was  sent  to  the  bank  and  it  was  cashed.  It 
was  held  that  such  fact  was  no  proof  that  the  money  was 
deposited  in  the  bank.9  But  this  is  certainly  wrong,  be- 
cause if  the  man  had  handed  the  money  to  the  cashier  the 
bank  would  have  been.  held.  The  mere  mailing  of  checks 
to  a  bank  for  deposit  is  not  proof  of  a  deposit,10  without 
more  appearing.  But  where  the  teller  received  a  draft  for 
collection  and  w.as  instructed  to  collect  it  and  deposit  it  to 
the  sender's  credit,  or  to  the  teller's  credit  as  trustee,  but 
the  teller,  after  collecting  it,  deposited  the  money  to  his 
own  personal  credit,  it  was  held  that  the  deposit  was  com- 
plete.11 So,  where  the  cashier  issued  a  certificate  of  deposit, 
although  it  had  a  memorandum  put  upon  it  by  the  cashier 
stating  that  the  amount  was  to  be  paid  to  a  creditor  of  the 
depositor,  or,  if  not  paid  to  him,  was  to  be  loaned  for  the 
depositor,  the  bank  was  held  liable.12  But  this  case  is 

be  said  of  Thatcher  v.  State  Bank,  cumstances.  But  the  real  reason 
5  Sandf.  121.  The  money  was  de-  for  deciding  the  case  as  it  was  de- 
posited in  both  cases.  cided  must  be  that  the  plaintiff 

4  State  Bank  v.  Kain,  1  III  45.  .  never  intended  to  make  a  deposit. 

sEast  River  Nat.  Bank  v.  Gove,  8Rich  v.   Niagara   Co.   Bank,  5 

57  N.  Y.  597.    But  in  any  case,  ex-  Thornp.  &  C.  589;  Shields  v.  Niagara 

cept  under  very  remarkable  cir-  Co.  Bank,  3  Hun,  477. 

cumstances,  the  deposit  should  be  »  Gettysburg  Nat  Bank  v.  Kuhns, 

received  at  the  bank.  62  Pa.  88. 

6  Jackson    Ins.    Co.    v.   Cross,  9  10  Miller  v.  Western  Bank,  172  Pa. 
Heisk.  283.    The  depositor  violated  197. 

the  rule  of  the  bank,  but  the  receiv-  nihl  v.  St.  Joseph  Bank,  26  Mo. 

ing  teller  also  violated  the  rule.  App.  129. 

7  Calton  v.  Savings  Bank,  7  Conn.  »  First  Nat  Bank  v.  Brooks,  22 
487,  a  case  with  very  peculiar  cir-  111.  App.  238.    Compare  Beckly  v. 


§  131.]  DEPOSITS.  207 

wrongly  decided,  because  it  was  not  a  banking  transaction, 
and  the  depositor  made  the  cashier  his  own  agent,  unless  it 
can  be  said  that  the  memorandum  contradicted  the  certifi- 
cate. In  another  instance  a  president  of  a  bank  issued  his 
personal  certificate,  according  to  his  habit  of  issuing  either 
his  own  or  the  bank's  certificate,  but  the  customer  thought 
he  was  dealing  with  the  bank;  a  deposit  was  held  to  have 
been  made  in  the  bank."  So,  where  the  certificate  of  a  pri- 
vate firm  was  issued,  but  the  bank  teller,  in  the  presence  of 
the  customer,  said  it  was  "  good  on  the  bank,"  the  bank  was 
held  upon  the  certificate.14  The  same  holding  was  made 
where  no  assurance  whatever  was  given.15  Again,  a  man, 
being  notified  by  the  paying  teller  that  his  account  was 
overdrawn,  went  to  the  bank  and  left  with  the  paying  teller 
the  amount  of  the  overdraft,  but  the  paying  teller  embezzled 
it;  the  bank  was  held  liable.16  In  a  peculiar  case  a  bucolic 
bank  permitted  a  customer  to  deposit  inone}7  in  a  city  bank 
to  the  credit  of  the  country  bank,  with  authority  to  draw 
upon  it  solely  at  the  customer's  request,  and  it  was  held  that 
there  was  no  deposit  in  the  country  bank.17  If  a  general 
principle  is  deducible  from  these  cases,  it  is  that  if  there  be 
a  delivery  of  money  at  the  bank  on  the  part  of  the  depos- 
itor, with  the  intention  of  making  a  deposit,  known  to  the 
officer  of  the  bank,  who  receives  it,  the  deposit  in  the  bank 
is  complete.  No  deposit  can  be  made  in  the  bank  until  it 
is  fully  organized.18 

Commercial    Bank,  39    S.  C.  281,  "Dustm  v.  Hodgen,  38  111.  352. 

which  seems  contra.  But  money  left  with  the  bank  to 

13  West  v.  Elmira  Bank,  20  Hun,  deceive  the  examiner  is  not  a  de- 

408.  posit.    United  States  v.  Peters,  87 

14Steckel  v.  Allentown  Bank,  93  Fed.  R.  984. 

Pa.  376.    This  case  is  wholly  irrec-  18  Long  v.  Citizens'  Bank,  8  Utah, 

oncilable  with  Allentown  Bank  v.  104    The  real  point,  however,  in 

Williams,  100  Pa.  123.    The  differ-  this  case  was  that  the  papar,  which 

ence  on  which  the  court  relies  is  a  was  a  certificate  of  deposit,  was  is- 

fantastic  quibble.  sued  by  the    cashier   to   himself. 

15Coleman  v.  First  Nat.  Bank,  53  There  was  proof  that  the  bank  had 

N.  Y.  388.  done  business.    Even  a  delivery  at 

1KEast  River  Nat.  Bank  v.  Gove,  some  place  other  than  the  bank 

57  N.  Y.  597.  binds  the  bank  if  it  ratifies  or  ao 


208  BANKS   AND   BANKING.  [§§  132,  133, 

§  132.  Effect  of  entries  in  books. —  An  entry  upon  the 
pass-book  or  in  the  bank  books  of  a  deposit  is  merely  a  re- 
ceipt. It  is  explainable  or  revocable  for  mistake l  by  either 
the  bank  or  the  depositor,  and  the  depositor  may  contradict 
the  entry  even  though  a  by-law  of  the  bank  requires  an  ex- 
amination as  to  correctness  at  the  time  of  the  entry.2  The 
earlier  cases  show  some  remarkable  judicial  performances 
upon  this  subject.3 

§  133.  Deposit  of  other  things  than  money. —  Where  a 
man  goes  to  a  bank  and  deposits  in  it  checks  or  drafts  or 
other  paper,  the  transaction  may  take  different  forms.  The 
bank  may  purchase  the  paper.  If  it  does,  the  transaction 
does  not  become  a  deposit,  even  though  the  cashier  makes 
out  a  deposit  slip  to  an  illiterate  man.1  The  paper  may  be 
deposited  for  collection  to  be  made  by  the  bank,  but  not  for 
credit.  If  a  specific  instruction  to  that  effect  is  given,  it  will 
be  binding  upon  the  bank  receiving  the  paper;  but  whether 
or  not  it  will  be  binding  on  third  parties  depends  upon 
whether  those  third  parties  have  notice.  If  the  direction  for 
collection,  or  for  account,  or  for  collection  and  credit  is  in- 
dorsed on  the  paper  itself,  that  is  sufficient  notice  to  every 
one  dealing  with  the  paper  that  the  depositor  has  never 
parted  with  his  title.2  If  the  paper  is  not  so  indorsed,  any 

quiesces  in  the  transaction  by  a  entry  is  conclusive;  otherwise,  not. 

course  of  dealing.   Juniper  v.  Com-  Manhattan  Co.  v.  Lydig,  4  Johns, 

raercial  Bank,  26  S.  E.  R.  725.  377.    The   true   rule    is   that  the 

^alcott  v.  First  Nat.  Bank,  53  books    are  prima  facie    correct. 

Kan.  480;  Schneider  v.  Irving  Bank,  Asher  v.  National  Bank,  7  Alb.  L. 

1  Daly,  500;  Branch  v.  Dawson,  36  J.  43. 

Minn.  193.  1  Bank  of  Guntersville  v.  Webb,. 

2  Mechanics'  Bank  v   Smith,  19    108  Ala.  132. 

Johns.  115.  2  Sweeney  v.  Easter,  1  Wall.  166; 

3  It  was  held  that  the  entry  on  Commercial    Nat.  Bank   v.  Arm- 
the  books  made  an  account  stated,  strong,    148    U.    S.    50;    National 
which  could  be  attacked  only  for  Butchers'    Bank   v.    Hubbell,    117 
fraud.    Hepburn  v.  Citizens'  Bank,  N.  Y.  384;  Manufacturers'  Bank  v. 

2  La.  Ann.  1007;  Mechanics'  Bank  Continental  Bank,  148  Mass.  553  \ 
v.  Banks,  11  La.  Ann.  261.    In  an-  Crown  Point  Nat  Bank  v.  Rich- 
other  case  it  is  said  if  the  entry  is  mond  Nat.  Bank,  76  Ind.  561.    And 
made  on  the  bank  book  first  the  see  §  175,  post. 


§  133.]  DEPOSITS.  209 

third  party  receiving  the  paper,  such  as  a  correspondent, 
bank,  may  assume  rightfully,  in  the  absence  of  notice  of  a 
different  state  of  facts,  that  the  paper  belongs  to  the  bank 
transmitting  it.3  When  the  funds  are  collected  and  in  the 
collecting  bank,  whether  or  not  those  funds  become  a  general 
deposit  in  the  bank  depends  upon  the  course  of  dealing  be- 
tween the  parties,  if  there  has  been  one,  or  if  there  has  been 
no  course  of  dealing,  and  no  express  contract,  except  to  col- 
lect, has  been  made,  the  funds  after  collection  belong  to  the 
bank,  and  the  relation  of  debtor  and  creditor  exists  between 
the  bank  and  its  depositor.4  But  where  there  has  been  an 
express  contract  to  collect  the  money  and  return  the  pro- 
ceeds to  the  depositor,  the  express  contract  would  overrule 
the  general  usages  of  the  business,5  and  the  money  in  the 
hands  of  the  bank  would  be  a  trust  fund  of  the  depositor.6 
Such  are  the  rules  governing  deposits  for  collection.  But 
ordinarily  a  man  who  has  checks  or  drafts  takes  them  to  his 
bank  and  deposits  them  for  credit  to  himself.  If  nothing  is 
said  or  written  to  indicate  the  intention,  the  deposit  is  for 
the  depositor's  credit.7  But  where  such  a  deposit  is  made, 
the  question  as  to  where  the  title  remains  is  a  much  debated 
contention.  If  the  checks  or  drafts  are  on  the  particular 
bank  in  which  they  are  deposited,  a  credit  of  them  as  cash 
to  the  depositor  is  payment,  and  by  the  great  weight  of  au- 
thority that  payment  is  final  and  irrevocable.8  The  checks, 

3  Cody  v.  City  Nat.  Bank,  55  Mich.  6  Continental  Nat.  Bank  v.  Weems> 
379;  Vickery  v.  State  Sav.  Ass'n,  21  69  Tex.  489.    See  also  McLeod  v. 
Fed.  R.  773.    And  see  §  175,  post.  Evans,  66  Wia  401   (overruled  by 

4  Marine  Bank  v.  Fulton  Bank,  2  Nonotuck  Silk  Co.  v.  Flanders,  8T 
Wall  252;  Commercial  Nat.  Bank  Wis.  237),  and  Anheuser-Busch  Ass'n 
v.  Armstrong,  148  U.  S.  50;  Marine  v.  Morris,  36  Neb.  31.  See  §  343,  post, 
Bank    v.    Rushmore,    28    I1L  463;  for  full  discussion. 

Butchers'    Bank    v.    Hubbell,   117  7  Farmers'    Bank    v.   Slayden,  8 

N.  Y.  384;  Reeves  v.  State  Bank,  8  Tex.  Civ.  App.  63. 

Ohio  St.  465.  8  Am.  Ex.  Nat.  Bank  v.  Gregg,  138 

5  Continental  Nat.  Bank  v.Weems,  111.  596;   Bank  v.  Burkhardt,  100 
69  Tex.  489,  where  the  contract  was  U.  S.  686;  Bartley  v.  State,  73  N. 
for  collection  and  return  of  pro-  W.  R  744;  Oddie  v.  National  City 
ceeds.    This  is  the  rule  as  between  Bank,  45  N.  Y.  735.    And  see  §  158, 
banks,  and  the  same  principle  ap-  post,  notes  5  and  6;  City  Nat.  Bank 
plies  as  between  depositor  and  bank.  v.  Burns,  68  Ala.  267.     Contra,  Na- 

14 


210  BANKS   AND   BANKING.  [§  133. 

thereupon,  have  passed  from  the  ownership  of  the  depositor. 
But  if  the  bank  receives  such  checks  upon  the  express  con- 
dition that  they  are  not  credited  as  cash,  but  are  subject  to 
further  examination,  the  mere  entry  of  them  as  cash  will  not 
preclude  the  bank  from  charging  them  back  to  the  depositor.9 
But  a  custom  to  that  effect  would  not  be  valid.10  Where 
the  checks  or  drafts  deposited  for  credit  are  on  another  bank 
than  the  one  receiving  them,  it  is  usual  for  them  to  be  cred- 
ited as  cash.  The  point  is,  however,  whether  they  pass  to 
the  bank  as  owner  or  as  a  mere  bailee  where  they  are  cred- 
ited as  cash.  All  the  cases  agree  that  when  such  checks  or 
drafts  deposited  for  credit  are  collected  and  the  money  in 
the  collecting  bank,  the  relation  of  debtor  and  creditor  ex- 
ists,11 unless  there  be  some  special  agreement  or  understand- 
ing between  the  bank  and  its  customer  to  the  contrary.  All 
the  cases  agree  that  all  third  parties  may  treat  the  bank  in 
which  checks  have  been  deposited  for  credit  of  the  depositor 
as  the  owner  of  the  paper.12  But  where  the  title  is  during 
the  process  of  collecting  is  a  very  different  question.  Some 
courts  erroneously  say  that,  if  the  depositor  is  allowed  to 
check  against  the  deposit,  the  title  is  in  the  bank.13  Other 

tional  Gold  Co.  v.  McDonald,  51  Wis.  401  (but  Nonotuck  Silk  Co.  v. 

CaL  64.     In  Pennsylvania,  if  the  Flanders,  87  Wis.  237,  is  in  accord), 

drawee  knows  that  the  drawer  has  and  Anheuser-Busch  Ass'n  v.  Mor- 

no  funds,  the  bank  may  revoke  the  ris,  36  Neb.  31.     The  collection  is 

credit      Patterson  v.  Union  Nat.  complete  when  credits  are  given 

Bank,  52  Pa.  206.    Rawl  v.  Sauls-  between  the  different  banks.  Ditch 

bury,  66  Ga.  394,  was  a  case  of  the  v.  Western  Nat.  Bank,  79  Md.  192; 

bank's  own  check.  Commercial    Nat.   Bank    v.   Arm- 

9  Pratt  v.  Foote,9N.  Y.  463:  Rapp  strong,  148  U.  S.  50;  In  re  State 

v.  National  Security  Bank,  136  Pa.  Bank,  56  Minn.  119.    See  also  First 

426.  Nat.  Bank  v.  Dickson,  6  Dak  301. 

10  This  must  follow  from  the  fact  12See  note  3,  ante,  and  Metropoli- 
that  payment  of  a  check  is  final  tan  Bank  v.  Loyd,  90  N.  Y.  530. 

A  custom  to  abrogate  that  rule  of  13  Ex  parte  Richdale,  19  Ch.  D.  409; 

law  would  not  be  valid.    See  §  158,  Craigie  v.  Hadley,  99  N.  Y.  131 ;  Na- 

post.  tional  Butchers'  Bank  v.  Hubbell, 

11  See  note  4,  ante,  for  cases.    This  117  N.  Y.  384;  Justt  v.  National 
rule   applies  between   banks,  and  Bank,  36  N.  Y.  Super.  Ct.  273;  2 
between    the    depositor   and   the  Morse    on    Banking,    896.      Some 
bank.    The  two  cases  that  seem  to  courts  say  this  results  from  a  de- 
be  opposed  are  McLeod  v.  Evans,  66  posit  for  credit.    Security  Bank  v. 


§  133.] 


DEPOSITS. 


211 


courts  deny  this,  and  say  the  right  to  check  against  the  de- 
posit is  a  mere  privilege.14  This  latter  idea  is  the  true  one, 
because  there  is  no  question  on  the  authorities  but  that  the 
bank,  having  received  checks  or  drafts  on  other  banks  as 
cash  credited,  has  the  right  to  revoke  the  credit  if  the  col- 
lection is  not  made ;  but  this  would  not  be  possible  if  title 
had  passed.15  It  does  not  help  the  matter  to  appeal  to  cus- 
tom, because  customs  are  facts,  while  title  is  a  legal  conclu- 
sion from  the  facts.  One  part  of  the  custom  may  be  to 
treat  the  deposit  as  cash,  but  the  other  part  of  the  custom  is 
to  treat  the  credit  as  merely  tentative.  A  custom  cannot 
exist  as  to  a  legal  conclusion.  Therefore,  we  must  fall  back 
upon  the  facts.  The  Supreme  Court  of  the  United  States 
once  said  the  whole  question  is  one  of  fact.16  That  statement 
does  not  help  the  matter,  because  the  facts  being  conceded 
the  law  must  put  a  construction  upon  those  facts.  Now,  on 
principle,  a  deposit  of  checks  for  credit  on  one  bank  upon 
another  bank  is  a  bailment.17  The  duty  of  the  bank  is  to 


Northwestern  Fuel  Co.,  58  Miun. 
141;  Lanterman  v.  Travous,  73  11L 
App.  670, 174  111.  459:  Am.  Ex.  Bank 
v.  Mining  Co.,  165  111.  103;  Doppelt 
v.  National  Bank  of  Republic,  175 
111.  432;  Am.  Trust  &  Sav.  Bank  v. 
Manufacturing  Co.,  150  111.  336.  But 
these  courts  recognize  that  the 
bank  can  charge  back  the  deposit. 

14Balbach  v.  Frelinghuysen,  15 
Fed.  R.  675;  Beal  v.  City  of  Somer- 
ville,  50  Fed.  R.  647,  5  U.  S.  App.  14. 
This  last  is  the  only  able  examina- 
tion of  the  matter  that  has  been 
made.  It  expressly  disapproves  2 
Morse  on  Banking,  896.  See  also 
Scott  v.  Ocean  Bank,  23  N.  Y.  289. 
The  Supreme  Court  of  the  United 
States  has  followed  the  case  of  Beal 
v.  City  of  Somerville. 

15  See  Beal  v.  City  of  Somerville, 
supra;  Stapylton  v.  Cie  des  Phos- 
phates, 88  Fed.  R.  53.  See  also 
§S  188,  189  and  190,  infra. 


16  St.  Louis  &  S.  F.  Ry.  Co.  v.  Johns- 
ton, 133  U.  S.  566.  But  this  case 
really  decides  that  checks  received 
and  credited  as  cash  against  which 
the  depositor  has  the  right  to  draw, 
when  the  checks  are  on  a  different 
bank  than  the  one  receiving  them, 
do  not  necessarily  become  the  prop- 
erty of  the  bank.  But  the  case  is 
not  in  point,  because  it  is  put  upon 
the  ground  that,  even  if  it  was  a 
deposit,  the  bank  became  a  trustee 
by  reason  of  its  fraud.  If  the  de- 
posit was  really  a  purchase  by  the 
bank,  and  is  so  treated  and  acted 
upon  by  both  parties,  title,  of  course, 
passes.  Taft  v.  Quinsigamond  Bank, 
52  N.  E.  R.  387.  The  case  of  Evans- 
ville  Bank  v.  German-American 
Bank,  155  U.  S.  556,  says  the  legal 
title  is  in  the  collecting  bank,  but 
that  it  has  not  the  equitable  title. 

"Giles  v.  Perkins,  9  East,  12,  14; 
Beal  v.  City  of  Somerville,  50  Fe£. 


212  BANKS   AND   BANKING.  [§  133. 

collect  and  credit  the  depositor  with  the  amount  obtained. 
"When  that  is  done  the  bailment  is  complete.  The  collecting 
bank  takes  no  risk  upon  the  paper ;  if  collection  is  not  made 
it  charges  the  paper  back  to  the  depositor.18  If  the  bank  fails 
in  this  duty  it  is  liable  for  negligence.19  It  would  not  be  so  if 
it  owned  the  paper.  Hence  we  are  driven  to  conclude  that 
the  bank  has  no  title  until  the  collection  is  complete.  The 
full  reason  for  this  conclusion  will  be  found  in  sections  1SY 
and  188.  This  conclusion  is  wholly  compatible  with  the 
fact  that  a  third  party  without  notice  may  get  title  from 
the  bank.  That  is  the  result  of  investing  the  bank  with  the 
indicia  of  ownership.  This  conclusion  is,  too,  wholly  com- 
patible with  the  fact  that  the  bank  may  sue  upon  the  paper 
whether  indorsed  to  it  for  credit  or  for  collection.  But  it 
may  do  this  as  holder,  although  it  is  not  the  owner.20  Each 
bank  in  the  chain  is  a  holder  or  bailee.  But  it  cannot  be 
said  that  this  conclusion  is  the  adjudicated  law  everywhere 
upon  this  subject.  A  very  ably  considered  case  so  holds.21 
But  there  are  cases  which  hold  that  if  the  depositor  is  al- 
lowed to  check  against  the  deposit,  the  title  passes  to  the 
bank.22  There  are  other  cases  which  say  that  if  the  deposit 
is  credited  as  cash  the  title  passes  to  the  bank.23  The  con- 
flict of  authority  is  not  capable  of  being  explained,  but  the 
true  rule  is  that  of  Beal  v.  City  of  Somerville.  The  impor- 

R.  647.    And  see  §§  181,  187-190,  (Ky.),  can  only  be  passed  over  in 

infra.  charitable  silence. 

18  Am.  Trust  &  Sav.  Bank  v.  Man-  21  Beal  v.   City  of  Somerville,  50 
ufacturing  Co.,  150  TIL  830;  Beal  v.  Fed.  R.  647.    And  this  case  is  fol- 
City  of  Somerville,  supra.     This  lowed  in  all  the  federal  courts, 
fact  is  what  renders  the  decisions  22  Craigie  v.  Hadley,  99  N.  Y.  131, 
in  note  13  so  ingeniously  absurd.  and  cases  cited  in  note  13,  ante. 

19  Exchange  Nat.  Bank  v.  Third  One  case  says  a  deposit  for  collec- 
Nat.  Bank,  112  U.  S.  276;  Mound  tion  and  credit  does  not  pass  title. 
City  Paint  Co.  v.  Commercial  Nat.  Armstrong   v.   National  Bank,  90 
Bank,  4  Utah,  353.  Ky.  431.     But  the  indorsement  for 

2°Evansville    Bank    v.    German-  credit  always  shows  this  fact  by 

American  Bank,  155  U.  S.  556;  Com-  being  to  another  bank, 

mercial  Bank   v.   Armstrong,  148  23  Security  Bank  v.  Northwestern 

U.S.  50;  First  Nat.  Bank  v.Hughes,  Fuel  Co.,  58  Minn.  141;  Ditch  v. 

46  Pac.  R.  272.    The  case  of  First  Western  Nat  Bank,  79  Md.  192. 
Nat.  Bank  v.  Payne,  42  S.  W.  R.  736 


§  134.]  DEPOSITS.  213 

tance  of  the  matter  is  as  to  who  sustains  the  loss  when  the 
correspondent  bank  fails,  and  as  to  who  owns  the  funds  if 
the  collecting  bank  should  fail.  These  matters  will  be 
treated  under  the  head  of  collections  arid  insolvency.24 

§134.  Ownership  of  deposit. —  The  natural  presumption 
is  that  money  deposited  to  the  credit  of  a  depositor  by  him- 
self belongs  to  that  depositor,  and  in  reason  the  bank  need 
only  look  to  the  apparent  owner  of  the  fund.  If  it  pays 
that  apparent  owner  of  the  deposit  or  one  designated  by 
him,  the  bank  is  fully  protected.1  But  sometimes  it  will 
happen  that  money  deposited  to  the  credit  of  one  man  really 
belongs  to  another.2  In  such  case,  after  notice  as  to  who  is 
the  true  owner  of  the  fund,  the  bank  cannot  pay  the  appar- 
ent owner.3  If  the  bank  pays  the  true  owner  of  the  fund  it 
is  always  protected.4  The  rule  is  believed  to  be  settled  that 
a  bank  cannot  dispute  the  title  of  the  depositor,  except  when 
the  credit  is  claimed  by  the  true  owner,  or  when  the  same 
has  been  attached  or  garnished.5  When  the  form  of  the  de- 
posit is  such  that  it  is  notice  of  the  true  ownership  of  the 
fund,  the  bank  is  compelled  to  act  upon  such  notice.6  But 

24  See  §§  188-190, 343  and  344,  post.  4Lockhaven  Bank  v.  Mason,  95 

1  Daly  v.  New  York  Chem.  Co.,  2  Pa.   113;    Brown    v.    Kinsley    Ex. 
Hall,  550;  Fulton  Bank  v.  New  York  Bank,  51  Kan.   359.    True  owner 
Canal  Co.,  4  Paige,  127;  McEwen  v.  may   recover   against    the    bank. 
Davis,  39  Ind.  109;   Davis  v.  Pan-  Starr  v.  York  Nat.  Bank,  55  Pa.  364; 
handle  Nat.  Bank,  29  S.  W.  R.  926.  Smith  v.  Phila.  Nat.  Bank,  1  Walk. 
As  to  presumption  see  Egbert  v.  (Pa.)  318.    It  is  said  that  the  bank 
Payne,  99  Pa.  239 ;  Lockhaven  Nat.  can  pay  the  true  owner  only  when 
Bank  v.  Mason,  95  Pa.  113.  he  has  enforced  his  claim  by  legal 

2  See  cases  following.  process.    Lund  v.  Seamen's  Bank, 

3  Providence    Ass'n   v.    Citizens'  37  Barb.  129.    But  this  is  not  true. 
Sav.  Bank,  19  R.  L  142;  Anderson  See  Farmers'  Bank  v.  King,  57  Pa. 
v.  Market  Nat.  Bank,  1  N.  Y.  Supp.  202;  First  Nat.  Bank  v.  Bache,  71 
136;  Frazier  v.  Erie  Bank,  8  Watts  Pa.  213;  Viets  v.  Union  Nat.  Bank, 
&  S.  18;  Union  Bank  v.  Johnson,  9  101  N.  Y.  563;  Bank  v.  Waddel,  100 
Gill  &  J.  297.    As  to  fact  of  notice  N.  C.  338. 

see  Isom  v.  First  Nat.  Bank,  52  Miss.  6  Citizens'  Bank  v.  Alexander,  120 

102;  Gibson  v.  Nat.  Park  Bank,  98  Pa.  476;  Martin  v.  State  Bank,  7 

N.  Y.  87;  Eagle  Mfg.  Co.  v.  Belcher,  S.  D.  263. 

89  Ga.  218.  «  See  the  next  section. 


214:  BANKS   AND   BANKING.  [§  134. 

the  mere  fact  that  the  word  "  assignee  "  is  appended  to  the 
depositor's  name  in  the  deposit  is  not  notice  to  the  bank  that 
the  credit  belongs  to  any  particular  fund;7  nor  is  a  deposit 
in  the  name  of  the  county  treasurer  by  itself  notice  that  the 
fund  belongs  to  the  county.8  The  whole  test  is  whether 
under  the  circumstances  the  bank  had  reason  to  believe  or 
ought  to  have  known  that  some  one  else  than  the  depositor 
owned  the  fund.9  If  a  mistake  is  made  in  the  name  in  which 
money  is  deposited  in  the  bank,  the  bank  is  bound  to  rectify 
the  mistake,  unless  it  has  changed  its  position  to  its  detri- 
ment by  reason  of  the  fact  of  deposit.10  But  whenever  there 
is  a  dispute  as  to  the  ownership,  the  bank  acts  at  its  peril  in 
attempting  to  settle  the  matter  for  itself.11  Payment  into 
court  under  a  bill  of  interpleader  should  generally  be  re- 
sorted to.  It  often  happens  that  one  man  will  make  a  de- 
posit in  another  man's  name.  But  that  single  fact  does  not 
operate  as  a  transfer  to  the  one  in  whose  name  the  deposit 
is  made.12  Yet,  of  course,  if  it  is  an  actual  transaction  be- 
tween the  two  persons,  or  if  it  be  a  case  of  gift  or  declara- 
tion of  trust,  the  title  is  complete  in  the  third  party  or 
trustee.18  But  the  one  who  made  the  deposit,  upon  tender 
of  the  pass-book  and  proof  of  no  transfer  or  gift,  is  entitled 
to  recover  the  deposit  against  the  bank.14  But  no  careful 
banker  would  be  justified  in  acting  unless  the  third  party 
waives  his  claim,  or  unless  there  is  no  controversy.  Assign- 
ments may  be  made  of  deposits  in  a  bank.  An  oral  assign- 
ment or  declaration  of  trust  of  a  deposit  is  good,15  but  the 

7Laubach  v.  Leibert,  87  Pa.  55.  Caines.  337;  Jameson  v.  Collins,  11 

See  next  section.  Phila,  258. 

8  Eyerman  v.  Second  Nat.  Bank,  12  Branch  v.  Dawson,  36  Minn.  193. 
84  Mo.  408.    See  next  section.  See  Douglas  v.  First  Nat.  Bank,  17 

9  California    Bank    v.    Western  Minn.  35;  Armstrong  v.  National 
Union  TeL  Co.,  52  CaL  280;  White  Bank,  53  Iowa,  752. 

v.  Springfield  Inst,  134  Mass.  232;  13See  case  following  and  Minor  v. 
Mfg.  Nat.  Bank  v.  Barnes,  65  III  69.  Rogers,  40  Conn.  512;  Martin  v. 

10  First  Nat  Bank  v.  Belt,  29  111.    Funk,  75  N.  Y.  134. 

App.  194.  14Brodeneck    v.    Waltham   Sav. 

"  Parker  v.  Hartley,  91  Pa.  465.  It  lust.,  109  Mass.  149. 

has  no  right  to  change  a  deposit  18McEwen  v.  Davis,  39  Ind.  109. 

Winter  v.  Bank  of  New  York,  2  Accompanied  with  change  of  de- 


§  135.]  DEPOSITS.  215 

bank  may  require  a  written  transfer.16  But  a  promise  to 
transfer  is  not  such  an  assignment  as  a  bank  may  act  upon.17 
A  written  assignment  of  a  deposit,  accompanied  by  a  delivery 
of  the  pass-book,  is  evidence  of  a  complete  assignment,18  al- 
though the  deposit  is  made  payable  after  the  depositor's 
decease.19  But  a  mere  delivery  of  the  deposit  slip  is  not  an 
assignment  even  as  to  one  who  discounted  a  check  upon  the 
fact.20  Notice  of  the  assignment  to  the  bank  is  necessary  to 
protect  the  assignee,21  for  a  payment  without  notice  is  pro- 
tected.22 After  a  bank  has  certified  a  check,  so  much  of  the 
deposit  belongs  to  the  bank.  Such  funds  are  therefore  not 
attachable  as  the  depositor's  credit  or  debt  from  the  bank,  yet 
this  self-evident  proposition  is  disputed.23  There  may  be 
liens  upon  the  deposit,  and  the  bank,  if  it  have  notice  thereof, 
must  protect  the  lien,  otherwise  not.24 

§  135.  Trust  or  partnership  funds. —  Where  trust  funds 
are  so  deposited  that  the  bank  is  not  chargeable  with  notice 
that  they  are  trust  funds,  it  is  able  to  give  credit  upon  them 
to  the  depositor,  and  is  not  liable  for  paying  them  out,  as  if 
they  belonged  to  the  depositor.1  Yet  as  soon  as  the  bank 

posit  (Hillnian  v.  Me  Williams,  70  22  Griffin  v.  Rice,  1  Hilt.  184;  Night- 

Cal.  449),  or  without  such  change  ingale  v.  Chaffee,  11  R.  L  609. 

(Risley  v.  Phoenix  Bank,  83  N.  Y.  ™  See  §  150,  post;  but  see  Bills  v. 

318).    See  cases  in  notes  17,  18,  19  Park  Bank,  89  N.  Y.  343.  The  court 

and  20  to  this  section.  mistook  completely  the  nature  of 

18McEwen  v.  Davis,  39  Ind.  109;  the  transaction  of  certifying.    The 

Risley  v.  Phoenix  Bank,  83  N.  Y.  decision  may  be  justified  upon  the 

318;  First  Nat.  Bank  v.  Clark,  134  ground  that  the  certifying  was  a 

N.  Y.  368.    Bank  cannot  pay  de-  mere  fraudulent  device, 

positor  after  notice  of  assignment.  24But    where     an     attachment 

Griffin  v.  Rice,  1  Hilt.  184;  Beck-  reaches  legal  interests  no  lien  is 

with  v.  Union  Bank,  9  N.  Y.  211.  created  by  a  garnishment  of  a  de- 

17  Coffin  v.  Henshaw,  10  Ind.  277.  posit,  where  the  levy  is  upon  the 

18  Foss  v.  Lowell  Sav.  Ass'n,  111  interest  of  the  true  owner,  but  the 
Mass.  285.  deposit  stands  in  another's  name. 

19  Schollmeier  v.  Schoendelen,  78  Greenleaf  v.  Mumford,  50  Barb.  543. 
Iowa,  426.  Yet  this   decision   appears  to  be 

20  First  Nat.  Bank  v.  Clark,  134  wrong  on  the  New  York  statute. 
N.  Y.  368.  See  Gibson  v.  Nat.  Park  Bank,  98 

21  Beckwith  v.  Union  Bank,  9  N.  Y.  N.  Y.  87,  and  note  2  to  §  137,  post. 
211.  i  School  Disk  v.  First  Nat.  Bank, 


216  BANKS   AND   BANKING.  [§  135. 

has  notice  of  the  trust  character  of  the  deposit  it  must  act 
accordingly.2  The  bank  will  be  held  to  have  had  notice 
from  the  words  attached  to  the  name  of  the  depositor  in  the 
account  indicating  a  trust  relation,  such  as  the  word  trustee 3 
or  general  agent.4  So,  where  a  public  officer  deposits  pub- 
lic moneys  in  his  official  name,  the  credit  passes  to  the  suc- 
cessor to  that  officer.5  But  where  moneys  are  deposited  by 
a  public  officer  in  his  individual  name,  the  bank  may  treat 
the  funds  as  those  of  the  individual  so  long  as  it  has  no  notice 
of  its  trust  character.6  If  the  fund  is  deposited  by  an  agent, 
which  fact  is  known  to  the  bank,  the  bank  has  notice  that 
the  fund,  belongs  to  some  one  else  than  the  depositor.7 
Where  the  fact  of  agency  is  disclosed,  the  bank  has  no  right 
to  assume  that  the  agent  has  power  to  do  anything  more 
than  deposit  the  money.8  It  would  be  unsafe  to  rely  upon 
the  agent's  statements  as  to  who  has  authority  to  draw  out 
the  funds.9  But  this  proposition  is  disputed.10  The  law 
ought  to  be  that  whoever  deposits  money  has  the  right  to 
draw  it  out,  where  words  which  merely  describe  his  capacity 

102  Mass.  174.    See  also  Ensman  v.  Swartwout  v.  Mechanics'  Bank,  5 
Delaware  Co.  Bank,  37  Wkly.  Notes  Denio,  555,  are  wrong. 
Cas.  578;  In  re  Plankinton  Bank,  6Long  v.  Emsley,  57  Iowa,  11. 
87    Wis.   378;    Wood    v.  Boylston  ?  Union  Stock  Yards  Bank  v.  Gil- 
Bank,  129  Mass.  358.    But  the  bank  lespie,  137  U.  S.  411 ;  National  Bank 
cannot  apply  the  deposit  to  its  own  v.  Insurance  Co.,  104  U.  S.  54 
previously  existing  claim  so  as  to  8  Honig  v.  Pacific  Bank,  73  Cal. 
cut  off  the  true  owner  unless  it  in  464    Compare   Citizens'   Bank  v. 
some  way  has  a  lien  upon  the  de-  Harrison,  127  Md.  128,  and  §  143, 
posit.     Burtnett  v.  First  Nat.  Bank,  post,  note    12.     See    also   Bristol 
38  Mich.  630;  National  Bank  v.  In-  Knife  Co.  v.  Bank,  41  Conn.  421. 
surance  Co.,  104  U.  S.  54    And  see  9  Honig  v.  Pacific  Bank,  73  Cal. 
note  3  to  §  140,  post.  464;  Bates  v.  First  Nat.  Bank,  89 
2Bundyv.Monticello,84Ind.  119;  N.  Y.  286;  Kerr  v.  People's  Bank, 
Ihl  v.  St.  Joseph  Bank,  26  Mo.  App.  158  Pa.  305. 
129.  10See  Randolph  v.  Allen,  73  Fed. 

3  See  cases  cited  in  last  note.  R.  23,41  U.  S.  App.  117,  semble.  If  the 

4  National  Bank  v.  Insurance  Co.,  money  actually  belongs  to  the  so- 
104  U.  S.  54  called  agent  the  bank  is  protected. 

5  Meridian  Nat.  Bank  v.  Hauser,  Kerr  v.  People's  Bank,  158  Pa.  305. 
145  Ind.  496;  Carman  v.  Franklin  If  principal  authorizes  or  ratifies, 
Bank,  61  Md.  467.    See  also  Smith  the  bank  is  protected.    City  Bank 
v.  Board,  48  N.  J.   Eq.  627.     But  '  v.  Kent,  57  Ga.  28a 

Eyerman  v.  Bank,  84  Mo.  408,  and 


§  135.]  DEPOSITS.  217 

are  appended  to  the  deposit.  Thus,  where  A.  deposits  money 
to  the  credit  of  A.,  "  agent,"  A.'s  check  as  agent  ought  to 
be  good  authority  to  the  bank  to  pay,  unless  the  name  of 
the  principal  is  disclosed  or  ascertained  in  some  way.  If 
the  name  of  the  principal  be  disclosed,  then  only  that  prin- 
cipal ought  to  have  authority  to  authorize  a  payment  to  be 
made  by  the  bank.11  But  where  the  deposit  is  to  the  credit 
of  A.,  "  trustee,"  the  check  of  A.  as  trustee  ought  to  be  suf- 
ficient.12 The  difference  between  the  agent  and  trustee  is 
that  one  holds  the  legal  title  and  the  other  does  not;  one 
has  full  power  to  deal  with  the  property,  the  other  has  only 
a  limited  power,  depending  upon  the  terms  of  the  agency. 
But  where  the  question  is  between  the  bank  and  the  agent, 
there  is  no  question  that  the  bank  has  no  right  to  appro- 
priate the  deposit  which  it  knows  is  made  by  him  as  agent 
to  the  bank's  claim  against  the  agent.13  The  same  is  true 
as  to  trustees.14  So,  in  case  of  partnership  deposits,  the  bank 
cannot  pay  out  the  money  upon  a  private  check  of  one  of 
the  partners 15  unless  there  is  such  a  custom  of  dealing.16 

11  Honig  v.  Pacific  Bank,  73  Cal.  Compare  Laubach  v.  Lubert,  87  Pa. 

464.  However  the  knowledge  comes  55;  Clemmerv.  Drovers'  Nat.  Bank, 

to  the   bank,  either  through  the  157  111.  206. 

agent  or  the  principal,  is  immate-  14  Central  Bank  v.  Life  Ins.  Co., 

rial.    Farmers'  Bank  v.   King,  57  104  U.  S.  54;  United  States  v.  Na- 

Pa.  202;  Lindsey  v.  Lambert  Ass'n,  tional  Bank,  73  Fed.  R.  379;  Clem- 

4  Fed.  R  48.  mer  v.  Drovers'  Nat.  Bank,  157  III. 

12Munnerlyn    v.    Augusta    Sav.  206;  McDowell  v.  Bank  of  Wilming- 

Bank,  88  Ga.  333,  says  the  private  ton,  2  Del.  Ch.  1.    But  bank  bound 

check  of  the  individual  is  sufficient;  by  agreement  to  so  apply.    Sayre 

but  this  case  seems  wrong.    The  v.  Weil,  94  Ala.  466.    See  Hale  v. 

reasoning  is  poor.    The  true  rule  is  Richards,  80  Iowa,   164    In  both 

that  a  check  by  the    trustee  as  these  cases  the  bank  was  held  es- 

trustee  is  good.  Anderson  v. Walker,  topped   as   against  the    depositor 

49  S.  W.  R.  937;  Duckett  v.  Nat.  from  saying  that  an  application  of 

Mechanics'  Bank,  86  Md.  400.    But  a  trust  deposit  already  made  was 

anything  else  is  a  breach  of  trust,  wrongfully  made. 

13  Lawrence  v.  Bank  of  Republic,  15Coote  v.  United  States  Bank,  3 

35  N.  Y.  320,  as  to  an  assignee;  Cranch,  C.  C.  50;  Billings  v.  Meigs, 

Union  Stock  Yards  Bank  v.  Gilles-  53  Barb.  272.    But  if  the  bank  can 

pie,  137  U.  S.  411,  as  to  an  agent,  show  that  the  money  actually  went 

i6  Evans  v.  Evans,  82  Iowa,  492. 


218  BANKS   AND   BANKING.  [§  136. 

The  statement  of  the  partner  as  to  his  authority  will  not 
justify  the  bank  in  acting  upon  it.17  A  deposit  to  the  credit 
of  a  corporate  officer  as  such  belongs  to  the  corporation.18 

§  136.  Liability  of  bank  as  to  trust  funds. —  Trust  funds 
are  those  which  are  credited  in  the  bank  to  some  person  in 
a  trust  capacity,  such  as  agent  or  trustee,  or  funds  that  are 
in  fact  either  actually  or  beneficially  the  property  of  some 
one  else  than  the  ostensible  depositor.  Where  the  bank  has 
no  notice  or  knowledge  of  the  trust,  it  may  pay  out  or  give 
credit  upon  the  apparent  authority.1  Where  it  has  notice 
of  the  trust,  it  cannot  permit  the  funds  to  be  taken  out  of 
the  bank  in  known  violation  of  the  trust,  or  by  a  single 
trustee  where  there  are  two,2  nor  can  the  bank  itself  apply 
the  funds  in  any  way  which  it  knows  is  a  violation  of  the 
trust.  But  if  the  agent  has  authority  to  draw  out  the  money, 
the  bank  is  not  required  to  look  after  a  proper  application 
of  it,3  and  in  such  a  case  the  bank  takes  the  risk  as  to  the 
agent's  authority.4  In  the  case  of  trust  funds  the  bank  as- 
sumes no  responsibility,  unless  in  some  way  it  is  put  upon 
notice  of  a  violation  of  the  trust.8  By  accepting  an  account 

for  partnership  purposes,  the  form  Commercial  Bank  v.  Jones,  18  Tex. 

of  the  check  becomes  immaterial  811.  See  also  Hatch  v.  Fourth  Nat. 

Coote  v.  United  States  Bank,  supra.  Bank,  147  N.  Y.  184;  United  States 

i7  Coote  v.  United  States  Bank,  3  v.  National  Bank,  73  Fed.  R  379; 

Cranch,  C.  C.  50.  Bank  of  Greensboro  v.  Clapp,  76 

18Lindsey  v.  Lambert  Ass'n,  4  N.  C.  482.  It  makes  no  difference 

Fed.  R  48.  that  the  funds  of  the  principal  are 

1  Ensman  v.  Delaware  Co.  Nat.  mingled  with  the  agent's  funds. 
Bank,  37  Wkly.  Notes  Cas.  518;  In  Van  Alen  v.  American  Nat.  Bank, 
re  Plankinton  Bank,  87  Wis.  378;  52  N.  Y.  1;  but  contra,  Beatty  v. 
Long  v.  Emsley,  57  Iowa,  11;  Smith  McLeod,  11  La.  Ann.  76. 

v.  Des  Moines  Nat.  Bank,  78  N.  W.  a  Randolph  v.  Allen,  73  Fed.  R 

R  238.    But  it  is  held  that  where  23,  41  U.  S.  App.  117. 

the  bank  claims  the  fund  for  itself,  4Honig  v.  Pacific  Bank,  73  Cal. 

it  is  accountable  to  the  principal  464;  Robinson  v.  Chem.  Nat.  Bank, 

regardless  of  notice.    Cady  v.  South  86  N.  Y.  404 

Omaha   Nat  Bank,  49   Neb.   125.  ^Loring  v.  Brodie,  134  Mass.  453. 

This  is  the  true  rule  unless  the  bank  But  if  administrator  dies  with  a  de- 

by  lending  credit  has  become   a  posit,  bank  cannot  pay  to  adminis- 

bonaflde  holder.    See  note  13,  infra,  trator  de  bonis  non  of  intestate. 

2  Swift  v.  Williams,  68  Md.  236;  Slaymaker  v.  Farmers'  Bank,  103 


§  136.]  DEPOSITS. 

in  the  name  of  a  trustee,  it  does  not  undertake  any  super- 
vision of  the  trust.6  But  if  the  bank  has  reason  to  think  or 
has  notice  that  the  funds  do  not  belong  to  the  person  in  whose 
name  they  are  standing,  it  is  sometimes  placed  in  a  position 
of  much  difficulty.  Instances  sometimes  occur  as  between 
husband  and  wife.  If  the  husband  deposits  money  for  both 
himself  and  his  wife  to  draw  upon,  the  pass-book  being  is- 
sued to  the  husband,  the  bank  may  safely  assume  the  deposit 
to  belong  to  the  husband.7  But  if  the  deposit  is  made  in 
the  name  of  the  wife  as  her  money,  the  bank  cannot  permit 
the  husband  to  check  it  out  on  any  statements  of  his.8  Ex- 
press authority  or  ratification  by  the  wife  must  appear.9 
Yet,  if  the  money  really  belonged  to  the  husband  and  was 
not  a  gift  to  the  wife,10  the  bank  would  be  protected  in  pay- 
ing to  the  order  of  the  true  owner  as  in  all  other  cases.11  Even 
though  the  bank  is  informed  that  the  money  belongs  to  the 
husband  when  it  is  deposited  in  the  husband's  name,  the 
wife  can  reclaim  it  if  the  bank  has  suffered  no  injury,  but 
merely  seeks  to  apply  it  on  the  husband's  debt.12  The  same 
is  true  of  all  other  cases  where  funds  are  in  the  bank  as  the 
property  of  one  person,  but  in  fact  belong  to  another.  So 
long  as  the  bank  has  not  paid  them  out  without  notice  or 
lent  credit  or  suffered  a  detriment,  but  itself  seeks  to  hold 
the  funds  as  belonging  to  the  ostensible  depositor,  it  will 
not  be  permitted  to  do  so.13  Where  money  is  deposited  to 

Pa.  616.  If  the  bank  permits  the  496;  Hammel  v.  First  Nat.  Bank,  2 
trust  fund  to  be  credited  to  the  Colo.  App.  571;  Scranton  v.  Farm- 
trustee  personally,  it  is  accountable  ers'  Bank,  24  N.  Y.  434;  Gate  City 
to  the  principal,  for  it  assists  in  the  Ass'n  v.  National  Bank,  126  Mo.  82. 
breach  of  trust.  Farmers'  Loan  Co.  7  Brown  v.  Brown,  23  Barb.  565. 
v.  Fidelity  Trust  Co.,  86  Fed.  R  541.  8  Bates  v.  First  Nat.  Bank,  23  Hun, 

6  Evans  v.  Evans,  82  Iowa,  492;  420,  89  N.  Y.  286. 

Eyrich  v.  Capital  State  Bank,  67  9  Case  last  cited. 

Miss.  60.    The  difficulty  always  lies  10  People  v.  State  Bank,  36  Hun, 

in  determining  what  puts  the  bank  607,  102  N.  Y.  740. 

upon  inquiry  as  to  a  misappropria-  H  Kerr  v.  People's  Bank,  158  Pa. 

tion.    As  to  agent,  see  Union  Stock  305.    But  see  German  Bank  v.  Him- 

Yards  Bank  v.  Gillespie,  137  U.  S.  stedt,  42  Ark.  62. 

411;  National  Bank  v.  Insurance  12  Citizens'  Bank  v.  Harrison,  127 

Co.,  104  U.  S.  54.    As  to  trustee,  see  Ind.  128. 

Howard  v.  Deposit  Bank,  80  Ky.  1S  Armstrong  v.  National  Bank,  53- 


220  BANKS   AND   BANKING.  [§  137. 

pay  to  a  certain  person,  if  the  person  is  not  interested  in  the 
deposit  and  has  not  ordered  or  procured  or  agreed  that  the 
deposit  should  be  so  made,14  the  deposit  may  be  withdrawn 
at  any  time  before  notice  to  the  person  for  whose  use  the 
deposit  is  made  or  a  promise  to  pay  that  person.15  In  case 
of  corporate  funds  deposited  in  the  bank,16  the  bank  cannot 
transfer  them  to  the  individual  credit  of  an  officer;17  but  it 
was  said  in  one  case  that  the  check  of  the  corporation  trans- 
ferred by  the  officer  to  himself  would  not  be  notice  of  a 
misappropriation  by  the  officer.18  But  government  deposits 
known  to  the  bank  to  be  government  deposits  cannot  be 
permitted  by  the  bank  to  be  drawn  out  on  private  check.19 
Some  further  cases  will  be  noticed  under  the  section  in  re- 
gard to  a  bank's  application  of  deposits  to  pay  off  its  own 
claims.20  There  are  other  cases  where  the  bank  actually 
acts  as  a  trustee.21 

§  137.  Attachment  and  garnishment  of  deposits. —  A 

levy  of  a  writ  of  attachment  properly  made,  or  a  garnish- 
ment under  a  writ  of  attachment,  or  an  execution  upon  a 

Iowa,  752;  Union  Stock  Yards  Nat.  16  Lindsey   v.    Lambert   Ass'n,  4 

Bank  v.  Moore,  79  Fed.  R.  705;  An-  Fed.  R.  48. 

derson  v.  Market  Nat.  Bank,  1  N.  Y.  17  Cushman  v.  Illinois  Starch  Co., 

Supp.  136.  Contra,  Boettcher  v.  Colo-  79  HI.  281. 

rado  Nat.  Bank,  15  Colo.  16,  which  is  18  Gate    City    Ass'n   v.    National 

wrongly  decided  because  the  bank  Bank,   126    Mo.  82.    This   case   is 

lost   nothing;    Wood    v.   Boylston  wrong,  because  the  fact  would  be 

Nat  Bank,  129  Mass.  358,  which  is  notice,  unless  the    check  was  of 

rightly  decided  because  the  bank  such  a    character  that  the  bank 

lost  its  debt.    See  further,  Burtnett  could  assume  that  the  check  was 

v.  First  Nat.  Bank,  38  Mich.  430;  transferred  properly  by  the  officer 

Johnson  v.  Payne  Bank,  56  Mo.  App.  to  himself.    The  court  in  its  decis- 

257.    But  this  rule  does  not  apply  ion  does  not  see  the  point  at  all, 

to  a  trust  completed.  nor  does  the  annotator  of  47  Am. 

14  Mayer  v.  Chattanooga  Bank,  51  St.  R.  63a 

Ga.  325.  M  United  States  v.  National  Bank, 

^  Brockmeyer  v.  Washington  Nat.  73  Fed.  R.  379. 

Ban  k,  40  Kan.  744 ;  Trustees  v.  Pace,  20  See  §  1 40,  post . 

15  Ga.  486;  Mayer  v.  Chattanooga  21See§341,^>os£.     Under  such  cir- 

Nat.  Bank,  51  Ga.  325,  citing  four  cumstances  it  is  chargeable  with 

English  cases.  all  the  duties  and  liabilities  of  a 

trustee. 


§  137.]  DEPOSITS.  221 

deposit,  creates  a  lien  upon  the  property  of  .the  debtor  in  the 
writ  or  the  execution,  which  is  always  considered  to  be  a 
legal  interest.  The  property  sought  to  be  reached  may  be 
either  a  legal  interest  in  the  chose  in  action,  the  deposit,  or 
it  may  be  merely  an  equitable  one.  Thus,  if  the  deposit 
stands  in  the  debtor's  name,  the  debtor  has  a  legal  interest. 
If  it  stands  in  the  name  of  some  other  person,  but  really  be- 
longs to  the  debtor,  the  latter  has  an  equitable  interest. 
Legal  interests  can  generally  be  reached  in  the  method  fixed 
by  the  statutes  of  the  particular  jurisdiction.  Sometimes 
equitable  interests  may  be  reached,  also,  by  legal  process. 
Thus  in  Massachusetts  a  fund  in  the  name  of  a  guardian 
may  be  reached  by  trustee  process  against  the  beneficiary,1 
and  in  New  York  a  deposit  in  the  name  of  another  is  reached 
by  an  attachment  against  the  true  owner.2  Whenever  equi- 
table interests  cannot  be  reached  by  process  at  law  they  can 
generally  be  reached  by  a  creditor's  bill.3  The  bank  is  al- 
ways a  party  to  such  an  action,  and  the  suit  amounts  to  a 
lispendens,  therefore,  as  against  the  bank;  but  generally  an 
injunction  should  be  issued.4  In  Pennsylvania  that  extraor- 
dinary thing  called  a  scire  facias  bill  of  discovery  seems 
to  create  a  lien  upon  subsequent  deposits.8  But  assuming 
that  the  proceeding,  whatever  it  may  be,  is  sufficient  to  notify 
the  bank,  the  bank  must  respect  the  lien,  or  the  claim  amount- 

1  Simmons  v.  Almy,  100  Mass.  239.    U.  S.  296;  Rev.  Stat.  of  111.,  ch.  22, 

2  Gibson  v.  National  Park  Bank,    sec.  49. 

98  N.  Y.  87.  Contra  in  Kansas  (Scott  4  Payments  made  in  violation  of 

v.  Smith,  2  Kan.  438)  as  to  a  mere  an  injunction  are  not  good  as  to  th& 

levy  of  execution  and  delivery  of  bank.    Springfield    Marine  Co.  v. 

the  deposit  by  the  bank.    But  see,  Peck,  102  111.  265.    But  a  state  court 

as  to  New  York  rule,  Bills  v.  Park  cannot  issue  an  injunction  against 

Bank,  89  N.  Y.  343;  O'Connor  v.  Me-  a  national  bank  until  final  judg- 

chanics'  Bank,  54  Hun,  272,  reversed  ment,  while  a  United  States  court 

in  124  N.  Y.  324;  and  §  134,  ante,  can.    See  §  352,  post. 

note  23.  &  Schram  v.  Cartwright,  16  Pa.  Co» 

3  Illinois  is  an  exception  if  the  Ct.  R.  618.    The  early  error  of  Penn- 
moneys  are  trust  moneys  for  a  bene-  sylvania  in  refusing  its  courts  chan- 
ficiary,  where  the  trust  has  been  eery  jurisdiction  has  produced  some- 
created  by  some  one  other  than  the  singular  results. 

beneficiary.    Potter  v.  Couch,  141 


222  BANKS   AND    BANKING.  [§  137. 

ing  to  a  lien,  from  the  time  it  has  notice  thereof.6  The 
garnishment  only  applies  to  the  amount  actually  due  at  the 
time,7  whatever  be  the  condition  of  the  account  as  shown 
by  the  books  of  the  bank,  for  payments  made  before  notice, 
although  not  entered  upon  the  books,  afe  good.8  The  bank's 
prior  lien  is  protected,9  and  the  bank,  if  it  has  notice  of  the 
claim  of  some  one  else  than  the  depositor,  cannot  pay  the 
deposit  to' the  depositor's  garnishing  creditor.10  But  it  seems 
to  be  held  that  money  deposited  to  pay  a  check  or  other 
claim  can  be  garnished  as  the  property  of  the  depositor  until 
paid  or  promised  to  be  paid  to  the  third  party  called  the 
"usee.". ll  The  true  owner,  whether  indicated  in  the  de- 
posit12 or  not,13  is  entitled  to  the  deposit  as  against  the  de- 
positor's garnishing  creditor.  But  even  if  the  fund  is  depos- 
ited to  the  credit  of  an  agent,  if  no  third  party  claims  the 
fund  the  garnishment  is  good.14  The  trustee  must  protect  the 
rights  of  his  beneficiary  as  well  as  his  own.15  If  the  bank  is 
adjudged  to  pay  over  the  amount  after  notice  to  the  bene- 
ficiary, the  payment  will  be  a  discharge  as  to  the  amount 
paid.16  The  bank  must  exercise  the  greatest  care  in  regard 
to  the  garnishment,  because  a  misnomer,  even  as  to  the 
middle  initial,  would  exonerate  the  bank  for  not  regarding 
the  garnishment,  if  it  had  no  other  knowledge  on  the  sub- 

6 Merchants' Bank  v.Meyer,  56  Ark.  1J  Mayer   v.   Chattahoochie    Nat. 

499;  Exchange  Bank  v.  Gulick,  24  Bank,  51  Ga.  325. 

Kan.  359.    All  the  cases  cited  to  this  la  Cotton  Mills  Co.   v.  Cooper,  93 

section  recognize  the  principle.  But  Iowa,  054.    The  deposit  was  to  the 

it  is  held  that  an  assignment  of  the  credit  of  a  person  as  agent, 

deposit  before  garnishment  gives  13Skilman  v.  Miller,  7  Bush,  428. 

the  assignee  the  better  title.    See  14  Proctor  v.  Greene,  14  R.  L  42. 

§  362,  post,  notes  8-10.  15  Randall  v.  Way,  111  Mass.  508. 

7  Johnson  v.  Brant,  38  Kan.  754.  «  Randall  v.  Way,  111  Mass.  506; 

8  Foster  v.  Swasey,  3  Woodb.  &  Leonard  v.  New  Bedford  Bank,  116 
M.  364  Mass.  210;  Woods  v.  Milford  Sav. 

9  Rice  v.  Third  Nat.  Bank,  97  Mich,  Inst.,  58  N.  H.  184.    But  if  the  bank 
414.  was  negligent  in  defending  the  ao- 

10  Adams  Co.  v.  National  Bank,  9    tion,  or  if  it  was  guilty  of  collusion, 
N.  Y.  Supp.  75.  it  will  not  be  a  defense.    See  §  363, 

post,  note  1,  as  to  savings  banks. 


§  138.]  DEPOSITS.  223 

ject.17  The  amendment  of  the  writ  would  not  cover  inter- 
venient  payments.18  This  matter  is  of  special  importance 
where  the  holder  of  a  check  can  sue  the  bank  after  presenta- 
tion, while  funds  to  meet  the  check  were  in  the  bank.  The 
fact  that  checks  are  outstanding  is  no  defense  against  the 
garnishment  of  the  deposit,19  unless  the  checks  have  been 
certified  or  accepted,20  except  in  those  states  which  permit 
the  holder  to  sue  the  bank,  and  in  that  case  checks  outstand- 
ing would  be  a  defense  only  after  the  checks  had  been  pre- 
sented.21 

§  138.  Death  of  depositor. — "We  have  already  examined 
the  cases  as  to  ownership  of  a  deposit  caused  by  a  voluntary 
transfer  or  assignment,  and  those  caused  by  a  transfer  by 
act  of  the  law  upon  garnishment  or  other  legal  proceeding. 
We  come  now  to  the  transfer  that  takes  place  upon  the 
death  of  the  depositor.  If  the  depositor  has  made  a  valid 
assignment  at  law  of  the  whole  deposit  in  his  life-time,1  al- 
though the  time  of  the  assignee's  enjoyment  was  postponed 
until  the  death  of  the  depositor,2  the  deposit  belongs  to  the 
assignee  and  not  to  the  personal  representative  of  the  de- 
ceased depositor.3  But  where  the  depositor  has  died  owning 
the  deposit,  the  property  of  the  deceased  devolves,  as  to  the 
personalty,  upon  the  personal  representative  of  the  deceased. 

17  German  Nat.  Bank  v.  National       19This  follows  from  the  nature  of 
State  Bank,  3  Colo.  App.  17,  and    the  check. 

cases  cited  therein;  Terry  v.  Sisson,  2°  Certifying  or  accepting  a  check 

125  Mass.  560.    In  the  former  case  makes  the  bank  the  debtor  and  re- 

the  court  retails  some  interesting  leases  the  drawer;  but  see  note  23, 

morsels  of  knowledge.    If  it  could  §  134,  ante. 

have  referred  to  the  report  of  the  21  The  levy  gives  a  lien  which  is 
argument  of  Kinnersley  v.  Knott,  legal,  not  equitable,  which  would 
7  C.  B.  980,  found  at  9  Am.  Law  prevail  over  any  equitable  assign- 
Rev.  176,  copied  from  the  Albany  ment.  See  the  next  section. 
Law  Journal,  it  might  have  quoted  l  Risley  v.  Phoenix  Bank,  83  N.  Y. 
one  of  the  most  amusing  passages  318;  Foss  v.  Lowell  Sav.  Ass'n,  111 
in  all  legal  literature.  Ma&s.  285. 

18  German  Nat.  Bank  v.  National  2Schollmeier  v.  Schoendelen,  78 
State  Bank,  supra;  Terry  v.  Sisson,  Iowa,  426. 

supra.  s  Gammond  v.  Bowery  Sav.  Bank, 

15  Daly,  483. 


224  BANKS   AND   BANKING.  [§  138. 

The  personalty  devolves  upon  the  executor  by  virtue  of  the 
will,  upon  the  administrator  by  virtue  of  the  law.  The 
death  is  equivalent  to  an  assignment  by  operation  of  law. 
Even  a  foreign  administrator  is  entitled  to  the  personalty.4 
It  follows  as  a  matter  of  necessity  that  all  unaccepted 
checks  outstanding  are  revoked  by  the  death  of  the  de- 
positor,5 except  that  the  bank  will  be  protected  as  to  pay- 
ments made  before  notice  of  the  death,6  just  as  it  will  be 
protected  as  to  payments  made  before  notice  of  the  assign- 
ment.7 The  word  "  revoked  "  hardly  expresses  the  fact ;  the 
check  is  not  revoked,  but  as  an  order  to  pay  it  is  not  bind- 
ing upon  the  bank  because  the  depositor  has  no  longer  any 
funds;  the  deposit  belongs  to  the  personal  representative. 
The  idea,  therefore,  that  the  death  is  the  revocation  of  a 
power  given  by  the  check  is  a  total  mistake.8  The  bank,  of 
course,  may  pay  the  check  or  may  accept  it  after  the  draw- 
er's death,  just  as  the  drawee  of  a  bill  of  exchange  may  ac- 
cept or  pay  it  after  the  drawer's  death.  But  the  bank,  having 
paid,  could  not  charge  it  against  the  depositor's  account. 
Yet  in  equity  the  bank  ought  to  be  subrogated  to  the  claim  of 
the  payee  of  the  check  against  the  drawer.  But  this  would  not 
be  a  right  arising  out  of  payment  of  the  check  as  a  check,  but 
rather  an  equitable  assignment  of  the  payee's  original  claim. 

4  Schluter  v.  Bowery  Sav.  Bank,  check    is   to  the    payee  a  power 
117  N.  Y.  125.   But  he  could  not  sue  coupled  with  an  interest  and  there- 
except  by  statute.  fore    irrevocabla    This    view    be- 

5  Nat.   Coin.   Bank  v.  Miller,  77  trays  a  confusion  between  owner- 
Ala.  168;  Fordred  v.  Seamen's  Sav.  ship  of  the  check  itself  and  own- 
Bank,  10  Abb.  Pr.  (N.  S.)  435;  Sim-  ership  of  the  credit  in  the  bank, 
mons  v.   Cincinnati  Sav.  Soc.,  31  The  two  things  are  wholly  distinct. 
Ohio  St.  457.    Even  if  it  be  drawn  It  is  enough  to  say  that  all  the  ad- 
to  pay  funeral  expenses  by  person  judicated  law  is  contrary  to  this 
in  extremis.    Second  Nat.  Bank  v.  theory.    The  check  may  be  an  au- 
Williams,  13  Mich.  282.  thority  to  receive  the  money,  but 

"Brennan  v.  Manuf.  Nat.  Bank,  it  gives  no  power  over  or  owner- 

62  Mich.  343,  dictum.    See  Tate  v.  ship  in  the  deposit.    See  Gardner 

Hilbert,  2  Ves.  Jr.  111.  v.  First  Nat.  Bank,  10  Mont.  149, 

7  Laclede  Bank  v.   Schuler,   120  where  a  power  to  a  bank  to  apply 
U.  S.  511.  deposit    was    held    not   a    power 

8  Mr.  Daniel  in  3  Va.  Law  Jour,  coupled  with  an  interest. 
823,  puts  forward  the  view  that  a 


§  138.]  DEPOSITS.  225 

So  far  the  law  seems  reasonably  certain,  wherever  the  rule 
prevails  that  the  holder  of  a  check  has  no  claim  upon  the  bank 
until  acceptance  of  the  check  by  the  bank.  But  in  a  few  states 
the  rule  prevails  that  the  holder  of  a  check  gains  a  right  of 
action  at  law  against  the  bank  if  it  refuses  payment  of  a 
check  when  it  has  sufficient  funds  credited  to  the  drawer.9 
The  rule,  however,  is  fixed  in  these  last  named  states,  that 
if  the  bank  has  not  funds  when  the  check  is  presented,  even 
if  it  had  funds  when  the  check  was  drawn,  no  liability  arises 
against  the  bank.10  It  is  the  presentment  of  the  check  that 
is  the  inception  of  the  holder's  right  against  the  bank.11  If 
this  be  true,  it  follows  as  a  matter  of  necessity  that,  in 
the  states  spoken  of,  the  death  of  the  drawer  compels  the 
bank  to  refuse  payment  of  any  check  of  the  drawer  which 
is  for  the  first  time  presented  after  the  death  of  the  drawer, 
or  rather  notice  thereof,12  because  the  drawer  ceased  to  own 
the  deposit,  and  ceased,  therefore,  to  have  funds  to  his  credit 
as  soon  as  he  died.  His  death  ipso  facto  transferred  the 
deposit  to  his  personal  representative,  who,  whether  ap- 
pointed by  will  or  by  the  court,  takes  title  of  the  date  of 
the  death.  This  result  also  follows  from  the  proposition 
that  since  presentment  is  necessary  to  fix  any  liability  upon 
the  bank,  a  check  may  be  revoked  under  the  Illinois  rule  at 
any  time  before  presentment.13  If  it  be  kept  in  mind  that 

9  Illinois,  Kentucky,    Nebraska,  Jones,  137  111.   634,  643,  expressly 
South  Carolina,  and  perhaps  Texas,  says  that  the  assignment  does  not 
hold  the  rule.    Missouri  and  Iowa  take  place  until  presentment.    So 
have  repudiated  it.    Louisiana  has  Daniel,  Neg.   Inst.  (4th    ed.),  sec. 
decisions  both  ways.    See  §  147,  1639. 

post  12The  bank  has  the  right  to  ap- 

10  Bank  of  Antigo  v.  Union  Trust  propriate  the  deposit  on  its  own 
Co.,  149  111.  343.    It  is  rather  singu-  claim  4  before    presentment.     Na- 
lar  that  Mr.  Justice  Shope  in  this  tional  Bank  v.  Blumensweig,  46  111. 
case  should  have  written  himself  App.  297. 

down  as  believing  that  the  payee  13  Tramell  v.  Farmers'  Nat.  Bank, 

is   the    drawee   of  a  check.    The  11  Ky.  Law  R.  900.    Except  as  to  a 

bank  is  the  drawee.  bona  fide  holder,  which  means  one 

11  Shaffner  v.  Edgerton,  13  Bradw.  who  took  it  from  the  payee.   Union 
132;  Lester  v.  Given,  8  Bush,  357.  Nat.  Bank  v.  Oceana  Co.  Bank,  80 
The  case   of  Met.  Nat.    Bank   v.  111.212;  Marine  Co.  v.  Stanford,  28 

15 


226  BANKS   AND    BANKING.  [§  138. 

the  question  is  between  the  bank  and  the  holder  of  the 
check,  no  court  ought  to  experience  any  difficulty  in  reach- 
ing this  conclusion.  It  may  be  urged  that  it  is  held  that  a 
check  is  a  partial  assignment;14  and  if  equal  to  the  deposit, 
a  total  assignment  of  the  deposit ; 15  and  that  as  between  the 
drawer  and  the  payee  it  transfers  so  much  of  the  fund,16 
which  amount  passes  to  each  successive  holder  of  the  check.17 
But  it  is  apparent  that  the  courts  do  not  use  this  phrase  in 
its  proper  sense ;  (1)  because  an  equitable  assignment  must 
have,  like  every  other  contract  enforced  in  equity,  a  valu- 
able consideration.  There  is  no  consideration  passing  from 
the  drawer  to  the  payee,  for  the  reason  that,  unless  the 
check  is  expressly  taken  as  payment,  it  pays  nothing.18  The 
original  claim  remains,  and  can  be  sued  upon  even  after  pre- 
sentment of  the  check.19  It  is  not  payment  until  it  is  itself 
paid.20  If  the  check  is  purchased  by  or  discounted  to  a  third 
party  for  value,  he  may  become  a  ~bona  fide  holder  as  against 
the  drawer.  The  check  is  not  an  equitable  assignment,  (2)  be- 
cause, until  it  is  presented,  it  may  be  revoked,21  which,  of 
course,  would  not  be  possible  if  the  check  were  even  an 
equitable  assignment.  It  is  not  an  equitable  assignment 
proper,  (3)  because  a  bank  in  these  states  with  the  abnormal 

HL    168;   Bickford   v.    First   Nat.  have   known    of   this   case,  if  he 

Bank,  42  III  238;  Brown  v.  Leckie,  edited  that  edition  personally. 

43  III  497.  *°  Brown  v.  Leckie,  43  III  497,  501, 

14  Munn  v.  Birch,  25  III  35.  recognizes  this  rule,  and  says  the 

15  Gardner  v.  Nat.  City  Bank,  39  checks  are  not  payment  but  the 
Ohio  St.  600.  means     of     payment.    That     the 

16  Bank  of  Antigo  v.  Union  Trust  holder  is  the  agent  of  the  drawer 
Co.,   149  I1L  343,  and  cases  cited  which  precludes  him  from  having 
therein.  the  absolute  title.    See  the  place 

17  Merchants'  Nat.  Bank  v.  Ritz-  last  cited.    This  is  said  even  as  to 
inger,  20  Bradw.  27.  certified  checks,  and  the  same  rule 

is  Thompson  v.  Bank  of  Brit.  No.  is  held  as  to  certificates  of  deposit. 

Am.,  82  N.  Y.  8.    Numerous  cases  Leake  v.  Brown,  43  111.  372. 

could  be  cited  to  this  proposition.  21  Tramell  v.  Farmers'  Nat.  Bank, 

19  Ridgeley  Bank  v.  Patton,  109  III  11  Ky.  Law  R.  900;  and  see  note  13, 
479.  Daniel,  Neg.  Inst.  (4th  ed.),  a nte,  to  this  section.  Insolvency  re- 
sec.  1639,  says  this,  of  course,  would  vokes  it  before  presentation.  Na- 
not  be  allowed.  He  seems  not  to  tional  Bank  v.  City  Nat  Bank,  68 

III  39a 


§  138.]  DEPOSITS.  227 

theory  of  a  check  is  not  compelled  to  pay  part  of  a  check ; M 
but  if  the  check  were  an  actual  assignment  when  drawn,  it 
would  be  good  to  the  extent  of  the  deposit.  Finally,  pre- 
sentment and  acceptance  by  the  bank  of  the  check  are  nec- 
essary under  this  rule  to  release  the  drawer;23  but  if  the 
check  were  an  actual  assignment,  the  drawer  would  have 
paid  the  claim  against  him  to  the  amount  of  the  check,  and 
he  would  be  liable  only  upon  his  implied  representation  that 
he  had  funds  in  the  bank  to  the  amount  of  the  check.  The 
failure  of  the  bank  to  pay  could  not  affect  him  if  the  bank 
had  funds.  Therefore  it  is  only  as  to  one  who  has  taken  as 
a  bona  fide  holder  the  check  from  the  payee  that  it  can  be 
said,  under  these  decisions,  that  the  check  is  an  assignment 
before  presentation.  Yet,  even  if  the  check  were  conceded 
to  be  an  assignment  as  between  the  drawer  and  payee,  it 
confers  no  legal  title,  unless  it  is  for  the  exact  amount  of 
the  deposit.  Being  a  partial  assignment  it  is  merely  equi- 
table.24 But  to  the  executor  or  administrator  a  legal  title 
passes  by  the  death.  As  representing  the  creditors  of  the 
deceased,  the  personal  representative  has  an  equity  equal  to 
the  equity  of  any  other  unsecured  creditor,  which  a  check- 
holder  is  until  presentation  of  the  check.  So  the  equities 
being'  equal,  the  legal  title  will  prevail,  and  that  is  in  the 
personal  representative.  He  did  not  become  personal  rep- 
resentative until  the  death,  and  hence  as  personal  repre- 
sentative could  have  received  no  notice  prior  to  the  very 
moment  that  he  got  the  legal  title.  The  same  result  would 
follow  if  the  executor  or  administrator  and  the  check-holder 

22  Coates  v.  Preston,  105  111.  470.  which    held  the  check  to  be  an 
It  does  not  pass  title  to  any  part  equitable  assignment.   If  the  check 
of  the  deposit.    Pabst  Brew.  Co.  v.  was  an  order  as  an  equitable  as- 
Reeves,  42  III  App.  154  signment,  it  conferred    no    right 

23  Metrop.  Bank  v.  Jones,  137  111.  until  presented.    Such  is  the  law 
634;  Ridgeley  Bank  v.  Patton,  109  as  to  every  other  assignment,  and 
III  479.  nowhere  is  the  law  more  clearly 

24  Miller    v.   Bledsoe,  2    III   530;  held  than  in  Illinois.    See  Moore 
Stone  v.  Pratt,  25  111.  25.    This  last  v.  Gravelot,  3  Bradw.  442;  Creigh- 
case  was  decided  ten  pages  away  ton  v.  Hyde  Park,  6  Bradw.  272. 
from    Munn   v.   Birch,  25  111.   35, 


228 


BANKS   AND   BANKING. 


[§  13&. 


are  considered  as  having  orders  on  the  fund.  The  order 
first  communicated  to  the  holder  of  the  fund  would  confer, 
as  against  the  bank,  the  better  right.25  We  may  conclude, 
then,  that  in  these  states  the  check  must  be  presented  before 
notice  of  the  other  assignment  by  death  comes  to  the  bank. 
No  bank,  therefore,  in  these  states  which  we  are  consider- 
ing, would  be  justified  in  paying  a  check  not  presented  until 
after  notice  of  the  depositor's  death  unless,  it  may  be  in  Illi- 
nois, to  a  lonafide  transf  error.28  The  rule  is  a  just  and  sound 
one.  It  can  injure  no  one.  If  the  check-holder  has  an  hon- 
est claim  he  will  obtain  it  by  presenting  it  to  the  personal 
representative.  If  his  claim  is  not  honest  he  ought  not  to 
obtain  it  merely  because  he  has  a  check.  If  the  estate  is 
solvent,  the  claim  will  be  paid  in  full,  and  the  check  could 
be  used  as  evidence  of  an  admission.  If  it  is  not  solvent  the 
check-holder  ought  not  to  obtain  a  preference.  In  all  other 
states,  and  in  cases  subject  to  the  jurisdiction  of  the  United 


28Laclede  Bank  v.  Schuler,  120 
U.  S.  511,and  the  cases  cited  therein. 
Compare  Moore  v.  Gravelot,  3 
Bradw.  443;  Creighton  v.  Hyde 
Park,  6  Bradw.  272,  which  recog- 
nize this  rule  as  to  orders  upon  a 
fund,  and  those  cases  seem  to  be 
undisputed  authority  in  Illinois. 

26  The  law  unquestionably  is  in 
Illinois  that  as  against  a  bona  fide 
holder  of  a  check  the  bank  cannot 
refuse  payment  of  the  check.  Nib- 
lack  v.  Park  Nat.  Bank,  169  111.  517, 
and  the  cases  cited  in  note  13, 
supra.  This  is  the  most  astonish- 
ing result  of  this  weird  rule  that 
the  holder  can  sue  the  bank.  Even 
if  the  check  were  a  bill  of  ex- 
change before  acceptance,  a  bona 
fide  holder  has  no  rights  against 
the  drawee.  Yet  here  is  the  Illi- 
nois court  reverting  to  the  rule  that 
a  check  is  an  assignment,  holding 
that  as  against  the  bank  the  check 


is  an  assignment  before  presenta- 
tion, while  it  has  held  over  and 
over  again  that  it  is  not  an  assign- 
ment until  it  has  been  presented, 
and  not  even  then  if  the  depositor 
has  not  the  full  amount  of  the 
check.  Then  it  is  held  that  there 
is  no  duty  upon  the  bank  to  re- 
serve from  future  payments  enough 
to  pay  an  unpresented  check. 
Gilliam  v.  Merchants'  Nat.  Bank, 
70  III  App.  593.  Then  the  court 
reverts  to  its  former  idea  of  as- 
signment by  the  giving  of  the 
check,  and  holds  that  the  check 
cannot  be  countermanded  before 
presentation  against  a  bona  fide 
holder,  so  that  the  bank  can  refuse 
to  pay.  Gage  Hotel  Co.  v.  Union 
Nat  Bank,  171 11L  531.  These  cases 
are  another  instance  of  the  great 
confusion  caused  by  this  rule.  See 
for  further  illustrations  note  30  to 
§  147,  and  note  23  to  §  140. 


§  139.]  DEPOSITS.  229 

States  courts,  which  in  a  matter  of  general  commercial  law 
would  not  follow  the  state  decisions,  a  bank  would  not  be 
justified  in  paying,  after  notice  of  the  depositor's  death,  any 
check  but  a  certified  or  accepted  one.  For  if  the  bank  in 
either  case  pays  the  check,  the  personal  representative  may, 
after  demand,  sue  the  bank.  At  law  the  bank  would  have  no 
defense,  although  in  equity  it  would,  no  doubt,  be  subrogated 
to  the  payee's  original  claim. 

§  139.  Insolvency  of  depositor. —  The  effect  of  an  assign- 
ment for  the  benefit  of  creditors  by  the  depositor  is  to  trans- 
fer the  deposit  as  any  assignment  would  transfer  it.  The 
right  of  the  bank  to  appropriate  the  depositor's  account  will 
be  considered  in  the  next  section.  Whatever  the  bank  pays 
before  notice  of  the  assignment  will  be,  of  course,  a  good 
payment.1  Where  statutory  systems  of  insolvency  prevail 
that  would  invalidate  preferences  secured  prior  to  an  appli- 
cation in  bankruptcy,  it  would  appear  to  be  a  reasonable 
rule  that  the  bank's  payments  of  checks  would  be  good  up 
to  the  time  of  receiving  notice  of  the  application  in  bank- 
ruptcy,2 unless  the  statute  should  provide  that  any  transfer 
by  the  insolvent  after  an  act  of  bankruptcy  was  forbidden.3 
In  the  latter  case  the  bank  ought  to  refuse  to  pay  unaccepted 
checks  as  soon  as  it  receives  any  notice  of  an  act  of  bank- 
ruptcy, unless  in  those  states  where  the  holder  can  sue,  where 
the  bank  could  not  safely  refuse  to  pay  if  the  check  had  been 
presented,  nor  can  it  safely  refuse  even  then,  because  the 
United  States  courts  will  refuse  to  recognize  the  rule.4  There 

1  Laclede  Bank  v.  Schuler,  120  But  even  in  the  states  which  recog- 
U.  S.  511.  nize  the  presentment  of  the  check  as 

2  Under  the  new  bankruptcy  law  giving  the  right  to  sue,  the  United 
of  the  United  States  a  fraudulent  States  courts  in  bankruptcy  must 
conveyance,  or  a  written  recogni-  refuse  to  recognize  the  state  rule, 
tion  of  insolvency,  or  an  applica-       3The  English  statute,  12  and  13 
tion,  or  an  assignment  for  creditors,  Viet.,  ch.  106,  §  133,  so  provides, 
are  all  acts  of  bankruptcy,  and  it  is       4  See  the  last  section  for  those 
very  questionable  if  the  bank  ought  states,  note  9.    Fourth  Nat.  Bank  v. 
not  to  refuse  unaccepted,  or  in  some  City  Nat.  Bank,  68  III  898.    But 
states  unpresented,   checks,  after  Chambers  v.  Northern  Bank,  5  Ky. 
notice  of  an  act  of  bankruptcy.  Law  R  123,  holds  that  the  drawing 


230  BANKS   AND   BANKING.  [§  140. 

are  a  number  of  statutes  against  preferences  Whose  effect  is 
to  render  an  assignment  of  a  deposit,  after  the  depositor  has 
become  insolvent,  void.5  Therefore,  a  bank  in  such  states 
could  not  recognize  an  assignment  after  notice  of  insolvency, 
and  ought  not  to  recognize  an  unaccepted  check,  or  in  a  few 
states  possibly  an  unpresented  check ;  but  even  if  the  check 
be  presented,  the  trustee  of  the  bankrupt  can  recover  the 
payment  in  the  United  States  court. 

§  140.  Bank  applying  deposit  to  its  own  claim. —  It  is 

a  recognized  principle  in  banking  law  that  a  bank  has"  the 
right  to  apply  the  general  deposit  of  the  depositor  to  the  pay- 
ment of  the  bank's  unsecured  claims  against  the  depositor. 
The  nature  of  the  claim  of  the  bank  may  be  either  a  matured 
or  an  unmatured  debt,  an  unliquidated  claim  for  damages, 
and  even  a  right  to  recover  for  a  fraud,  and  the  rights  of 
the  bank  vary  somewhat  in  the  cases  with  the  nature  of  the 
claim.  But  one  rule  is  unvarying  —  the  claim  must  be  really 
and  in  fact  the  property  of  the  bank,1  and  in  the  next  place 
the  deposit  must  legally  and  equitably  belong  to  the  depos- 
itor.2 Even  though  the  bank  has  no  notice  that  the  deposit 
belongs  to  some  one  else  than  the  depositor,  it  cannot  appro- 
priate the  deposit  for  a  debt  of  the  ostensible  depositor, 
unless  it  has  been  misled,  or  has  suffered  an  injury  or  given 
credit  upon  the  strength  of  the  apparent  ownership,3  and  then 

of  the  check  prevails  over  the  peti-  l  Stetson   v.  Exchange  Bank,  7 

tion  in  bankruptcy,  which  does  not  Gray,  435. 

revoke  check  even  if  the  bank  had  2  Lawrence  v.  Bank  of  Republic, 

notice.  35  N.  Y.  320;  Tobey  v.  Manufact- 

5 Stone  v.  Dodge,  96  Mich.  514;  urers'  Nat.  Bank,  9  R.  L  236;  Na- 

Van  Dykev.  McQuade,85N.  Y.  616;  tional  Bank  v.  Insurance  Co.,  104 

In  re  Hamilton,  26  Oreg.  579.    Con-  U.  a  54;    Walker   v.  Manhattan 

tra,  Moseby  v.  Williamson,  5  Heisk.  Bank,  25  Fed.  R  347;  Union  Stock 

278.     And   compare   Johnston    v.  Yards  Bank  v.  Gillespie,  137  TJ.  S. 

Humphrey,  91  Wis.  76.    This  rule  411;  Clemmerv.  National  Bank,  157 

applies    to   national    banks.     Ve-  III  206;  Coote  v.  Bank  of  United 

nango  Nat  Bank  v.  Taylor,  56  Pa.  States,  3  Cranch.  C.  C.  95. 

14    A  different  provision  is  noticed  3  Douglas  v.  First  Nat  Bank,  17 

in  Bank  of  Pennsylvania  v.  Spang-  Minn.  35;  Armstrong  v.  National 

ler,  32  Pa.  474.  Bank,  53  Iowa,  752;  Anderson  v. 


DEPOSITS. 


231 


only  to  the  extent  to  which  it  has  suffered  injury.  But  if 
the  bank  has  a  claim  against  the  true  owner  of  the  deposit, 
it  may  apply  the  deposit  though  standing  in  another  name.4 
It  makes  no  difference  how  the  claim  arises,  whether  it  be 
against  the  depositor  alone  or  against  himself  and  wife,5  or 
against  him  as  indorser  or  guarantor  of  a  matured  note,  pro- 
vided the  maker  or  principal  debtor  is  insolvent.6  But  if  the 
debt  is  fully  secured  the  bank  may  not  apply  the  deposit,7 
unless  there  be  a  special  agreement  to  that  effect.  If  the 
unsecured  debt  be  matured  there  is  no  doubt  of  the  bank's 
right  to  make  the  application.8  It  is  said  to  be  the  law  by 
a  number  of  decisions  that  are  not  able  to  give  any  reason- 
able excuse  for  their  existence,  that  the  bank  cannot  apply 
the  deposit  of  the  individual  depositor  upon  the  debt  of  the 
firm  of  which  he  is  a  member;9  but  the  better  view  of  the 


Market  Nat.  Bank,  1  N.  Y.  Supp. 
136;  Davis  v.  Panhandle  Nat.  Bank, 
29  S.  W.  R.  926;  Wood  v.  Boylston 
Bank,  129  Mass.  358;  Cady  v.  South 
Omaha  Nat  Bank,  46  Neb.  756. 
Contra,  Boettcher  v.  Colorado  Nat. 
Bank,  15  Colo.  16.  Compare  Burt- 
nett  v.  National  Bank,  38  Mich.  430. 

4  Garnett  Bank  v.  Bowen,  21  Kan. 
354;  Falkland  v.  National  Bank,  84 
N.  Y.  145.  See  also  Hatch  v.  Fourth 
Nat.  Bank,  147  N.  Y.  184.  Contra, 
Citizens'  Bank  v.  Alexander,  120 
Pa.  476. 

»Haydon  v.  Alton  Nat.  Bank,  29 
111.  App.  458.  But  it  is  held  that  if 
a  note  is  joint  and  several  the  bank 
cannot  apply  the  deposit  of  one 
maker.  Merchants'  Bank  v.  Evans, 
9  W.  Va.  373;  Dawson  v.  Real  Es- 
tate Bank,  5  Ark.  283;  Long  Island 
Bank  v.  Town  send,  Hill  &  D.  Supp. 
204.  These  cases  are  not  sound.  See 
note  9,  infra. 

6  Ex  parte  Howard  Nat.  Bank,  2 
Low.  487.  Contra,  National  Bank 
v.  Proctor,  98  III  558,  as  to  note  not 


due.  Compare  Appeal  of  Farmers' 
Bank,  48  Pa.  57;  National  Bank  v. 
Gormley,  2  Walk.  (Pa.)  493;  New- 
bold  v.  Patrick,  25  Pitts.  Leg.  J. 
(N.  S.)  299.  But  Mechanics'  Bank 
v.  Seitz,  150  Pa.  632,  seems  to  be  in 
accord,  while  First  Nat.  Bank  v. 
Shreiner,  110  Pa.  188,  denies  the 
right  as  to  a  guarantor,  but  not  an 
indorser. 

'Schuler  v.  Israel,  120  U.  S.  506; 
Farmers'  Bank  v.  McFerran,  11  Ky. 
Law  R.  183. 

8  See  cases  in  preceding  notes  and 
Commercial  Bank  v.   Hughes,  17 
Wend.  94;  Blair  v.  Allen,  3  Dili 
101;  National  Bank  v.  Hill,  76  Ind. 
223.    The  application  is  to  be  made 
on  the  last  day  of  graca    Home 
Nat.  Bank  v.  Newton,  8  I1L  App. 
563. 

9  Watts  v.  Christie,  11  Beav.  546; 
International  Bank  v.  Jones,  119  III 
407;   Raymond  v.  Palmer,  41  La. 
Ann.  425;  Adams  v.  National  Bank, 
113  N.  C.  332.    See  note  5,  supra. 


232 


BANKS   AND   BANKING. 


[§  140. 


law  is  that  it  can.10  If  the  unsecured  debt  is  not  matured, 
the  great  weight  of  authority  and  the  reason  of  the  rule  of 
equitable  set-off  permits  the  application  of  the  deposit,  pro- 
vided the  depositor  be  insolvent.11  But  death  is  not  equiva- 
lent to  insolvency;  yet  if  the  depositor  died  insolvent12  the 
application  can  of  course  be  made  to  unmatured  and  unse- 
cured indebtedness.13  In  Pennsylvania,  if  the  debtor  dies  in- 
solvent, there  is  no  set-off,  but  if  he  died  solvent  his  deposit 
may  be  set  off.14  The  reason  for  the  rule  stated  above  is  that 
the  bank  has  a  lien  superior  to  all  other  claims.15  This  is 
simply  a.  general  business  usage  crystallized  into  a  rule  of 
law.  But  some  courts  wrongly  deny  the  right  to  apply  upon 
an  unmatured  indebtedness  as  against  an  attachment 16  or 
against  an  assignment.17  Unliquidated  demands  may  be  set 
off  against  the  deposit,18  and  so  may  a  claim  to  recover  for 
fraud.19  The  fact  that  checks  are  outstanding  does  not  de- 
prive the  bank  of  its  right;20  but  in  those  states  which  rec- 
ognize the  right  of  the  holder  to  sue  upon  the  check  after 


10  Eyrich  v.  State  Bank,  67  Miss.  60. 

"Schiller  v.  Israel,  120  U.  S.  506; 
Dermuon  v.  Boylston  Bank,  5  Gush. 
194;  Georgia  Seed  Co.  v.  Talmage, 
96  Ga.  254;  Fidelity  Co.  v.  Mer- 
chants' Nat.  Bank,  9  L.  R  A.  108, 
and  note;  Flour  Co.  v.  Merchants' 
Bank,  90  Ky.  225;  Trust  Co.  v.  Na- 
tional Bank,  91  Tenn.  336;  Citizens' 
Bank  v.  Kendrick,  92  Tenn.  437. 
But  contra,  National  Bank  v.  Proc- 
tor, 98  III  558.  This  last  decision  is 
incomprehensible. 

12  Jordan    v.    National  Bank,  74 
N.  Y.  467. 

13  Ford  v.  Thornton,  3  Leigh,  753; 
Knecht  v.  Savings  Inst,  2  Mo.  App. 
563. 

14  Farmers'  Bank  Appeal,  48  Pa. 
57:  Bosler  v.  Exchange  Bank,  4  Pa. 
32:  National  Bank  v.  Shoemaker, 
11  Wkly.  Notes  Gas.  215. 

15  Ford  v.  Thornton,  3  Leigh,  695. 


16  Manufacturers'  Nat.  Bank  v. 
Jones,  2  Penny.  377.  Contra,  Schuler 
v.  Israel,  120  U.  S.  506. 

17Oatrnan  v.  Batavian  Bank,  77 
Wis.  501.  This  is  one  of  the  most 
absurd  opinions  in  all  the  books. 
The  court  says  counsel,  in  his  brief, 
cites  certain  cases,  and  then  the 
court  puts  those  cases  in  the  opin- 
ion. There  are  ten  cases  cited,  but 
only  one  is  in  point,  and  that  is 
Beckwith  v.  Union  Bank,  9  N.  Y. 
211,  which  is  no  longer  authority. 

18  Ex  parte  Howard  Nat.  Bank,  2 
Low.  487.     Contra,  Irvine  v.  Dean, 
93  Tenn.  846. 

19  Andrews  v.  Artisans'  Bank,  26 
N.  Y.  298.    For  set-off  in  peculiar 
cases,  see  Clark  v.   Northampton 
Bank,  160  Mass.  26;  National  Bank 
v.  Greene,  45  N.  J.  Eq.  546. 

20  Georgia  Seed  Co.  v.  Talmage,  96 
Ga.254. 


§  141.]  DEPOSITS.  233 

presentation,  no  set-off  exists  in  favor  of  the  bank  as  against 
a  lonafide  holder  of  the  check;21  and  in  other  states  it  is 
held  that  the  right  of  set-off  does  not  exist  as  against  bona 
fide  check-holders,  whether  the  bank's  claim  is  matured  or 
unmatured.22  There  is  no  soundness  in  either  rule.  The 
bank  may  apply  the  deposit  upon  any  of  the  depositor's  debts 
of  its  own  that  it  pleases;23  but  if  it  has  received  a  deposit 
under  a  specific  direction  or  agreement  as  to  its  disposition, 
it  will  be  bound  by  the  direction  or  agreement,24  and  this 
direction  need  not  be  in  writing.25  The  application  of  a 
general  deposit,  if  applied  without  notice  of  a  valid  adverse 
claim,  can  be  justified  in  certain  cases.26  Collections  made  and 
properly  credited  are  deposits,  when  mingled  with  the  funds 
of  the  bank,  and  are  applicable  by  the  bank  as  deposits.27 

§  141.  Duty  of  bank  to  apply  deposit. —  It  is  a  well- 
known  principle  of  law  that  any  dealing  between  the  cred- 
itor and  the  principal  debtor  —  and  one  case  holds  any 
concealment  of  a  relation  between  the  creditor  and  the 
principal  debtor1  —  prejudicial  to  the  indorser  or  guarantor 
of  the  contract,  without  the  assent  or  concurrence  of  the 
surety,  releases  the  latter.  The  bank  having  a  lien  upon 

21  Fourth  Nat.  Bank  v.  City  Bank,  23  Commercial  Nat.  Bank  v.  Hen- 

68  III  898;  Merchants'  Nat,  Bank  ninger,  105  Pa.  496. 

v.  Ritzinger,  20  111.  App.  27.  24  Straus  v.  Tradesmen's  Bank,  36 

a  Fidelity  Trust  Co.  v.  Merchants'  Hun,  451,  122  N.  Y.  379;   United- 
Bank  (Ky.),  9  L.  R  A.  108;  Zeile  v.  States  Bank  v.  Macalister,  9  Pa. 
German  Sav.  Inst.,  4  Mo.  App.  401,  475;  Packing  Co.  v.  First  Nat.  Bank, 
which  latter  case  is  no  longer  an  69  Miss.  700. 
authority.     The  Illinois  cases  are  25  Case  last  cited, 
express  that  as  against  a  bonafide  26McEwen  v.  Davis,  39  Ind.  109; 
check-holder  the  bank  must  have  Allen  v.  Brown,  39  Iowa,  330;  note 
applied  the  deposit  before  presenta-  3  to  this  section. 
tion  of  the  check.    Niblack  v.  Park  «  Muench  v.  Valley  Bank,  11  Mo. 
Nat  Bank,  169  111.  517.  This  ruling  App.  144. 

is  of  course  wrong,  because  it  gives  1  Jungk  v.  Reed,  8  Utah,  49.    The 

the  check-holder  a  better  right  than  author  reported  this  case,  and  then 

the  drawer  of  the  check;  it  is  sim-  thought,  and  still  thinks,  it  wrongly 

ply  another  illustration  of  the  wild  decided  upon  the  whole  issue, 
result  of  the  rule  that  says  a  check 
is  an  assignment. 


234 


BANKS   AND    BANKING. 


[ 


the  deposit  for  its  claims,  and  having  the  opportunity  to 
protect  the  surety,  ought  in  justice  to  do  so.  The  situation 
of  the  surety  is  certainly  altered  to  his  disadvantage,  unless 
he  assents.  But  some  courts  admit  this  right  in  the  surety,2 
while  other  deny  it.3  The  courts  of  Pennsylvania  have  be- 
come involved  in  a  singular  net  of  conflicting  dicta  and  de- 
cisions upon  this  question.4  The  cases  will  be  found  in  the 
note.  The  duty,  however,  does  not  exist  as  regards  the  ac- 
ceptor of  a  bill  of  exchange,  whether  the  deposit  exists  at 
the  date  of  the  maturity  of  the  bill5  or  is  deposited  after- 
wards.6 Wherever  there  is  an  agreement  taking  a  particu- 
lar security  out  of  the  course  of  general  dealing  between  the 
bank  and  the  depositor,  the  surety  cannot  complain  that  his 
rights  are  prejudiced.7  But  it  will  be  seen  that  the  same 
result  is  achieved  where  a  deposit  exists,  in  a  few  cases,  by 


2  Dawson  v.  Real  Estate  Bank,  5 
Ark.  283;   German    Nat.   Bank  v. 
Foreman,  138  Pa.  474;  Mechanics' 
Bank  v.  Seitz,  150  Pa.  632;  McDow- 
ell v.  Wilmington  Bank,  1  Harr. 
369;  Pursifall  v.  Pineville  Bank,  30 
S.  W.  R.  203;  Faulkner  v.  Cumber- 
land Valley  Bank,  14  Ky.  Law  R. 
923;  Armstrong  v.  Warner,  49  Ohio 
St.  376.    This  latter  case  holds  that 
the  surety  upon  a  note  on  the  in- 
solvency of  the  bank  is  entitled  to 
the  principal's  deposit  as  a  set-off 
against  the  note. 

3  Wilson  v.  Dawson,  52  Ind.  513; 
Voss  v.  Germ.  Am.  Bank,  83  111. 
599;  Third  Nat.  Bank  v.  Harrison, 
10  Fed.  R.  243;  Teconic  Bank  v. 
Johnson,  21  Me.  426;  National  Bank 
v.  Smith,  66  N.  Y.  271;  and  see  the 
Pennsylvania    cases   in  the    next 
note. 

4  People's  Bank  v.  Legrand,  103 
Pa.  309,  held  if  deposit  insufficient 
it  need  not  be  applied,  but  gave  in- 
dorser  maker's  right  of  set-off.  First 
Nat  Bank  v.  Shreiner,  110  Pa.  188, 


held  that  subsequent  deposits,  if  in- 
sufficient, need  not  be  applied;  but 
Commercial  Bank  v.  Henninger, 
105  Pa.  496,  and  Germ.  Nat  Bank 
v.  Foreman,  138  Pa.  474,  held  that 
if  the  deposit  was  sufficient  at  the 
date  of  the  maturity  of  the  bill,  it 
must  be  applied.  But  Mechanics' 
Bank  v.  Seitz,  150  Pa.  632,  and  First 
Nat.  Bank  v.  Peltz,  176  Pa.  513,  de- 
cide that  the  deposit  must  be  suffi- 
cient at  the  maturity  of  the  debt, 
and  must  be  to  the  credit  of  the 
person  primarily  liable.  It  may  be 
possible  to  induce  some  other  court 
to  accept  these  distinctions. 

8  Flournoy  v.  National  Bank,  79 
Ga.  810. 

6  Citizens'  Nat.  Bank  v.  Carson, 
32  Mo.  191. 

?Mahaiwe  Bank  v.  Peck,  127 
Mass.  298;  but  Germ.  Nat  Bank 
v.  Foreman,  138  Pa.  474,  denies  the 
rule  where  the  deposit  remains  a 
general  deposit  See  Wilson  v. 
Dawson,  52  Ind.  5ia 


§  142.]  DEPOSITS.  235 

giving  to  the  surety,  where  the  drawer  is  insolvent,  a  set-off 
based  upon  his  apparent  subrogation  to  the  rights  of  the 
depositor  as  they  existed,  presumably,  at  the  date  of  the 
maturity  of  the  claim.8 

§  142.  Right  of  bank  to  apply  deposit  on  other  de- 
mands.—  If  a  note  be  made  payable  at  a  bank,  it  has  been 
said,  without  good  reason,  that  the  bank  has  no  authority 
to  pay  it  out  of  the  maker's  deposit  without  a  direction  to 
do  so.1  But  this  rule  is  subject  to  the  qualification,  in  those 
states  which  hold  it,  that  if  there  is  a  custom  to  that  effect 
known  to  the  maker  the  bank  may  do  so.2  If  the  deposit 
is  made  for  the  purpose  of  paying  a  particular  note,  the 
bank  may  so  apply,  unless  before  payment  it  is  notified  not 
to  do  so.3  As  we  have  seen,  such  a  deposit  does  not  become 
necessarily  the  property  of  the  person  for  payment  of  whose 
note  it  is  deposited.4  A  certification  of  a  note  payable  at 
the  bank  is  the  same  as  the  certification  of  a  check.5  If  pay- 
ment be  made  of  such  a  note  by  the  bank,  even  though  the 

8  Armstrong  v.  Warner,  49  Ohio  able  court);   jEtna  Nat.  Bank  v. 

St.  376;  Van  Wenke  Gin  Co.  v.  Citi-  Fourth    Nat  Bank,  46  N.  Y.  88; 

zens'  Bank,  89  Tex.  147.    The  last  Indig  v.  Bank,  80  N.  Y.  100;  Grif- 

case  is  clearly  wrong;  the  drawer  fin  v.  Rice,  1  Hilt  184;  Frances  v. 

was  not  insolvent    It  practically  People's  Bank,  1   Ohio  N.  P.  281. 

holds  that  non-residence  is  equiva-  But  if  the  bank  pays,  it  may  set  the 

lent  to  insolvency  where  the  ao  note  off  against  the  deposit    Bed- 

ceptor  seeks  to  hold  the  bank  for  ford  Bank  v.  Acoam,  125  Ind.  584; 

non-application  of  the  drawer's  de-  but  Grissom  v.  Comm.  Nat  Bank, 

posit    See  notes  5  and  6,  supra.  87  Tenn.  350,  is  contra.    See  §  173, 

!"Wood  v.  Merch.  Trust  Co.,  41  post.                                               , 

111.  267;  Ridgely  Nat  Bank  v.  Pat-  2  Grissom  v.  Comm.  Nat  Bank,  87 

ton,  109  III  479.    The  case  of  Home  Tenn.  350.    But  this  is  a  general 

Nat.  Bank  v.  Newton,  8  Bradw.  563,  usage  that  every  sane  person  ought 

does  not  establish  a  different  rule  to  be  held  to  know, 

in  Illinois.    It  is  considered  at  1  3  Bedford    Bank  v.  Acoam,   125 

Daniel,  Neg.  Inst  326a,  as  doing  so,  Ind.  584. 

but  that  is  a  total  mistake,  because  4  .(Etna  Nat.  Bank  v.  Fourth  Nat 

the  note  in  question  was  to  the  bank  Bank,  46  N.  Y.  82.  And  see  note  15 

itself.  Grissom  v.  Comm.  Nat.  Bank,  to  §  136,  ante. 

87  Tenn.  350.    But  the  better  rule  6  Riverside   Bank  v.  First  Nat 

is  that  it  can.    Riverside  Bank  v.  Bank.  74  Fed.  R.  276,  and  cases 

First  Nat  Bank,  74  Fed.  R.  276  (an  therein  cited. 


236  BANKS    AND   BANKING.  [§  143. 

bank  acted  under  a  clear  mistake  as  to  the  state  of  the  de- 
positor's account,  it  is  final.6  But  payment  through  a  clear- 
ing-house is  provisional  only,  and  may  be  rescinded  on  the 
ground  of  mistake.7 

§  143.  Payment  by  the  bank  of  deposit. — The  duty  of  the 
bank  to  its  depositor  is  in  some  way  to  make  payment.  We 
have  indicated  certain  methods  by  which  this  is  done,  as, 
for  instance,  by  payment  to  the  true  owner,  by  payment  to 
the  assignee,  by  payment  to  the  depositor's  creditor  under 
legal  process,  by  payment  to  the  personal  representative,  by 
payment  to  itself  in  discharge  of  its  own  claims,  and  by  pay- 
ment upon  other  claims  payable  at  the  bank.  But  there  are 
other  methods  of  paying,  such  as  by  remittances,  and  finally 
by  payments  upon  checks.  A  remittance  to  a  distance  is  said 
to  be  at  the  risk  of  the  depositor.1  Generally  the  depositor 
gives  his  own  check  to  the  bank,  and  the  bank  remits  the 
amount,  or  he  simply  deposits  a-  sum  to  be  transferred,  get- 
ting a  draft.  In  either  case,  at  whose  risk  is  the  transfer?  is 
a  vexed  question.  But  it  would  seem  that  if  the  bank  itself 
undertakes  to  remit  it  must  bear  the  loss,2  but  if  the  remitter 
purchases  a  draft  upon  the  other  bank  which  he  himself 
sends,  the  draft  is  not  payment  until  it  is  paid  itself.3  Com- 

6  Riverside    Bank   v.   First  Nat.  2  Cutler  v.  Am.  Ex.  Nat  Bank, 
Bank,    supra,   and   cases   therein  113  N.  Y.  593.  See  Weedsport  Bank 
cited.  v.  Park  Bank,  41  N.  Y.  561.    The 

7  Nat.  Ex.  Bank  v.  National  Bank  point  is  as  to  when  the  transaction 
of  North  America,  133  Mass.  147.  is  complete  so  that  the  funds  are 
But  see  §  158,  post.  really  transmitted  and  put  to  the 

1  Jung  v.  Second  Ward  Sav.  Bank,  credit  either  of  the  transmitter  or 

55  Wis.  364.    This  case  seems  to  be  the  person  designated  by  him. 

the  only  known  instance  where  a  3  But  this  proposition  is  denied  in 

court  was  so  deluded  as  to  hold  Ex  parte  Jones,  77  Ala.  330,  to  the 

that  payment  to  a  forger  upon  a  extent  that  the  depositor  having 

forged  indorsement  was  actual  pay-  taken  a  draft  ceases  to  be  a  depos- 

ment  of  the  deposit  where  the  de-  itor,  and  if  the  draft  is  not  paid 

positor  was   not  to  blame.     The  cannot  rescind  and  claim  to  be  a 

court  cited  as  its  authority  Graves  depositor.     But  if  the  bank  had 

v.  Am.  Ex.   Bank,   17  N.  Y.  205,  been  guilty  of  a  fraud,  the  rule 

which  exactly  contradicts  the  opin-  would     be     different       Compare 

ion.  Hogue  v.  Edwards,  9  Bradw.  148, 


DEPOSITS. 


237 


ing  now  to  the  payment  by  the  bank  itself  through  the  me- 
dium of  checks,  the  engagement  of  the  bank  to  its  depositor 
is  to  pay  the  deposit,  if  it  is  not  a  time  deposit,  upon  de- 
mand,4 and  there  can  be  no  default  until  a  demand  is  made.* 
A  check  upon  the  bank  duly  presented  is  a  demand.6  The 
bank  can  only  refuse  to  pay  the  deposit  (1)  when  it  has  not 
sufficient  credit  to  the  drawer  to  pay  the  whole  check;7 
(2)  when  it  has  notice  of  the  fact  that  the  deposit  does  not 
belong  to  the  drawer; 8  (3)  when  it  is  put  upon  inquiry  as  to 
the  fact  that  funds  deposited,  but  known  to  the  bank  to  be 
trust  funds,  either  by  the  form  of  the  deposit  or  in  some 
other  way,  are  being  misappropriated ; 9  but  a  deposit  depos- 
ited by  the  trustee  to  himself  as  trustee  must  be  paid  out  on 
the  check  of  the  trustee ; 10  and  if  the  deposit  is  to  the  credit 
of  some  one  as  agent,  and  the  bank  knows  or  ought  to  know 
who  is  principal,  it  cannot  pay  on  the  check  of  the  agent ; n 
but  it  is  said  if  nothing  appears  as  to  the  principal  the  bank 
may  pay  on  the  check  of  the  agent ; 12  (4)  when  it  has  notice 
of  an  assignment  or  has  accepted  or  certified  checks  to  the 


263.  This  case  is  a  very  peculiar 
one.  The  holder  of  a  check  ob- 
tained a  draft  for  his  check,  which 
was  payable  in  exchange.  A  rem- 
edy was  refused  the  holder  under 
the  Illinois  rule  because  the  check 
was  not  payable  in  money.  But 
the  court  recognizes  that  the  check- 
holder  still  has  a  claim  upon  the 
drawer  of  the  check.  See  note  30, 
§  147,  post. 

4  Ward  v.  Johnson,  95  111.  215. 

6Girard  Bank  v.  Bank  of  Penn 
Township,  39  Pa.  92. 

6  But  it  is  not  the  only  form  of  a 
demand.  Citizens'  Bank  v.  Harri- 
son, 127  Ind.  128. 

'Coates  v.  Preston,  105  111.  470; 
Pabst  Brewing  Co.  v.  Reeves,  42  111. 
App.154.  Contra, Bromley v.Comm. 
Nat  Bank,  9  Phila.  522.  But  the 
bank  may  agree  to  pay  pro  tanto. 


Dana  v.  Third  Nat.  Bank,  95  Mass. 
445. 

8  See  §  134,  ante. 

9  See  §§  135, 136,  ante. 

i<>Ihl  v.  St.  Joseph  Bank,  26  Ma 
App.  129.  But  see  Munnerlyn  v. 
Augusta  Bank,  88  Ga.  333.  But 
bank  is  bound  if  it  has  agreed  to 
apply  trust  money  to  individual 
debt  of  the  trustee.  Sayre  v.  Weil, 
94  Ala.  466.  See  §  135,  ante,  note  14 

11  See  §  135,  ante,  notes  8  and  9. 

12  Patterson  v.  Marine  Bank,  130 
Pa.  419;  Citizens'  Bank  v.  Alex- 
ander,   120    Pa.    476;    Lockhaven 
Bank  v.  Mason,  95  Pa.  113;  German 
Bank  v.  Himstedt,  42  Ark.  62.   The 
language,  but  not  the  actual  decis- 
ion, in  Honig  v.  Pacific  Bank,  73 
Cal.  464,  is  contra.    And  see  §  135r 
note  8,  ante,  which  states  the  bet- 
ter rule. 


BANKS   AND   BANKING.  [§  143. 

amount  of  the  deposit; 13  (5)  when  it  has  notice  of  a  lien  upon 
the  deposit;14  (6)  when  it  has  notice  of  the  death  of  the  de- 
positor;15 (7)  when  it  has  notice  of  the  insolvency  of  the 
depositor; 16  (8)  when  it  has  itself  appropriated  or  has  a  valid 
lien  upon  the  deposit  for  a  claim  paid  to  itself  or  to  some 
one  else.17  The  above  cases  constitute  the  exceptions  to  the 
necessity  for  payment  by  the  bank  when  it  has  funds  to  the 
credit  of  the  depositor.  Otherwise  the  bank  is  estopped  to 
dispute  its  depositor's  title,18  nor  can  it  set  up  any  illegality 
in  the  method  by  which  the  depositor  acquired  the  moneys 
deposited.19  "Where  the  bank,  however,  has  notice  of  an  ad- 
verse claim,  it  may  exact  indemnity  as  a  condition  of  paying 
the  check.20  If  there  are  separate  accounts  the  bank  must 
regard  these  separate  funds.21  The  fact  that  the  original  de- 
posit was  in  notes  taken  as  cash,  which  have  depreciated  in 
value,  makes  no  difference,  though  there  be  a  custom  to  the 
contrary;  the  bank  must  bear  the  loss  in  the  case  of  a  gen- 
eral deposit.22  It  must  pay  the  cheek  in  current  funds,23  but 
if  the  money  has  been  confiscated  by  the  go  .'eminent  it  has 

13  See  §  146,  notes  14  and  15,  and  Paine,  43  111.  432.     But  payment  in 
§  150.     The  certification  takes  so  treasury  notes  is  good  where  the 
much  money  from  the  depositor's  state  law  requires  the  deposit  to  be 
account.   It  is  an  assignment  to  the  paid  in  gold  and  silver.    Reynolds 
bank.  v.  Bank  of  State,  18  Ind.  467.    The 

14  See  §  137,  ante.  legal  tender  cases  affirmed  this  rul- 
15 See  §  138,  ante.  ing.     Custom  cannot  prescribe  a 

16  See  §  139,  ante.  legal  tender    different  from  that 

17  See  §§  140,  141,  ante.  fixed  by  law.    Thompson  v.  Riggs, 

18  Citizens'  Bank    v.    Alexander,  5  Wall.  663;  Marine  Bank  v.  Chan  d- 
120  Pa.  476;  Martin  v.  Minnekahta  ler,  27  111. ,525.   General  deposits  are 
Bank,  7  S.  D.  263.  payable  in  current  funds.   Gutribel 

19  Porter  v.  Sher.  Co.  B'g  Co.,  40  v.  Abrams,  20  La.  Ann.  568;  Fort 
Neb.  274  v.  Bank  of  Cape  Fear,  61  N.  C.  417; 

20  Starr  v.  York  Nat  Bank,  55  Pa.  Ruffin  v.  Orange  Co.  Comm'rs,  69 
364  N.  C.  498.    Deposit  of  .Confederate 

21  Voight  v.  Lewis,  Fed.  Cas.  No.  notes  not  a  deposit  of  money.   Fos- 
10,989.  ter  v.  Bank  of  New  Orleans,  21  La. 

22  Marine  Bank  v.  Chandler,  27  111.  Ann.  338.     Contra,  Dabney  v.  Bank 
525.     See  Chicago  Marine  Co.   v.  of  State,  3  S.  C.  124,  as  to  the  value 
Carpenter,  28  111.  360;   Osgood  v.  deposited. 

McConnel,   32    III  74;    Willets  v.      23  Marine  B'kv.  Chandler,  27  III  525. 


§  144.]  DEPOSITS.  239 

been  held  that  the  depositor  bears  the  loss.24  This  decision 
is  correct  in  case  of  a  special  deposit,  but  wholly  wrong  as 
to  a  general  deposit,  which  creates  the  relation  of  debtor  and 
creditor.  Just  as  the  bank  must  bear  the  loss  where  the  de- 
posit was  in  money  which  afterwards  depreciated,  it  obtains 
the  benefit  if  the  money  deposited  taken  at  its  real  value  in- 
creases in  value.25  But  an  agreement  to  return  in  kind  the 
deposit  makes  the  deposit  special,26  and  evidence  of  usage  is 
admissible  to  show  that  a  certain  entry  in  the  books  pur- 
ported to  be  such  an  agreement.27  Whatever  payments  the 
bank  makes  upon  checks  is  payment  of  the  deposit  pro  tanto.28 
Outstanding  checks  cannot  excuse  the  bank's  failure  to  pay.29 

§  144.  Liability  to  depositor  for  set-off. —  The  right  of 
set-off  between  the  bank  and  its  depositor  is  reciprocal.  The 
depositor  has  a  right  of  set-off  against  the  bank  for  his  de- 
posit against  the  bank's  claim,1  or  for  any  other  direct  and 
ascertained  claim  which  constitutes  a  set-off.2  But  an  unac- 
cepted check  in  his  favor,  drawn  by  another  depositor,  would 
not  be  a  claim  that  could  be  set  off,3  except,  perhaps,  in  those 
states  which  allow  the  holder  of  a  check  to  sue  the  bank, 
and  in  that  case  only  after  the  check  has  been  presented.4 
If  the  bank  is  insolvent,  the  depositor  or  an  indorser  upon  a 
note  held  by  the  bank  may  set  off  his  individual  deposit  in 

24  Mandeville  v.   State  Bank,  19.  5  Har.  &  J.  489;  Equitable  Bank  v. 
La.  Ann.  392.  Claasen,  23  N.  Y.  Supp.  310. 

25  Gumbel  v.  Abrams,  20  La.  Ann.        2  Whittington  v.  Farmers'  Bank, 
568.  5  Har.  &  J.  489. 

26  Chesapeake  Bank  v.  Swain,  29        3Butterworth  v.  Peck,  5  Bosw.  341. 
Md.  483.  But  in  those  states  which  recognize 

27  Case  last  cited.  the  holder's  right  to  sue  the  bank, 

28  Mayer  v.  Heidelbach,  123  N.  Y.  it  would  logically  follow  that  the 
332.  check  after  presentment  could  be 

29  Meridian  Nat.  Bank  v.  Hauser,  set  off  after  insolvency.  This  would 
145  Ind.  496;  Jackson  Ins.  Co.  v.  make  it  a  simple  process  to  wipe 
Cross,9Heisk.283.  Unless,  of  course,  out  the  bank's  assets  against  sol v- 
they  are  accepted  or  certified,  and  ent  debtors. 

in  some  states  unless  they  have       4  See  the  last  note.    Surely  those 
been  presented.    See  §  147,  post.         states  would  hesitate  before  mak- 
1  Whittington  v.  Farmers'  Bank,    ing  such  a  ruling. 


240  BANKS   AND   BANKING.  [§  144. 

the  bank,  although  the  note  matured  after  the  insolvency.6 
If  the  note  was  due  at  insolvency,  all  authority  concedes  the 
right.6  This  right  of  set-off  is  not  lost  by  the  appointment 
of  a  receiver 7  or  an  assignee ; 8  for  such  an  assignee  or  re- 
ceiver obtains  only  the  bank's  right,  no  more.  It  is  said  that 
where  a  director  has  been  sued  by  the  bank  or  its  representa- 
tive for  securities  which  were  transferred  to  him  by  the 
bank  in  the  way  of  an  illegal  preference,  he  may  set  off  his 
deposit  to  the  extent  of  dividends  he  would  have  received 
upon  his  deposit  in  settlement  of  the  bank's  affairs.9  In  an- 
other case  an  insolvent  bank  indorsed  defendant's  note  to 
another  bank  after  maturity.  The  second  bank  did  not  claim 
to  be  a  bona  fide  holder.  The  ruling  was  that  the  defendant 
could  set  off  his  deposit  in  the  first  bank  against  the  note 
sued  upon  by  the  second  bank.10  The  ruling  would  neces- 
sarily have  been  different  if  the  plaintiff  had  been  a  bona 
fide  holder.11  But  where  a  bank  agrees  to  hold  a  note  for 
a  surety  upon  the  surety's  agreement  that  he  will  not  reduce 
his  deposit  below  the  note,  the  note  belongs  to  the  depositor 
and  the  bank  is  a  mere  trustee  and  cannot  sue  the  surety.12 

^Schuler  v.  Israel,  120  U.  S.  506;  Hunger  v.  Albany  Nat.  Bank,  85 

Jordan    v.   Sharlock,  84   Pa.  366;  N.  Y.  580,  is  also  contra,  but  the 

S  Idles  v.  Houston,  110  Pa.  254    In  case  is  correct  on  other  grounds. 

Pennsylvania  the  depositor  is  in  See  also  §  830,  post. 

better  position  than  the  bank.    So  6  State   v.   Brobston,  94  Ga.   95, 

also  in  Wisconsin.    Jones  v.  Pien-  where  state  had  a  lien  upon  the 

ing,  85  Wis.  264:  Merchants'  Ex.  funds  of  the  bank;  Batty  v.  Scuddy, 

Bank  v.  Fieldner,  92  Wis.  415;  Mo  10  La.  Ann.  404;  In  re  Van  Allen, 

Cagg  v.  Woodman,  28  111.  84;  Sick-  37  Barb.  225;  Seymour  v.  Dunham, 

els  v.  Herold,  36  N.  Y.  Supp.  488;  24  Hun,  93. 

Clute  v.  Warner,  8  App.  Div.  40;  1  Yardley  v.  Clothier,  49  Fed.  R. 

Davis  v.  Industrial  Mfg.   Co.,  114  337;   Miller  v.  Franklin    Bank,  1 

N.   C.  321 ;  Second  Nat   Bank  v.  Paige,  444. 

Hemingray,  34  Ohio  St.  381.    In  this  8  Fort  v.  McCulley,  59  Barb.  87. 

last  case,  by  agreement,  the  firm  9  Lamb  v.  Pannell,  28  W.  Va.  663. 

deposit  was  used  as  a  set-off  against  10  Merchants'  Ex.  Bank  v.  Field- 

the  debt  of  an  individual  partner,  ner,  92  Wis.  415. 

Yardley  v.  Clothier,  49  Fed.  R.  337,  "  Philler  v.  Woodfall,  83  Wkly. 

a  case  which  in  a  masterly  way  Notes  Cas.  183. 

demolishes  Armstrong  v.  Scott,  36  12  Harrison  v.  Harrison,  118  Ind. 

Fed.  R.  63,  which  is  contra;  but  179. 


§  145.]  DEPOSITS.  2-il 

Certificates  of  deposit  are  governed  by  the  same  rule  as  other 
general  deposits  as  to  a  depositor's  right  to  set  off.13  This 
right  if  waived  is  ended,14  and  cannot  be  revived  by  a  bill  in 
equity.15 

§  145.  Liability  to  drawer  for  dishonoring  check. — As 

to  the  drawer,  where  a  bank  dishonors  his  check  while  funds 
are  deposited  to  his  credit  sufficient  to  meet  the  check,  the 
remedy  is  twofold.  He  may  immediately  sue  for  the  deposit,1 
because  the  check  is  a  demand,2  or  he  may  sue  for  damages. 
The  fact  of  dishonor  is  to  be  determined  by  the  true  state  of 
the  account,3  not  what  the  books  show  necessarily,.although 
they  may  be  considered  as  prima  facie  correct  as  entries 
made  in  due  course  of  business.4  The  depositor  when  suing 
for  his  deposit  does  not  sue  upon  his  check — that  is  a  mere 
order;5  but  it  is  proof  of  a  demand  if  it  was  indorsed  by  the 
payee.6  But  this  remedy  will  generally  be  considered  in- 
sufficient by  the  depositor  whose  check  has  been  dishonored, 
because  the  smaller  the  check  the  worse  is  the  injury.7  The 
common  action,  therefore,  is  an  action  on  the  case  for  dam- 
ages. It  has  been  pointed  out  in  the  introduction  how  this 
remedy  exists  in  favor  of  this  particular  creditor  against  his 
debtor,  when  it  does  not  exist  in  favor  of  other  creditors 
against  their  debtors.  It  is  really  a  survival  of  the  day  when 
a  deposit  in  a  bank  was  a  bailment,  and  is  the  old  common- 

13Newberry    v.    Trowbridge,    13  2Viets  v.  Union  Nat.  Bank,  101 

Mich.  263.  N.  Y.  563. 

14  In  re  Commercial  Bank,  4  Ohio  3  See  cases  cited  in  notes  17, 18, 19 
Dec.  108.  and  20  to  this  section. 

15  Bung  Co.  v.  Armstrong,  34  Fed.  4  This  is  the  general  rule  applica- 
R  94.  ble  to  all  transactions. 

1  First  Nat.  Bank  v.  Shoemaker,  5  First  Nat.  Bank  v.  Shoemaker, 

117  Pa.  94    The  reading  of  this  117  Pa.  94. 

case  reminds   one  of  the   artless  6  Rowley  v.  National    Bank,  63 

statement  of  the  reporter  in  Year  Hun,  550.    But  this  allegation  is  dis- 

Book  30-31  Edw.  L:  "Defaute  de  pensed  with  if  bank  refuses  to  pay 

bon  serjant  fet  B  perdre  sez  den-  for  lack  of  funds.    Eichner  v.  Bow- 

iers,"  quoted  1  Poll.  &  Mait.  Hist,  ery  Bank,  45  N.  Y.  Supp.  68. 

Eng.  Law,  199;  Viets  v.  Union  Nat.  7  Marzetti  v.  Williams,  1  B.  &  Ad. 

Bank,  101  N.  Y.  563.  415. 
1C 


242  BANKS   AND   BANKING.  [§  145. 

law  action  of  the  bailor  against  his  bailee.  It  is  proven  by 
the  fact  that  the  depositor  in  this  action  can  recover  both 
his  deposit  and  the  other  damages  he  has  suffered.  In  this 
action  reasonable  and  "  temperate  "  damages,8  and  what  that 
phrase  means  depends  wholly  upon  the  taste  and  fancy  of  the 
particular  court,  may  be  recovered  without  any  proof  of  spe- 
cial damage  or  of  malice.9  Other  courts  say  substantial  dam- 
ages may  be  recovered  without  such  proof.10  These  damages 
need  not  be  immediately  connected  with  a  tangible  pecun- 
iary loss.11  But  it  was  held  that  where  the  error  was  dis- 
covered and  the  check  paid  within  a  few  days,  only  nominal 
damages  could  be  recovered.12  This  ruling  can  be  justified 
only  on  the  maxim  humanum  est  errare,  because  the  dam- 
ages are  not  necessarily  diminished  by  a  rectification  of  the 
mistake.  But  damages,  such  as  for  the  arrest  of  the  drawer,13 
or  the  seizure  of  his  business,14  are  too  remote.  It  is  a  com- 
plete defense  to  the  action  that  the  check  was  not  indorsed 
by  the  payee.15  The  fact  that  in  some  states  the  holder  has 
a  right  of  action  on  the  check  is  no  defense 16  in  those  par- 
ticular states.  It  is  no  defense  that  the  dishonor  was  caused 
by  negligence  of  the  bank's  employee,17  but  would  the  con- 

8  Atlantic  Nat.  Bank  v.  Davis,  96       12See     Brooke     v.     Tradesmen's 
Ga.  334;  Rolin  v.  Steward,  14  C.  B.    Bank,  69  Hun,  202. 

595.  13  Bank  of  Commerce  v.  Goos,  39 

9  Schaffner  v.  Ehrman,  37  III  App.  Neb.  437.    The  court  in  this  case 
340,  139  III  109;  Rolin  v.  Steward,  excluded  such  evidence,   but  the 
14  C.  B.  595.  plaintiff's  attorney,  in  his  desire  to 

10  Schaffner  v.  Ehrman,  37  HI.  App.  swell  the  damages,  got  the  evidence 
340,  139  111.  109;  Svendsen  v.  State  improperly    before   the  jury  and 
Bank,  64  Minn.  40;  Patterson  v.  Ma-  then  lost  his  judgment.    But  the 
rine  Bank,  130  Pa,  419:  Bircheli  v.  opinion  on  this  latter  point  is  quite 
Third  Nat  Bank,  15  Wkly.  Notes  weak. 

Cas.  174.  14  Brooke    v.    Tradesmen's    Nat. 

11  Patterson  v.  Marine  Bank,  130    Bank,  69  Hun,  202. 

Pa,  419  (but  should  be  the  reason-  18  Rowley   v.  National    Bank,  63 

able  and  probable  consequences);  Hun,  550.    But  see  note  6,  siipra, 

Svendsen  v.  State  Bank,  64  Minn,  where  this  proof  is  dispensed  with. 

40.   Contra,  nominal  damages  only,  16  National  Bank  v.  Boles,  12  Ky. 

Brooke  v.  Tradesmen's    Bank,  69  Law  R.  422. 

Hun,    202;    Burroughs    v.  Trades-  17  Atlanta  Nat.  Bank  v.  Davis,  96 

men's  Bank,  87  Hun,  6.  Ga.  334 


§  146.]  DEPOSITS.  243 

tributory  negligence  of  the  plaintiff  be  a  defense?18  The 
fact  that  it  has  credited  checks  on  itself  as  cash  which  were 
not  good  is  no  defense,  but  it  would  be  a  defense  if  the 
checks  were  on  another  bank.19  If  a  purchased  draft,  which 
has  been  credited  as  cash,  has  been  lost  in  going  through  the 
mail,  and  the  bank  has  charged  off  the  draft  on  account  of 
the  drawer's  and  indorsees  failure  to  furnish  another  draft, 
it  will  be  no  defense.20  Payment  of  the  check  on  a  forged 
indorsement  will  be  no  defense.21 

§  146.  Liability  of  bank  to  holder. —  Since  the  check  is 
a  mere  order  on  the  banker,  the  holder  acquires  no  right 
against  the  bank  until  the  check  has  been  accepted  or  cer- 
tified by  the  bank.  Certification  is,  of  course,  an  acceptance, 
but  it  is  not  the  only  method  of  accepting  a  check.  Accept- 
ance is  a  question  of  fact,1  and  is  provable  by  circumstantial 
as  well  as  by  direct  evidence.2  An  unexplained  delay  in  re- 
fusing payment  may  be  an  acceptance  by  the  bank.3  An 
oral  statement  or  telegram 4  by  the  cashier,5  or  by  the  tel- 
ler,5 that  the  check  is  good,  either  as  to  drawer  or  indorser, 
is  an  acceptance.6  But  payment  to  the  wrong  person  on  an 
unauthorized  indorsement  does  not  give  the  holder  of  the 

18  Since  it  is  not  a  suit  for  negli-  4  Henrietta  Nat.   Bank  v.  State 
gence  the  answer  ought  to  be  no.  Nat.  Bank,  80  Tex.  648;    Espy  v. 

19  Am.  Ex.  Nat.  Bank  v.  Gregg,  Bank,  18  Wall.  605.    Contra,  Myei-s 
138  HL  596,  reversing  37  III  App.  v.  Union  Nat.  Bank,  27  Til  App. 
425.  254.    And  see  note  13,  §  150,  post. 

20  Kavanagh  v.  Farmers'  Bank,  59  5  Barnet  v.  Smith,  30  N.  H.  256. 
Mo.  App.  540.  Contra,  Kahn  v.  Walton,  46  Ohio 

21  Citizens'  Nat.  Bank  v.  Imp.  &  St.  195. 

Trad.  Nat   Bank,  119  N.  Y.   195;  » State  v.  Morton,  27  Vt.  310. 

Viets  v.  Union  Nat.  Bank,  101  N.  Y.  6  See  also,  as  to  oral  acceptance, 

563.  Farmers'  Bank  v.  Dunbar,  32  Neb. 

1  First  Nat.  Bank  v.  McMichael,  487,  and  Morse  v.  Mass.  Nat.  Bank, 
106  Pa.  460.  1  Holmes,  209.    But  if  the  statute 

2  See  the  case  next  cited.  requires  a  writing,  the  rule  is  dif- 

3  First  Nat.  Bank  v.  McMichael,  ferent.    Duncan  v.  Berlin,  60  N.  Y. 
106  Pa.  460.      Contra,  Colo.  Nat.  151;  State  Bank  v.  Lindeman,  161 
Bank   v.    Boettcher,   5   Colo.   185.  Pa.  199. 

Compare  Overman  v.  Bank,  31  N. 
J.  Law,  583. 


244 


BANKS   AND   BANKING. 


[§ 


check  the  right  to  sue  the  bank  as  on  an  acceptance ; 7  yet, 
if  the  drawer  is  allowed  credit  for  the  check  after  wrongful 
payment  thereof,  some  courts  say  that  it  is  an  acceptance.8 
A  promise  to  accept  is  nudum  pactum  where  the  depositor 
has  no  funds,9  but  may  be  binding  as  an  estoppel,  if  commu- 
nicated to  the  holder,  according  to  one  case.10  If  the  bank 
does  accept  the  check  to  the  holder  who  is  in  good  faith, 
the  drawer  is  released,11  and  the  bank  becomes  liable  upon 
the  check,  whether  it  has  funds  or  not.12  The  holder  of  an 
accepted  check  may  therefore  sue  the  bank.13  But,  unless 
the  check  has  been  either  orally  or  otherwise  accepted,  the 
holder  has  no  cause  of  action  against  the  bank  —  his  re- 
course is  upon  the  drawer.14  A  check  drawn  generally  upon 


7  First  Nat.  Bank  v.  Whitman,  94 
U.  S.  343;  Grocer  Co.  v.  Farmers' 
Bank,  71  Mo.  App.   132.     Contra, 
Peck  v.  People's  Nat.  Bank,  88  Tenn. 
380;  Millard  v.  National  Bank,  3 
Me  Arthur,  54;  Seventh  Nat.  Bank 
v.  Cook,  73  Pa,  483;  Dodge  v.  Nat. 
Ex.  Bank,  20  Ohio  St.  234;  Com- 
mercial Nat.  Bank  v.  Lincoln  Fuel 
Co.,  67  111.  App.  166, 

8  National  Bank  v.  Cook,  73  Pa. 
483,  and  last  two  cases  cited.    But 
in  Pennsylvania  this  credit  may  be 
withdrawn  in  accordance  with  a 
clearing-house  rule.    German  Nat. 
Bank  v.  Farmers'  Dep.  Bank,  118 
Pa.  294.    The  rule  of  the  Supreme 
Court  of  the  United  States  (First 

*Nat.  Bank  v.  Whitman,  94  U.  S. 
343)  is  the  right  one,  because  there 
is  no  novation.  But  Saylor  v.  Bush- 
oug,  100  Pa.  23,  where  the  depositor 
directed,  and  the  bank  kept  enough, 
to  pay  the  check,  is  correct,  because 
there  was  a  novation.  Commercial 
Nat  Bank  v.  Lincoln  Fuel  Co.,  67 
111.  App.  166,  is  wrong. 

9  Morse   v.   Masa   Nat.  Bank,  1 
Holmes,  209. 

10  Nelson  v.  First  Nat.  Bank,  48  111. 


36.  The  court  says  it  is  binding  as 
a  contract;  but  what  right  had  the 
bank  to  go  into  the  business  of  buy- 
ing corn?  The  promise  might  be 
turned  into  a  representation  as  to 
credit,  and  thus  be  an  estoppel. 
But  the  representation  was  not 
made  to  the  check-holder,  so  how 
could  he  sue  upon  it?  One  case 
holds  that  he  could  sue.  Chanute 
Nat.  Bank  v.  Crowell,  6  Elan.  App. 
533.  See  Springfield  Marine  Bank 
v.  Mitchell,  48  III  App.  486,  a  unique 
decision. 

11  French  v.  Irwin,  4  Baxt.  401; 
First  Nat.  Bank  v.  Leach,  52  N.  Y.  350 ; 
Born  v.  First  Nat.  Bank,  123  Ind.  78. 

12  Farmers'    Bank    v.    Butchers' 
Bank,  69  N.  Y.  125;  Lynch  v.  First 
Nat.  Bank,  107  N.  Y.  179;  Hill  v. 
National  Trust  Co.,  108  Pa.  1. 

13  Lunt  v.  Bank  of  North  America, 
49    Barb.    221;    Commercial    Nat. 
Bank  v.  First  Nat  Bank,  118  N.  C. 
783;  Bank  of  Republic  v.  Millard, 
10  Wall  152;  Ames  v.  York  Nat 
Bank,  103  Mass.  326. 

"  Bank  of  Republic  v.  Millard,  10 
Wall.  152;  First  Nat  Bank  v.  Whit- 
man, 94  U.  S.  343;  Florence  Mining 


147.] 


DEPOSITS. 


245 


a  deposit  is  not  an  equitable  assignment  of  any  portion 
thereof,15  nor  an  assignment  of  the  whole  thereof,  where  it  is 
for  the  full  amount  of  the  deposit.16  This  is  the  necessary 
result  of  the  rule  as  to  checks  that  is  held  throughout  the 
commercial  world ;  but  if  a  check  is  drawn  upon  a  particu- 
lar fund,  and  so  understood  as  between  the  parties,  it  is 
operative  upon  that  fund  pro  tanto,11  but  a  check  or  draft 
drawn  generally  is  not  so.18 

§  147.  Rule  in  some  states. —  Yet  in  spite  of  the  great 
weight  of  authority,  the  usage  of  the  commercial  world,  the 
necessities  of  business,  the  convenience  of  banking  transac- 
tions and  the  dictates  of  common  sense,  as  settled  by  the 
courts  of  England  and  America,  it  is  held  in  Illinois,1  Ken- 
tucky,2 South  Carolina,3  Nebraska,4  and  perhaps  Texas,5  that 
the  holder  of  a  check  can  sue  upon  it,  if  when  presented  at 
the  bank  the  depositor  has  sufficient  credit  to  meet  the  whole 
of  it,6  but  not  a  lesser  amount.7  This  same  rule  was  adopted 


Co.  v.  Brown,  124  IT.  S.  385,  and 
every  state  in  the  Union,  except 
those  mentioned  in  the  next  section- 

u  Fourth  St.  Bank  v.  Yardley,  165 
U.  S.  634;  Florence  Mining  Co.  v. 
Brown,  124  U.  S.  385. 

16  See  cases  last  cited. 

^  Fourth  St.  Bank  v.  Yardley,  165 
U.  S.  634.  This  case  must  be  closely 
confined  to  the  particular  facts,  or 
it  is  misleading.  See  also  Coates 
v.  first  Nat.  Bank,  91  N.  Y.  26; 
Throop  Grain  Cleaner  Co.  v.  Smith, 
110  N.  Y.  83;  First  Nat.  Bank  v. 
Clark,  134  N.  Y.  368.  But  compare 
First  Nat.  Bank  v.  Dubuque  Ry. 
Co.,  52  Iowa.  378. 

18  Bush  v.  Foote,  58  Miss.  5;  Jones 
v.  Pacific  Co.,  13  N.  W.  R.  359;  First 
Nat  Bank  v.  Dubuque,  etc.  Ry.  Co., 
52  Iowa,  378;  Hawes  v.  Blackwell, 
107  N.  C.  196.  This  last  case  suc- 
ceeds in  being  wholly  unintelligi- 


ble as  to  the  check-holder's  rights 
against  the  bank.  The  court  seemed 
not  to  have  any  well-defined  idea 
upon  the  subject.  See  also  the 
cases  cited  in  the  three  preceding 
notes. 

1  Munn  v.  Burch,  25  I1L  35,  and 
cases  to  the  present  time. 

2  Lester  v.   Given,  8  Bush,  357; 
Herndon    v.    Louisville    Banking 
Ass'n,  10  Ky.  Law  R.  584 

8  Fogarties  v.  State  Bank,  12  Rich. 
Law,  518;  Simmons  Hardware  Co. 
v.  Bank  of  Greenwood,  41  S.  C.  177. 

4  Fonner  v.  Smith,  31  Neb.  107. 

8  First  Nat.  Bank  v.  Randall,  1 
White  &  W.  Civ.  Gas.  Ct.  App., 
sec.  975. 

6  See  cases  last  cited  and  those 
cited  in  note  27  to  this  section. 

7  Coates  v.  Preston,  105  111.  470; 
Pabst  Brewing  Co.  v.  Reeves,  42  III 
App.  154 


246  BANKS    AND   BANKING.  [§  147. 

in  the  intermediate  appellate  courts  of  Missouri,8  but  was  re- 
jected by  the  Supreme  Court  of  that  state.9  Iowa  adopted 
it,10  but  soon  afterwards  repudiated  it.11  Louisiana  recognizes 
an  assignment  by  check  where  the  check  corresponds  to  the 
whole  deposit.12  But  all  the  cases  agree  that  presentment  is 
necessary  to  give  the  holder  any  right  against  the  bank,13 
except,  it  has  been  said,  that  the  drawing  of  the  check  gives 
the  holder  thereof  precedence  over  a  garnishment.14  And 
finally,  the  rule  must  be  in  these  states  that  the  check  takes 
effect  upon  moneys  deposited  after  the  check  is  drawn.15  The 
situation  of  a  banker  in  these  peculiar  states  is  most  insecure. 
Suppose  a  check  is  countermanded  after  presentation.  The 
owner  of  the  deposit,  if  the  jurisdictional  facts  exist,  can  sue 
him  in  the  United  States  court  and  obtain  judgment  if  the 
banker  pays  the  check.  For  the  federal  courts  will  be  gov- 
erned by  the  general  rule,  and  will  not  follow  the  local  law. 
But  the  holder  of  the  check  can  sue  him  in  the  state  courts 
and  get  judgment  also.  So  it  would  be  in  the  case  of  an  unpre- 
sented  check  in  the  hands  of  a  l)onajide  holder.  It  is  nothing 
less  than  monstrous  that  such  a  condition  should  exist.  As  we 
pointed  out  in  section  139,  ante,  this  very  condition  confronts 
every  bank  in  case  of  an  insolvent  depositor.  This  rule  in- 
troduces such  difficulties  into  the  law  that  the  grounds  of  it 
are  worthy  of  serious  attention,  not  less  so  on  account  of  the 
fact  that  both  Mr.  Morse  and  Mr.  Daniel  have  given  the 

8  McGrade  v.  German  Sav.  Inst.,  4  v.  National  City  Bank,  39  Ohio  St. 
Mo.  App.  330;  State  Sav.  Ass'n  v.  600,  was  a  check  for  the  whole  de- 
Boatmen's  Sav.  Bank,  11  Mo.  App.  posit.     Compare    Railway   Co.    v. 
292;  Senter  v.  Continental  Bank,  7  Metrop.  Nat.  Bank,  54  Ohio  St.  60. 
Mo.  App.  532.  13  See  cases  cited  in  note  2  and 

9  Dickenson  v.  Coates,  79  Mo.  250;  note  30  to  this  section. 

Coates  v.  Doran,  83  Mo.  337.  14  Detheridge  v.  Crumbaugh,  8  Ky. 

10  Roberts  v.  Corbin,  26  Iowa,  315.  Law  R.  592.    Illinois  holds  other- 

11  First  Nat.  Bank  v.  Dubuque,  etc.  wise.    See  note  30  to  this  section. 
Ry.,  52  Iowa,  378.  These  courts   cannot  agree  even 

12  Gordon  v.  Muchler,  34  La.  Ann.  upon  their  own  rule. 

604     But   it  denied   the   general  15  Rosenbaum  v.  Lytle,  8  Ky.  Law 

right    Case  v.  Henderson,  23  La.  R.  607.    This  is  implied  in  all  the 

Ann.  49.    Perhaps  Ohio  belongs  in  Illinois  cases.    See  note  30  to  this 

this  list  with  Louisiana.    Gardner  section. 


§ 


DEPOSITS. 


247 


rule  their  enthusiastic  commendation.  The  leading  case  is 
Munn  v.  Burch?*  The  opinion  is  by  Chief  Justice  Caton. 
He  was  no  doubt  a  man  of  strong  original  power;  but  he 
cannot  be  said  to  have  had  any  accurate  scientific  knowl- 
edge of  the  principles  of  the  law.  He  put  the  holder's  right 
upon  three  grounds:  (1)  that  the  check  is  an  equitable  as- 
signment; (2)  that  the  promise  of  the  bank  to  the  depositor 
to  honor  his  check  is  made  for  the  benefit  of  the  check- 
holder,  who  may  sue  upon  it;  (3)  that  there  is  an  implied 
contract  between  the  check-holder  and  the  bank.  The  first 
ground  is  refuted  by  all  the  other  decisions  to  the  effect  that 
no  assignment  takes  place  until  presentation,  up  to  which 
time  the  bank  can  apply  the  deposit  on  its  own  claim,17  and 
the  maker  can  revoke  the  check.18  It  cannot  in  fact  be  an 


16  25  111.  35.  This  opinion  was 
written  at  a  comparatively  early 
day.  It  really  was  a  presumption 
for  a  court  in  a  state  that  had  so 
little  banking  to  assume  to  talk 
with  such  absolute  aplomb  of  com- 
mercial usage.  The  case  was  a  hard 
one,  and  hard  cases  make  bad  law. 
It  should  be  remembered  that  it 
was  an  equity  case,  and  is  no  au- 
thority for  the  proposition  that  the 
holder  can  sue  at  law.  The  facts  of 
the  case  were  that  a  man  had  a 
check  upon  a  bank  for  wheat  sold 
to  a  buyer  for  eastern  people.  The 
check  was  brought  to  the  bank  and 
the  buyer  had  funds.  The  check 
was  left  there  and  by  the  bank  was 
charged  against  the  account  of  the 
drawer.  It  was  therefore  accepted. 
But  a  draft  of  the  buyer's  came 
back  protested,  and  the  bank 
charged  off  the  credit  and  refused 
to  pay  the  check,  but  at  the  same 
time  the  bank  had  the  bill  of  lad- 
ing for  the  wheat  and  actually  got 
the  proceeds.  It  would  have  been 
a  simple  matter  to  hold  that  the 
check  had  been  accepted  and  that 


the  holder  could  sue.  But  neither 
court  nor  counsel  saw  this  obvious 
solution,  and  the  consequence  was 
a  great  mass  of  dictum  now  become 
law  in  Illinois. 

17  See  cases  cited  in  note  30.    It  is 
probable  that  this  peculiar  idea  is 
due  to  a  confusion  in  the  minds  of 
the  judges-  between  the  relation 
of  debtor  and  creditor,  and  the  old 
idea  that  a  man  actually  had  his 
own  money  with  his  banker.    This 
same  confusion  survives  in  common 
speech  and  the  courts  are  compelled 
to  give  it  effect  in  wills.    A  bank 
credit  passes  under  a  bequest  of 
ready  money  or  money  in  hand. 
Parker  v.  Marchant,  1  Ph  356;  In  re 
Powell,  Johns.  49;  Fryer  v.  Rankin> 
11  Sim.  55;  Stern  v.  Richardson,  37 
L.  J.  Ch.  369;  Varsey  v.  Reynolds,  5 
Russ.  12;  Langdale  v.  Whitfield,  27 
L.  J.  Ch.  795. 

18  This  is  implied  in  the  Illinois 
cases.    Fourth  Nat.  Bank  v.  City 
Nat.  Bank,  68  111.  398,  admits  that 
an  assignment  in  bankruptcy  re- 
vokes an  unpresented  check. 


248  BANKS    AND   BANKING.  [§  147. 

equitable  assignment,  because  no  consideration  is  paid  for  it; 
it  is  not  payment  in  itself; 19  it  discharges  nothing  until  ac- 
ceptance ;  the  original  claim  remains.  It  is  merely  an  order 
to  pay,  and  does  not  take  effect  upon  the  deposit  as  a  fund 
existing  when  it  was  drawn,  but  upon  what  exists  when  it 
is  presented.20  Otherwise  it  might  be  an  assignment  of  a 
credit  not  in  existence  when  it  was  made,  and  hence  not  an 
assignment  at  law  at  all.  It  is  only  an  order  and  not  an  as- 
signment, because  the  drawer  is  not  released  until  it  is  ac- 
cepted.21 Neither  of  the  text  writers  spoken  of  above  relies 
upon  this  ground  as  tenable.  Next  it  is  said  that  the  promise 
of  the  bank  to  the  depositor  is  made  for  the  benefit  of  the 
third  party,  the  check-holder,  and  therefore  he  can  sue  upon 
it.  But  this  ground  is  based  upon  an  actual  contract,  ex- 
pressly made.  A  quasi-coutract  arising  ex  lege  is  not  an 
obligation  to  a  third  party.  Conceding  such  a  contract  act- 
ually made,  the  rule  is  that  when  a  third  party  sues  upon  a 
contract  made  for  his  benefit,  he  must  be  a  person  ascer- 
tained at  that  time  and  pointed  out  by  the  contract.22  He 
cannot  be  "all  the  world,"  as  Chief  Justice  Caton  seems  to 
think.  The  very  nature  of  the  transaction  is  such  that  the 
third  party  cannot  be  ascertained  at  the  time  of  making  the 
contract.  But  the  real  difficulty  with  this  proposition  is 
that  the  engagement  existing  between  the  depositor  and  the 
bank  is  not  a  contract  at  all,  but  a  quasi-con  tract.  It  is  a 
customary  duty  imposed  as  the  result  of  a  relation,  and  is 
not  an  actual  express  contract  nor  one  implied  as  of  fact 
from  circumstances.23  Therefore  there  is  no  chance  left  for 
this  contention.  The  third  ground  is  the  one  relied  upon  by 
the  text  writers,  to  wit:  that  there  is  an  implied  contract 
between  the  check-holders  and  the  bank  which  creates  a 

19  Thomson  v.  Bank  of  Brit  No.  Nat.  Bank,  46  N.  Y.  82;  Montgomery 

Am.,  82  N.  Y.  8.  v.  Reif,  15  Utah,  495,  and  cases 

20Rosenbaum  v.  Lytle,  8  Ky.  Law  therein  cited;  and  see  specially  Na- 

R.  607.  See  note  15  to  this  section,  tional  Bank  v.  Eliot  Bank,  5  Am. 

21Metrop.  Bank  v.  Jones,  137  III.  Law  Reg.  711,  and  Simsonv.  Brown, 

634  68  N.  Y.  355. 

2-' See  ^Etna  Nat  Bank  v.  Fourth  23S2e  §  128,  ante. 


§  147.]  DEPOSITS.  249 

duty.  This  duty  must  arise  either  when  the  check  is  given 
or  when  it  is  presented.  It  must  be  the  latter,  because  no 
duty  whatever  on  the  part  of  the  bank  exists  until  that 
time.24  This  duty  must  arise  out  of  a  contract  or  out  of  a 
particular  relation.  It  will  not  be  contended  that  there  is 
any  express  contract  or  one  implied  prior  to  the  time  of  pres- 
entation. Kow,  if  the  duty  arises  out  of  a  contract,  it  must 
be  a  contract  made  either  expressly  or  implied ly  at  the  time 
of  presenting  the  check.  No  contract  is  made  then  expressly 
or  impliedly,  because  none  such  is  contended  for  except  a 
customary  duty  arising  from  the  general  practice,  which  is 
called  a  contract.  The  first  objection  is  that  there  is  no 
such  customary  duty,  as  is  settled  by  the  almost  unanimous 
concurrence  of  the  courts  of  England  and  America  and  the 
practice  of  the  business  world.  But  the  very  statement  of 
the  so-called  implied  contract  shows  that  it  is  a  quasi-con- 
tract,  not  a  contract  proper,  i.  e.,  one  implied  as  a  fact  by 
agreement.  Therefore  it  arises  out  of  a  relation  and  depends 
upon  the  fact  as  to  whether  such  a  customary  duty  has  so 
long  prevailed  as  to  have  become  an  absolute  rule  of  law. 
This  is  shown  by  the  analogous  relations  of  carriers  and  inn- 
keepers. But  here  a  court  has  invented  a  customary  duty 
for  itself  and  then  enforced  it,  when  it  could  only  enforce 
such  a  rule  of  law  if  the  customary  duty  had  prevailed  so 
generally  or  for  so  long  as  to  become  a  fixed  and  permanent 
rule  of  law.  On  either  ground,  then,  this  rule  is  untenable. 
But  the  courts  and  text  writers  have  lost  sight  of  the  fact 
that  the  depositor's  right  is  a  double  one :  first,  an  actual  con- 
tract creating  a  debt;  second,  a  customary  duty  creating  an 
obligation  ^wm-contractual.  The  debt  is  not  at  all  the  re- 
sult of  a  duty,  but  the  rule  that  gives  the  holder  a  right  to 
sue  seeks  to  create  an  actual  contract  of  debt  out  of  a  cus- 
tomary duty,  which  never  creates  more  than  a  quasi-contract. 
It  must  be  remembered  that  a  debt  and  the  common-law 
remedy  of  debt  are  not  the  same  thing.  The  action  of  debt 
lies  on  quasi-contract,  but  a  ^^-contractual  obligation  is  not 

24  See  note  20  and  note  18  to  this  section. 


250  BANKS   AND    BANKING.  [§  147. 

a  debt.  Text  writers  have  confused  debt  with  the  action  of 
debt,  or  they  never  could  have  said  that  a  duty  creates  a 
debt.  Yet  the  decisions  going  upon  other  grounds  gener- 
ally contend  that  the  alleged  contract  between  the  parties 
creates  the  duty,  and,  because  the  nature  of  quasi-contract 
has  not  been  until  lately  well  understood,25  it  had  been  con- 
ceded that  there  is  a  contract  between  the  depositor  and  the 
bank  to  honor  his  checks  upon  his  fund.  The  right  of  the 
check-holder  to  recover  is  denied,  because  he  is  not  a  party 
to  the  contract.26  This  rule  is  unvarying  wherever  a  con- 
tract is  insisted  upon  as  creating  a  relation  out  of  which  a 
duty  arises.  A  contract  of  carriage  of  passengers,27  a  con- 
tract between  attorney  and  client,28  a  contract  between  a 
telegraph  company  and  the  sender  or  receiver,29  can  only 
be  sued  upon  by  one  who  is  a  party  to  the  contract,  not  by 
some  one  who  is  injured  by  the  manner  in  which  the  con- 
tract is  failed  to  be  performed.  This  analogy  is  complete 
and  runs  all  through  the  law,  that  a  man  to  claim  the  .bene- 
fit of  a  contract  must  be  in  some  way  a  party  to  it.  The 
point  has  already  been  noticed  that  the  check-holder  is  not 
a  party  to  any  contract  between  the  bank  and  its  depositor, 
even  if  there  can  be  said  to  be  a  contract  between  them  as 
to  the  duty  to  pay  checks.  There  is  of  course  the  contract 
of  loaning,  which  creates  a  debt,  but  this  duty  is  wholly  out- 
side of  that  relation.  Such  are  the  reasons  which  lead  us 
to  think  that  the  rule  in  Illinois  and  the  other  states  men- 
tioned is  unsound  and  has  no  excuse  for  existing.  But  the 
prolonged  and  never-ending  trouble  that  it  causes  the  courts 
of  that  state30  would  be  good  reason  for  its  abolition.  But 

25  Keener   on    Quasi-Contract,   a    Q.  B.  D.  503,  cannot  be  considered  as 
most  admirable  work  and  one  that    overruling  this  case. 

reflects  the  highest  credit  upon  the  28  Nat.  Bank  v.  Ward,  100  U.  S.  195. 
jurists  of  this  country.  29  McCornick  v.  Western  Union 

26  See  the  opinions  in  the  cases    Tel.  Co.,  79  Fed.  R.  449. 

cited  in  note  14  to  §  140,  ante,  30  The  course  of  Illinois  decisions 

27  Winterbottom  v.  Wright,  10  M.    is  an  excellent  illustration  of  the 
&  W.  109.    Heaven  v.  Fender,  11    fact  that  the  disregard  of  a  sound 


DEPOSITS. 


251 


the  courts  of  the  state  seem  so  firmly  wedded  to  this  propo- 
sition, untenable  as  it  is,  and  confusing  as  it  renders  the  law 


principle  of  law  is,  as  Pope  Pius  IX 
said  of  the  marriage  of  a  priest, 
"  an  act  which  carries  its  own  pun- 
ishment with  it."  We  have  already 
pointed  out  the  absurd  results  of 
this  rule  in  the  instances  men- 
tioned in  note  26  to  §  138,  ante,  and 
note  22  to  §  140,  ante,  as  well  as  the 
monstrous  situation  of  a  bank  in 
case  of  insolvency  in  note  2  to  §  139, 
ante.  Af ter  the  decision  in  Munnv. 
Burch,  25  III  35  (which  Chief  Jus- 
tice Breese  at  68  111.  401,  calls  Mon- 
roe v.  Beach),  the  court  was  com- 
pelled to  admit  the  right  of  the 
depositor  to  suo  on  the  check  even 
though  it  had  been  presented. 
Chicago  Ins.  Co.  v.  Stanford,  28  111. 
168,  But  the  modification  had  to 
be  at  once  made  that  the  holder 
gained  no  right  until  he  presented 
the  check.  Shaffner  v.  Edgerton, 
13  Bradw.  132;  Fourth  Nat.  Bank 
v.  City  Nat.  Bank,  68  III  398.  The 
check  was  called  an  equitable  as- 
signment.yetsuituponitatlaw  was 
allowed.  Next  it  was  said  that  the 
check  must  be  payable  in  money, 
not  exchange.  Hogue  v.  Edwards, 
9  Bradw.  148.  This  case  displays 
almost  a  genius  for  being  wrong. 
A  check  was  given  on  a  bank  with 
a  memorandum  statement  on  it  to 
show  it  was  to  obtain  a  draft.  The 
check  was  paid  by  the  issuance  of 
a  draft.  The  draft  was  never  paid, 
and  the  holder  of  the  check  sued 
the  bank.  And  it  was  held  he  could 
not  recover.  The  check,  of  course, 
was  accepted  for  so  much  money, 
and  could  be  sued  on  anywhere  by 
the  holder.  The  only  question  was 
as  to  whether  the  issuance  of  a 


draft,  never  paid,  was-  payment. 
Of  course  it  was  not  payment, 
Indig  v.  Nat.  City  Bank,  80  N.  Y. 
100.  The  bank  obtained  just  so 
much  money  without  giving  any- 
thing for  it.  The  court  intimates 
that  -the  holder  of  the  check  could 
sue  the  drawee  on  the  draft,  but 
that  is  absurd,  because  it  was  never 
accepted.  The  draft  was  in  fact  a 
check  on  another  bank,  and  the 
payment  of  that  check  was  stopped 
or  rather  countermanded.  The 
check  was  no  less  a  check  because 
drawn  by  one  bank  on  another. 
State  v.  Vincent,  91  Mo.  662.  Here 
the  court  recognize  the  right  of 
the  drawer  to  stop  payment  on  the 
check  as  against  the  holder.  A  re- 
hearing was  had,  and  in  9  Bradw. 
263,  the  court  in  a  per  curiam  opin- 
ion, although  its  gross  error  had 
been  pointed  out  to  it,  yet  per- 
sisted in  its  error,  and  said  that 
there  was  no  privity  between  the 
holder  of  the  check  and  the  bank, 
although  the  bank  had  accepted 
the  check.  The  court  seemingly 
holds  also  that  the  payee  of  the 
check,  called  a  draft,  could  not  sue 
the  person  who  issued  it.  A  more 
iniquitous  result  cannot  be  con- 
ceived. Yet  here  we  have  the  doc- 
trine of  the  holder  suing,  absolutely 
annihilated  for  want  of  privity  in 
the  case  of  a  check  drawn  by  a 
bank.  Next  we  find  that  the  as- 
signment of  the  check  carries  with 
it  legal  title  to  the  drawer's  de- 
posit for  the  sum  named  in  the 
check.  Merchants'  Nat.  Bank  v. 
Ritzinger,  20  Bradw.  27.  In  other 
words,  the  assignment  of  an  equi- 


252 


BANKS   AND   BANKING. 


[§ 


of  banking,  that  there  is  little  hope  of  a  change.   "Ephraim 
is  joined  to  idols;  let  him  alone;"  but  a  later  saying  of  the 


table  assignment  gives  the  assignee 
an  assignment  at  law.  Then  we 
are  told  that  a  demand  of  payment 
and  acceptance  by  telegraph  are 
not  sufficient  to  give  the  holder 
the  right  to  sue.  Myers  v.  Union 
Nat.  Bank,  27  III  App.  254  Then 
a  demand  before  banking  hours  is 
held  sufficient  to  give  the  holder 
the  right  to  sue.  American  Ex. 
Nat.  Bank  v.  Chicago  Nat.  Bank,  27 
III  App.  538.  Then  we  are  told 
that  the  bank  cannot  set  off  its  own 
debt  against  the  depositor  where  a 
check  has  been  presented.  Fourth 
Nat.  Bank  v.  City  Nat.  Bank,  68 
111.  398;  Niblack  v.  Park  Nat  Bank, 
169  111.  517.  This  is  perhaps  the 
worst  result  of  the  rule.  A  banker 
carrying  a  customer  on  his  deposit 
may  iind  the  whole  deposit  wiped 
out  by  a  check  suddenly  presented. 
This  seems  to  be  on  the  theory  that 
title  passes  to  the  holder  upon  the 
drawing  of  the  check,  otherwise  it 
-could  not  cut  off  the  banker's  set- 
off.  But  the  court  has  abandoned 
this  idea  by  holding  emphatically, 
as  it  has,  that  there  is  no  assign- 
ment until  presentation  of  the 
check.  But  if  this  is  so,  the  orig- 
inal demand  of  the  holder  of  the 
check  is  ended,  and  the  drawer 
ought  to  be  released,  because  if 
there  are  funds  the  presentation  is 
the  same  as  an  acceptance  of  the 
check.  Yet  Ridgely  Bank  v.  Pat- 
ton,  109  III  479,  holds  that  the 
holder  can  sue  and  attach  on  his 
original  claim,  and  yet  sue  the  bank 
on  the  check.  Even  such  a  devo- 
tee of  the  new  doctrine  as  Mr. 
Daniel  scouts  this  absurd  idea. 


2  Daniel,  Neg.  Inst.  (4th  ed.),  §  1639. 
The  court,  with  the  courage  of  its 
convictions,  originally  held  that 
acceptance  or  certification  of  the 
check  cuts  no  figure;  it  does  not 
release  the  drawer.  Bickford  v. 
First  Nat.  Bank,  42  III  238;  Rounds 
v.  Smith,  42  III  245;  Brown  v. 
Leckie,  43  111  497.  The  court's  lan- 
guage was  not  confined  to  a  check 
certified  at  the  instance  of  the 
drawer.  The  theory  was  that,  if 
the  check  was  an  assignment,  ac- 
ceptance was  perfectly  immaterial. 
But  the  court  was  compelled  to  re- 
cede from  this  position.  It  was  im- 
possible to  leave  a  great  commercial 
city  like  Chicago  in  such  a  condi- 
tion. And  Metropolitan  Bank  v. 
Jones,  137  111.  634,  holds  that  accept- 
ance by  the  bank  releases  the 
drawer.  The  court  courageously 
undertakes  to  say  the  former  rul- 
ings of  the  court  are  not  in  point 
because  they  were  cases  of  certifi- 
cation to  the  drawer  of  the  check; 
but  it  overlooked  Wood  v.  Merch. 
Sav.  Co.,  41  111.  267,  which  was  a 
certification  of  a  note.  The  opin- 
ion in  Metropolitan  Bank  v.  Jones, 
supra,  says  no  title  passes  to  the 
holder  by  way  of  assignment  until 
presentation.  But  the  assignment 
is  the  assignment  of  what  is  equal 
to  so  much  cash,  and  if  the  holder 
of  the  check  gets  title  to  the  cash 
by  presentation,  what  further  is 
needed  to  give  him  title  to  the 
cash,  so  as  to  discharge  the  drawer? 
But  then  comes  Bank  of  Antigo  v. 
Union  Trust  Co.,  149  III  343,  and 
says  that  the  check  is  an  assign- 
ment only  as  between  the  drawer 


DEPOSITS. 


255 


prophet  asserts,  as  a  celebrated  writer  wittily  observes,  that 
Ephraim  shall  remain  "  a  wild  ass,  alone  by  himself." 


and  drawee  before  presentation. 
The  learned  judge  must  mean  payee 
instead  of  drawee,  but  the  confu- 
sion produced  by  this  doctrine  is 
so  great  that  an  erudite  court  must 
go  "  thundering  down  the  ages  "  as 
holding  the  belief  that  the  payee 
of  a  check  is  its  drawee.  Then  we 
are  informed  that  although  the 
check  on  presentation  does  not  re- 
lease the  drawer,  yet  the  bank  loses 
its  right  of  set-off  as  against  a  pre- 
sented check,  although  the  debt  is 
matured.  Brown  v.  Leckie,  43  ILL 
497;  Fourth  Nat,  Bank  v.  City  Nat. 
Bank,  68  III  398.  And  it  loses  this 
right  as  against  a  holder  on  an  un- 
matured  demand  even  though  the 
check  be  not  presented  (Merchants' 
Nat.  Bank  v.  Ritzinger,  20  Bradw. 
27),  it  being  immaterial  that  the 
maker  is  insolvent.  Merchants' 
Nat.  Bank  v.  Robinson,  47  Ky.  552. 
Again  it  is  held  that  the  outstand- 
ing unpresented  assignment  by 
check  is  not  good  against  the  bank's 
assignment  of  the  deposit  to  itself 
by  application  of  it  on  the  debt  of 
the  depositor.  Fort  Dearborn  Nat. 
Bank  v.  Blumensweig,  46  111.  App. 
297.  Yet  it  is  plain  that  the  same 
rule  ought  to  apply  to  an  unma- 
tured  demand  if  the  depositor  is 
insolvent.  The  latter  is  a  case  of 
equitable  set-off,  which  ought  to  be 
good  against  an  equitable  assign- 
ment. If  the  holder  has  a  claim 
against  the  bank  by  reason  of  a 
check,  he  surely  ought  to  be  able 
to  set  off  the  check  which  he  holds 
against  the  debt  which  he  owes  to 
the  bank.  But  by  this  process  any 
depositor,  by  giving  checks  to  men 


who  owe  the  bank,  can  get  paid  in 
full,  while  other  depositors  must 
take  what  is  left.  The  bank's  as- 
sets could  be  reduced  to  a  mini- 
mum by  such  a  process.  See  §  224, 
post.  Finally,  the  court  long  ago, 
in  McCagg  v.  Woodman,  28  111.  84, 
held  that  a  depositor  could  set  off 
his  deposits  against  a  note  of  his 
own  to  the  bank  maturing  after 
insolvency.  This  was  right,  as  it 
was  a  good  case  of  equitable  set-off. 
Yet  the  bank  cannot  set  off  its  un- 
matured  demand  against  an  in- 
solvent depositor.  The  result  is  most 
inequitable.  To  be  consistent  the 
court  should  hold  that  the  holder 
of  a  presented  or  unpresented  check 
can  set  it  off  against  an  insolvent 
bank  for  a  debt  which  is  unma- 
tured  at  the  date  of  the  insolvency. 
This  doctrine  has  so  confused  the 
court  that  it  has  forgotten  that  a 
bank  cannot  lend  its  credit  for  ac- 
commodation. Turning  now  to 
overdrafts,  the  court  holds  that  if 
an  officer  of  the  bank  promises  the 
drawer  without  funds  to  pay  his 
check,  and  the  drawer  tells  this  to 
the  holder,  the  holder  can  sue  upon 
it  as  a  contract  made  with  himself. 
Nelson  v.  First  Nat.  Bank,  48  111. 
36.  And  by  this  decision  the  court 
puts  a  bank  in  the  position  of 
guaranteeing  a  corn-merchant's  ac- 
count merely  for  his  accommoda- 
tion. It  went  further  in  Springfield 
Marine  Bank  v.  Mitchell,  48  111. 
App.  486,  and  made  a  bank  a  horse- 
dealer  by  estoppel. 

This  farrago  of  warring  decis- 
ions, rudis  indigestaque  moles,  all 
results  from  an  attempt  to  disre- 


254 


BANKS   AND   BANKING. 


[§  148. 


§  148.  Order  of  payment  of  checks. —  It  is  a  part  of  the 
duty  of  banks,  which  some  courts  mistakenly  call  an  implied 
contract,1  to  pay  the  checks  of  a  depositor  in  the  order  in 
'which  they  are  presented.2  If  checks  are  presented  at  the 
same  time,  the  bank  may  pay  in  the  order  that  it  pleases.3 
If  there  are  more  accounts  than  one,  and  one  or  more  of 
them  are  disputed,  the  bank  may  apply  the  check  upon  an 
undisputed  account.4  It  follows  from  the  rule  as  to  order 
of  payment,  that  where  a  creditor  of  the  depositor  has  ob- 
tained a  lien  by  trustee  process  and  has  taken  a  check  and 


gard  a  plain  and  well-settled  rule 
of  law  produced  By  the  rules  of 
business.  The  text  writers  who 
support  this  rule  had  not  contem- 
plated the  practical  results  of  its 
working.*  The  history  of  the  decis- 
ions in  one  state  shows  that  "a 
good  thing  is,"  as  Howells  some- 
where says,  "never  so  much  of  a 
good  thing  as  when  it  gets  thor- 
oughly started."  The  painful  spec- 
tacle presented  by  these  Illinois 
decisions  ought  to  be  a  valuable 
lesson  to  code-tinkers  and  the  per- 
petrators of  crude  judicial  or  other 
legislation.  Those  people  cannot 
be  made  to  understand  that  the 
vital  principles  of  the  common  law 
are  the  result  of  ages  of  experience 
and  common  sense  tried  and  tested 
in  the  discussions  in  courts  from 
day  to  day,  from  year  to  year,  f r<  n 
century  to  century.  The  product 
of  these  discussions  has  been  a  sys- 
tem of  law,  imperfectly  developed 
here  and  there,  it  is  true,  but  one 
whose  ideal  is  simply  justice. 

•"  On  the  rock  primeval,  hidden  in 

the  past  its  bases  be, 
Block  by  block  the  endeavoring 

ages  built  it  up  to  what  we  see." 

Its  principles  are  not  for  yester- 
day, but  for  to-day.    Its  marvelous 


capacity  for  a  natural  growth  is 
proven  every  day  by  its  rapid 
adaptation  to  new  conditions.  As 
the  great  Grecian  said  of  the  funda- 
mentals of  morals  we  may  say  of 
the  vital  principles  of  the  common 
law:  "The  power  of  the  Lord  is 
mighty  in  them  and  groweth  not 
old."  Take,  for  instance,  the  de- 
velopment of  jury  trial  and  the 
rules  of  evidenca  What  a  jury  or 
other  trial  is  without  such  rules  we 
see  in  the  hideous  travesties  of 
France.  Those  rules  are  of  the 
same  character,  for  they,  as  Lord 
Erskine  splendidly  says,  are  founded 
in  the  philosophy  of  nature,  in  the 
truths  of  history  and  in  the  expe- 
rience of  common  life.  Matters  of 
mere  forms  of  pleading,  or  of  the 
competency  of  witnesses,  may  vary 
from  day  to  day,  but  the  principles 
of  substantive  law,  being  a  natural 
growth,  cannot  be  tampered  with 
without  great  evil  resulting. 

1  Chambers  v.  Northern  Bank,  5 
Ky.  Law  R.  123. 

2  National  Safe  Co.  v.  People,  50 
III  App.  336. 

8  Dykers  v.  Leather  Manuf.  Bank, 
11  Paige,  612. 

4  Hauptmann  v.  First  Nat  Bank, 
83  Hun,  78. 


§§  149,  150.]  DEPOSITS.  255 

released  his  lien,  and  another  trustee  process  is  levied  before 
his  check  is  cashed,  he  loses  his  lien.5  The  same  result  would 
follow  if  a  check  were  paid  before  he  presented  his  own 
check. 

§  149.  Refusal  of  payment. —  We  have  already  noticed 
the  instances'  where  a  bank  may  refuse  payment.  It  may 
refuse  to  pay  a  part  of  a  check,1  but  may  agree  to  pay  pro 
tanto*  If  it  refuses  to  pay  on  account  of  defects  in  the  check, 
such  as  to  the  signature,  the  defect  should  be  pointed  out.3 
It  cannot  refuse  to  pay  checks  because  they  were  given  with- 
out consideration  or  illegally,4  unless,  of  course,  payment 
on  the  check  has  been  stopped.  The  checks  must  be  paid 
in  the  form  and  manner  prescribed  by  the  depositor.5  The 
bank  is  entitled  to  a  reasonable  opportunity  to  examine  its 
books  before  payment.6 

§  150.  Accepted  and  certified  checks. —  By  common  con- 
sent and  the  usage  of  the  commercial  world,  the  certifica- 
tion of  a  check,  or  the  acceptance  of  it  by  the  bank  at  the 
instance  of  the  payee,  discharges  the  drawer  of  the  check 

8  Bullard  v.  Randall,  1  Gray,  605.  which  is  payable  to  one  for  the  ae- 

^oates  v.  Preston,  105  111.  470;  count  of  another.  Ridgeley  Bank  v. 

Lowenstein    v.   Bressler,  109  Ala.  Patton,  109  111.  479.    But  in  the  ab- 

326;  Eichelberger  v.  Finley,  7  Har.  sence  of  other  knowledge,  would  a 

&  J.  381;  In  Matter  of  Brown,  2  bank  be  justified  in  thinking  from 

Story,    519.     Contra,   Bromley    v.  such  a  check  that  the  person  for 

Comm.  Nat.  Bank,  9  Phila.  522.  whose  account  the  check  was  given 

2  Dana  v.  Third  Nat.  Bank,  95  assented  to  the  arrangement  ?    But 
Mass.  445.    But  the  bank  cannot  probably  it  would  be  said  that  the 
force  the  holder  to  receive  part  depositor  had  the  right  to  direct 
payment.    In  Matter  of  Brown,  2  how  payment  should  be  made,  and 
Story.  519.  the  bank  owed  no  duty  to  the  ben- 

3  Illinois  State  Bank  v.  Batty,  5  eficiary  of  the  check.    The  check 
111.  200.  in  the  above  case  was  payable  to 

4  McCord  v.  CaL  Nat.  Bank,  96  an  attorney  for  the  account  of  his 
Cal.  197.  client,  and  the  question  did  not 

6Metrop.  Nat.  Bank  v.  Race,  32  arise. 

111.  App.  126;  Gladstone  Ex.  Bank  6  State  Nat.  Bank  v.  Boettcher,  5 

v.  Keating,  94  Mich.  439.    But  a  Colo.  185. 
bank  cannot  refuse  to  pay  a  cheek 


256  BANKS   AND    BANKING.  [§  150, 

and  substitutes  the  bank  as  a  debtor.1  In  other  words,  a 
novation  takes  place.  The  depositor  owes  his  creditor,  and 
the  bank  owes  the  depositor.  The  three  agree  that  the  bank 
may  owe  the  creditor,  and  the  depositor  is  discharged.  The- 
result  is  that  so  much  of  the  depositor's  account  as  corre- 
sponds to  the  accepted  or  certified  check  at  once  becomes 
the  property  of  the  bank;2  that  is  to  say,  the  check  is  paid. 
But  the -same  result  as  to  the  bank  becoming  entitled  to  so 
much  of  the  depositor's  account  follows  upon  a  certification 
granted  to  the  drawer  of  the  check;  but  in  this  latter  case 
the  transaction  is  a  different  one,  because  there  is  in  fact  no 
novation,  there  being  no  third  party  to  the  transaction. 
Hence  such  a  certified  check  delivered  to  the  payee  is  not 
payment  of  a  debt  between  the  drawer  of  the  check  and  the 
payee.3  Upon  both  such  descriptions  of  certified  checks  the 
bank  becomes  responsible  to  the  payee,  but  with  this  differ- 
ence: a  certification  granted  to  the  drawer  of  the  check,  not 
being  payment  of  any  claim  as  between  the  drawer  and  the 
payee,  and  not  being,  therefore,  a  novation,  may  be  revoked 
by  the  bank  for  a  mistake  as  to  the  drawer's  credit  with  the 
bank,  except  when  the  check  has  passed  to  a  bona  fide  in- 
dorsee, or  when  the  payee  of  the  check  has  parted  with 
value  or  suffered  a  detriment  on  the  faith  of  the  certifica- 
tion.4 The  reasons  for  this  rule  are  that  the  certification  has 

1  See  note  11  to  §  146,  ante,  and  634;  Born  v.  First  Nat  Bank,  12a 
Nat.  Laf.  Bank  v.  Cin'ti  Oyster  Co.,  Ind.  78;  Minot  v.  Russ,  156  Mass.  458. 
18  Wkly.  Law  Bui.  350.    The  bank  This  result  follows  even  though  the 
becomes  liable.   Drovers'  Nat.  Bank  certification  was  obtained  at  the 
v.  Packing  Co.,  117  111  100;  Irving  request  of  the   payea    Randolph 
Bank  v.  Wetherald.  36  N.  Y.  335.  Nat.  Bank  v.  Hornblower,  160  Mass. 

2  Merchants' Bank  v.  State  Bank,  401.    But  this  last  decision  is  not 
10  Wall  604   The  certification  need  sound,  because  there  was  a  nova- 
not  be  entered  on  the  books  or  made  tion. 

in  banking  hours.    See  the  last  case  4  Lynch  v.  First  Nat.  Bank,  107 

and  Brown  v.  Leckie,  43  111.  497.  N.  Y.  179;   Goshen  Nat.   Bank   v. 

But  the  bank  is  simply  a  debtor,  Bingham,  118  N.  Y.  349.    The  owner 

not  a  trustee.    Girard  Bank  v.  Bank,  of  the  check  can  claim  only  to  the 

39  Pa.  92.  amount  actually  expended  upon  it. 

3Larsen  v.  Breene,  12  Colo.  480;  Brooklyn  Trust  Co.  v.  Toler,  65  Hun, 

Metropolitan  Bank  v.  Jones,  137  III  187, 138  N.  Y.  675. 


§  150.]  DEPOSITS.  257 

been  granted  by  a  mistake  of  the  bank.  The  drawer  has 
no  right  to  complain,  because  he  knew  that  the  official  of 
the  bank  had  no  right  to  grant  him  a  certification  of  his 
check  when  he  had  no  sufficient  credit  with  the  bank.  The 
payee  of  the  check  who  has  suffered  no  detriment,  or  his  in- 
dorsee who  did  not  pay  value  for  the  check,  has  no  right  to 
complain,  because  he  has  lost  nothing  by  the  certification.5 
But  where  a  certification  has  been  granted  to  the  payee  or 
the  indorsee  of  the  check,  the  situation  is  wholly  differ- 
ent. The  debt  owing  by  the  drawer  to  the  payee,  for  which 
the  check  was  given,  has  been  paid  by  the  payee  choosing 
to  go  to  the  bank  and  accepting  its  certification  in  lieu  of 
the  drawer's  debt  to  him.  A  complete  novation  has  taken 
place,  and  on  the  strength  of  the  certification  the  payee  has 
parted  with  full  value,  to  wit:  the  debt  or  claim  owing  to 
him  by  the  drawer  of  the  check,  which  has  been  paid.  To 
this  transaction  there  were  three  parties;  to  the  former 
transaction  there  were  but  two.  Therefore,'  a  certification 
granted  to  a  payee  or  a  bonafide  indorsee  of  a  check  is  final 
and  cannot  be  revoked.6  But  here  again  courts  have  refused 
to  see  a  plain  distinction,  and  they  are  found  holding,  in 
spite  of  well-settled  principles,  that  the  bank  may  revoke  its 
certification  granted  to  the  payee,  where  he  has  not  altered 
his  position  and  will  lose  nothing,  as  they  say;7  a  statement 

5  See  the  cases  cited  in  the  last  ble;  Dillaway  v.  Northwestern  Nat. 
nota    The  word  used  in  the  text  is  Bank,  82  111.  App.  71.   This  last  case 
"  indorsee,"  not  "  transferee."    In-  says  the  check's  certification  may 
dorsement  is  necessary.    See  the  be  rescinded  where  no  rights  have 
second  case  in  last  note.  intervened.    But  by  the  very  nature 

6  Riverside   Bank  v.  First   Nat.  of  the  transaction  rights  have  in- 
Bank,  74  Fed.  R.  276,  and  cases  tervened,  because  the  drawer's  debt 
therein.  to  the  payee  was   paid,  and  the 

7  Second  Nat.  Bank  v.  Western  payee  has  parted  with  full  value, 
Nat.  Bank,  51  Md.  128;  Irving  Bank  as  Metropolitan  Bank  v.  Jones,  137 
v.  Wetherald,  36  N.  Y.  335  (but  see  111.  634,  shows.    This   assumption 
this   case  explained  in  Riverside  in  the  face  of  the  absolute  fact  of 
Bank  v.  First  Nat.  Bank,  supra);  novation  is  inexplicable    But  the 
Louisiana  State  Bank  v.  Hibernia  fallacy  lies  at  the  base  of  all  these 
Bank,  26  La.  Ann.  399;  Bank  of  Re-  erroneous  decisions.    But  the  rule 
public  v.  Baxter,  31  Vt.  101,  sem-  would  protect  actual  expenditure^ 

17 


258  BANKS    AND   BANKING.  [§  150. 

which  is  a  contradiction  in  terms,  for  he  has  already  taken  the 
check  as  payment.  As  a  matter  of  deduction,  the  same  rule 
would  apply  to  a  certification  obtained  by  fraud.  It  may 
be  revoked,  except  in  the  hands  of  a  bonafide  holder.8  The 
officers  of  the  bank  who  have  implied  authority  to  certify 
checks  are  the  president,9  the  cashier,10  the  paying  teller,11 
and,  of  course,  the  board  of  directors.12  The  usual  form  of 
accepting  is  by  writing  or  stamping  the  word  "good,"  or 
"  certified  "  upon  it.  But  a  verbal  acceptance  is  good,13  except 
where  the  drawer  has  no  funds,14  and  except  in  those  states 
whose  statutes  require  a  written  acceptance.15  Although  it 
is  said  that  a  promise  to  accept  a  check  is  not  binding  where 
the  drawer  has  no  funds,16  yet,  if  the  bank  has  agreed  to 
accept  the  check  with  one  who  advances  value  to  pay  the 
check,  the  bank  becomes  an  acceptor.17  A  certification  made 
where  the  drawer  has  no  funds  is  not  binding,  except  in 
the  hands  of  a  bonafide  holder  of  the  check; 18  but  it  should 
appear  that  the  certification  took  place  in  the  usual  course 
of  business,  even  in  the  case  of  one  in  good  faith  obtaining 
it.19  But  the  bank's  liability  upon  a  mistaken  or  a  fraudu- 
lent certification  is  only  to  the  extent  of  the  lona  fide  hold- 
See  Brooklyn  Trust  Co.  v.  Toler,  in  the  statute  of  frauds.  But  an  oral 
note  4,  supra.  acceptance  is  good  where  the 

8  Goshen  Nat.  Bank  v.  Bingham,  drawer  is  acting  for  another  who 
118  N.  Y.  349.  See  note  5,  supra.  has  funds.  Leach  v.  Hill,  76  N.  W. 

»  Claftin  v.  Farmers'  Bank,  25  N.  Y.    R  667. 

293;  Wild  v.  Passamaquoddy  Bank,  ls  Those  states  consider  an  accept- 
3  Mason,  506.  ance  of  a  check  governed  by  the 

10  Merchants'  Bank  v.  State  Bank,    rule  as  to  a  bill  of  exchange. 
10  Wall  604  i«  Bowen  v.  Needles  Nat  Bank,  87 

u  Farmers'    Bank    v.    Butchers'    Fed.  R  430;  Morse  v.  Massachusetts 
Bank,  28  N.  Y.  475.    But  contra,    Nat  Bank,  1  Holmes,  209. 
Mussey  v.  Eagle  Bank, 9  Met  373.          "Allen  Co.   Bank  v.   Carter,  88 

12  See  the  last  two  cases.  Tenn.  287.    This  last  case  goes  far 

13Jarvis  v.  Wilson,  46  Conn.  90;  enough.  The  Illinois  cases  are  fla- 
Pierce  v.  Kittredge,  115  Mass.  374;  grant  errors.  See  note  10,  §  146,  ante. 
Farmers'  Bank  v.  Dunbar,  32  Neb.  18  Stevens  v.  Com.  Exchange 
487;  Barnet  v.  Smith,  30  N.  H.  256;  Bank.  3  Hun,  147;  Gibson  v.  Na- 
and  see  note  4  to  §  146,  ante.  tional  Park  Bank,  98  N.  Y.  87. 

14  Morse    v.    Massachusetts    Nat.       19  Dorsey  v.  Abrams,  85  Pa.  299. 
Bank,  1  Holmes,  209.    It  is  within 


§  151.]  DEPOSITS.  259 

er's  loss.20  "Where  the  certification  is  of  forged  or  altered 
paper,  so  forged  before  certification,  the  certificate  warrants 
the  signature  of  the  drawer,  but  not  that  of  an  indorser,21 
nor  the  amount  of  the  check,22  and  a  custom  is  not  admissible 
proof  to  show  that  it  does.23  The  bank  is  not  liable  to  an 
innocent  payee  or  holder  of  a  certified  check,  which  is  altered 
after  certification,  unless  its  negligence  gave  an  opportunity 
for  the  alteration.24  A  certification  of  a  check  payable  to  a 
fictitious  payee  is  good  in  the  hands  of  a  lona  fide  holder.25 
A  demand  upon  a  certified  check  is  necessary  before  suing 
upon  it,  but  that  demand  need  not  be  made  within  a  reason- 
able time.26  The  certified  check  is  good  until  its  efficacy 
expires  by  virtue  of  the  statute  of  limitations.27  It  is  said 
that  a  bank  cannot  set  off  the  holder's  indebtedness  to  it  as 
against  its  liability  on  a  certified  check,28  but  that  proposi- 
tion is,  of  course,  not  sound.  Possession  of  a  certified  check 
by  the  drawer  raises  the  presumption  that  it  belongs  to  the 
drawer.29 

§  151.  Fictitious  payees. —  The  general  rule  is  that  a 
check  payable  to  a  fictitious  payee  is  payable  to  bearer ;  but 
if  a  real  person  is  intended  by  the  name  of  the  payee,  the 
check  must  be  indorsed  by  that  person  or  by  some  one  with 
authority  from  him,  otherwise  a  forgery  is  perpetrated  in 

20  Brooklyn  Trust  Co.  v.  Toler,  65  26  Farmers'    Bank    v.    Butchers' 
Hun,  187,  138  N.  Y.  675.  Bank,  16  N.  Y.  125;  Bank  of  British 

21  First  Nat.  Bank  v.  Northwestern  North  America  v.  Merchants'  Bank, 
Nat.  Bank,  152  111.  296.  91  N.  Y.  106. 

-  Parke  v.  Roser,  67  Ind.  500 ;  Clews  27  French  v.  Irwin,  4  Baxt.  401. 

v.  Bank  of  New  York,  89  N.  Y.  ^  Brown    v.   Leckie,  43   III  497. 

418;  Marine  Nat.  Bank  v.  City  Nat.  This  decision  is  utterly  wrong,  be- 

Bank,  59  N.  Y.  67.  cause  as  to  the  drawer  as  well  as 

23  Security  Bank  v.  National  Bank  the  drawee  the  check  would  be  paid 
of  Republic,  67  N.  Y.  458.  by  the  bank's  credit  to  the  payee 

24  Helwege  v.  Hibernia  Nat.  Bank,  by  way  of  set-off.    This  case  is  an- 
28  La.  Ann.  520.  other    illustration  of  the   Illinois 

25  Meridian  Nat.  Bank  v.  First  Nat.  confusion. 

Bank,  33  N.  E.  R,  247;  Merchants'      29Buehler  v.  Gait,  35  III  App.  225. 
Trust  Co.  v.  Metropolis   Bank,  7 
Daly,  137. 


260  BANKS   AND   BANKING.  [§  152. 

indorsing  the  check.  But  a  fictitious  payee  may  be  intended 
although  the  name  of  a  real  person  is  used.1  Such  checks 
when  paid  are  good  as  against  the  drawer.2  But  a  fictitious 
payee  is  not  a  person  who  is  not  in  existence,  but  whom  the 
drawer  believes  to  be  in  existence.3  Payment  upon  an  indorse- 
ment representing  such  a  payee  is  .lot  payment.4  Such  is  the 
rule  where  a  drawer  is  imposed  upon  to  draw  a  check  pay- 
able to  a  fictitious  person.5  But  if  the  drawer  has  been 
guilty  of  negligence  in  the  manner  of  drawing  the  check 
and  perhaps  of  delivering  it  that  misleads  the  bank,  the  pay- 
ment is  good.6  The  certification  of  a  check  made  payable 
to  a  fictitious  payee  is  good  in  the  hands  of  a  lona  fide 
holder  thereof.7 

§  152.  Bate  upon  checks. —  It  is  said  by  a  text  writer 
that  if  a  check  is  not  dated  it  is  never  payable,1  but  the  law 
is  that  such  a  check  may  be  filled  in  with  the  true  date,  or 
if  not  filled  in  is  payable  upon  demand,  so  far  as  the  bank 
is  concerned.  The  issuing  of  the  check  with  a  blank  date 
is  implied  authority  to  any  holder  to  fill  in  a  date.2  But 
caution  would  dictate  to  a  bank  a  request  to  have  the  check 
properly  filled  in  as  a  measure  of  protection  to  its  depositor. 
But  a  check  is  not  payable  until  its  date.3  A  check  post-dated 

1  Irving  Bank  v.  Alley,  79  N.  Y.  ford  v.  West  Side  Bank,  100  N.  Y. 
536;  First  Nat.  Bank  v.  Farmers'  50,  contra  as  to  the  negligence  in 
Bank,  76  N.  W.  R.  430.  the  manner  of  delivering  the  check. 

2  Phillips  v.  Merchants' Nat  Bank,  The  true  rule  would  be  this:  If  the 
140  N.  Y.  556.  bank  was  guilty  of  negligence  in 

8  Shipman  v.  Bank  of  the  State,  paying  the  check,  the  antecedent 

126  N.  Y.  318.   Contra,  Bank  of  Eng-  negligence  of  the  drawer  is  imma- 

land  v.  Vagliano,  (1891)  App.  Gas.  107.  terial,  provided  that  negl  igence  did 

4  Armstrong    v.    Pomeroy    Nat.  not  throw  the  bank  off  its  guard. 
Bank,  46  Ohio  St.    512,  and  case       7  See  note  25  to  preceding  section, 
last  cited.  *  Morse  on  Banking,  238. 

8  Case  last  cited.    Such  a  case  be-       2  See  Crawford  v.  West  Side  Bank, 

comes  merely  a  case  of  payment  100  N.   Y.   50,  and  2  Ency.   Law 

upon  a  forged  indorsement  of  the  (2d  ed.),  255. 
paj-ee's  name.  See§§154,156,t'n/ra.        s  Gordon  v.  Commonwealth  Bank, 

6  Burnet  Sav.  Co.  v.  German  Nat.  6  Duer,  76.    Compare  Taylor  v.  Sip, 

Bank,  4  Ohio  Dec.  290;  Smith  v.  Me-  80  N.  J.  Law,  284. 
chanics'  Bank,  6  La.  Ann.  610;  Craw- 


§  153.]  DEPOSITS.  261 

on  its  face  is  an  inland  bill  of  exchange 4  and  is  entitled  to 
days  of  grace.5  A  check  signed  before  its  date,  which  is 
altered  by  the  depositor's  book-keeper  as  to  the  date  and 
cashed,  the  depositor  having  been  guilty  of  no  negligence  in 
drawing  the  check,  leaves  the  bank  liable.6  But  the  bank 
is  only  liable  to  the  depositor  upon  an  altered  check  for  pay- 
ing ;  as  to  other  parties  it  is  not  liable,  and  takes  no  risk 
except  that  the  drawer's  signature  is  genuine.7  If  a  bank 
pays  a  check  before  its  date  it  is  not  entitled  to  charge  it 
against  the  depositor's  account.8 

§  153.  Revocation  of  check. —  The  cases  where  checks 
have  been  in  effect  revoked  by  an  assignment  of  the  deposit, 
or  by  the  garnishment  of  the  deposit,  or  by  the  death  or  in- 
solvency of  the  depositor,  or  by  the  bank's  application  of 
the  deposit,  have  been  already  considered.  But  the  drawer 
of  a  check  has  the  right  to  revoke  it  at  any  time  before  it  is 
accepted,1  or,  if  not  accepted,  at  any  time  prior  to  its  pay- 
ment.2 In  those  states  which  allow  the  holder  to  sue  upon 
a  check,  it  may  be  revoked  at  any  time  prior  to  its  presenta- 
tion.3 But  a  check  may  also  be  revoked  by  the  payee,4 

4  See  §  205,  post.  be  liabla    Elder  v.  National  Bank, 

»  See  last  note.  55  N.  Y.  Supp.  576. 

6  Crawford  v.  West  Side  Bank,  2Dykers  v.  Leather  Mfg.  Bank, 
100  N.  Y.  50.  11  Paige,  612.    Compare  Freund  v. 

7  National  Bank  of  Com.  v.  Na-  Importers'    &    Traders'    Bank,  76 
tional  Mechanics'  Bkg.   Ass'n,  55  N.  Y.  352,  where  the  check  had 
N.  Y.  211;  Crawford  v.  West  Side  been  certified.    If  notice  is  given, 
Bank,  100  N.  Y.  50.  This  statement  the  burden  is  on  the  bank  to  show 
is  inserted  here  to  prevent  the  text  payment  prior  thereto.    Albers  v. 
from  being  misleading.  Commercial  Bank,  85  Mo.  173.  Pease 

8  See  cases  cited  in  notes  3  and  6  to  v.  Landauer,  63  Wis.  29,  denies  this 
this  section.  arbitrary  right  and  says  it  can  only 

1  Acceptance  releases  the  drawer  be  exercised  for  good  cause.    See 

and  substitutes  the  bank  as  debtor,  also  Bremer  Co.  Bank  v.  Mores,  73 

It  is  merely  another  name  for  one  Iowa,  289. 

species  of  payment.    If  the  bank  8  Tramell  v.  Farmers'  Nat  Bank, 

pays  a  revoked  check  through  neg-  11  Ky.  Law  R.  900.    There  is  a  pe- 

ligence,  it  is  liable  though  the  de-  culiar  case  in  Massachusetts,  which 

positor  agreed  the  bank  should  not  held  that  the  drawer  of  the  check 

*  Public  Grain  &  Stock  Ex.  v.  Kune,  20  Bradw.  137. 


262  BANKS    AND   BANKING.  [§  154:. 

when  the  check  has  been  unindorsed  by  him,  and,  on  prin- 
ciple, whenever  the  check  has  not  passed  into  the  hands  of 
a  lona  fide,  holder,  at  any  time  prior  to  acceptance,  or  in 
some  states  presentation,  or,  if  not  accepted,  at  any  time  prior 
to  payment.  But  a  check  indorsed  by  the  payee's  author- 
ized agent,  during  the  life-time  of  the  payee,  may  be  paid 
by  the  bank  to  the  holder  after  the  payee's  death.5  If  the 
check  is  paid  by  the  bank  after  having  been  properly  re- 
voked, the  bank  becomes  liable  for  the  amount  of  the  check 
either  to  the  depositor  revoking 6  or  to  the  payee  revoking.7 

§  154.  Forged  or  altered  paper. —  Forgery  may  consist  of 
a  forgery  or  alteration  in  the  body  of  a  check  really  signed 
by  the  depositor,  or  it  may  consist  of  the  simulation  of  the 
depositor's  signature,  or  it  may  be  that  the  name  of  a  payee 
has  been  forged  upon  the  check.  The  difference  between 
the  three  cases  is  very  marked  as  regards  the  rights  of  a  bank 
on  the  payment  of  forged  or  altered  paper.  The  case  of 
payment  by  a  bank  of  a  check  on  itself,  where  the  drawer's 
signature  is  forged,  is  governed  by  the  rule  that  a  bank  is 
bound  to  know  the  signature  of  its  own  depositor.1  There- 
fore, taking  the  case  first  of  certification  of  a  check,  which 
is  a  species  of  payment,  if  the  bank  certifies  a  forged  check 
on  itself,  the  certification  ought  to  be,  it  might  seem,  at 
first  blush,  final  and  irrevocable  as  to  an  innocent  holder 
of  the  check,  where  the  forgery  consists  of  a  forgery  of  the 
name  of  the  drawer.2  But  the  rule  that  the  certification  of 

could  not  stop  payment  of  his  own  which  do  not  permit  the  holder  to 

check  given  to  one  who  had  passed  sue  before  certification  or  accept- 

it  to  the  bank,  but  which  the  bank  ance.    But  see  note  8  to  §  146,  ante. 

had  not  paid.    Charles  River  Nat.  The  action  should  be  for  money 

Bank  v.  Davis,  100  Mass.  413.  had  and  received,  and  should  not 

5  Brennan  v.  Merchants'  Bank,  62  be  upon  the  check  itself. 

Mich.  343.  l  The  cases  cited  in  the  notes  fol- 

6  Schneider  v.    Irving    Bank,  1    lowing  this  all  recognize  this  very 
Daly,  500.  obvious  proposition. 

'Public,  etc.  Ex.  v.  Kune,  20  2See  the  principle  decided  in 
Bradw.  137.  And  this  ought  to  be  Riverside  Bank  v.  First  Nat  Bank, 
the  rule  in  those  jurisdictions,  74  Fed.  R.  276,  38  U.  S.  App.  674, 


§  154]  DEPOSITS.  263 

a  check,  forged  as  to  the  name  of  the  drawer,  only  binds  the 
bank  as  to  the  payee's  loss  upon  it,  is  proper,  because  the 
bank  cannot  charge  the  check  against  the  drawer.  Herein 
lies  the  distinction  between  this  case  and  that  of  certifi- 
cation to  the  payee,  owing  to  a  mistake  as  to  the  state 
of  the  account,  spoken  of  in  section  150,  cvnte.  The  bank 
is,  of  course,  held  as  to  a  lona  fide  indorsee,  for  he  relied 
upon  the  bank's  certificate  when  he  paid  value.  Even  if 
a  certified  check  has  been  stolen,  a  ~bona,  fide  holder  of  ne- 
gotiable paper  is  protected  as  against  the  bank.3  If  the 
person  obtaining  the  check  to  be  certified  had  notice  of  the 
forgery,  his  conduct,  it  is  plain,  would  be  a  fraud  and  he  could 
claim  nothing  from  the  certification.  If  the  holder  of  the 
check,  however,  believes  it  to  be  good  and  alters  his  position 
on  the  strength  of  the  certification,  he  becomes  a  bonafide 
holder  for  value.4  But  in  the  case  of  a  holder  who  has  lost 
nothing  by  the  certification,  the  rule  ordinarily  would  be, 
both  thinking  the  check  genuine,  that  the  certification  could 
be  revoked  on  the  ground  of  mutual  mistake.5  The  bank,  it 
is  true,  is  bound  to  know  its  drawer's  signature,  as  it  is  bound 
to  .know  the  state  of  the  drawer's  account;  yet  the  holder  of 
the  check  has  parted  with  nothing  of  value  on  the  strength 
of  the  certificate.6  But  there  are  cases  where  the  bank  can 
charge  a  check  forged  as  to  the  maker's  name  against  the 

But  the  rule  is  that  the  certifica-  of  the  bank  is  based  upon  its  con- 

tion  of  a  check  forged  as  to  the  tract  of  certification, 

name  of  the  drawer  can  be  revoked  5  It  may  be  considered  either  a 

in  the  hands  of  the  person  to  whom  mistake  as  to  the  existence  of  the 

it  has  been  certified,  except  as  to  his  subject-matter  or  a  mistake  as  to 

loss   upon   the    certification.    See  its   essential  qualities,  preferably 

§  150,  ante,  where  the  authorities  the  latter.    See  for  the  rule,  Clark 

are  given  as  to  a  mistake  in  the  on  Contracts,  298.    See  §  150,  ante, 

drawer's  account.  notes  6  and  7. 

3  Nolan  v.  Bank  of  New  York,  67  6  See  §  150,  ante,  for  the  reasons 
Barb.  24  that  govern    this  casa    There  is 

4  Meads  v.  Merchants'  Bank,  25  some  question  as  to  the  rule  in 
N.  Y.  143.    The  element  of  knowl-  case  of  a  mistake  as  to  the  state  of 
edge  of  the  falsity  is  lacking  to  the  account.    See  Riverside  Bank 
make  this  a  case  of  false  represen-  v.  First  Nat.  Bank,  supra,  and  note 
Cation  by  the  bank.    The  liability  7  to  §  150,  ante. 


264  BANKS   AND   BANKING.  [§  154. 

maker.7  In  such  a  case  the  bank,  under  any  circumstances, 
ought  not  to  be  permitted  to  revoke  its  certification  or  to 
recover  its  payment,  because  it  would  otherwise  charge  the 
check  against  the  drawer;  yet  the  drawer  would  have  paid 
nothing  by  the  check.8  Therefore,  in  a  suit  between  the 
bank  and  the  holder  to  whom  it  had  certified  a  check  forged 
as  to  the  drawer's  name,  there  would  necessarily  be  litigated 
the  right  of  the  matter  as  between  the  bank  and  the  drawer 
of  the  check.  So  that  the  common  sense  of  the  matter  is 
that  certification  of  a  check  forged  as  to  the  maker's  name, 
where  the  bank  can  charge  the  check  against  the-  drawer, 
ought  to  bind  the  bank  to  the  person  to  whom  the  certifica- 
tion was  given  or  into  whose  hands  the  certified  check  came, 
if  he  were  in  good  faith.  The  same  rule  would  apply  to  a 
check  paid,  whatever  the  circumstances,  where  the  forgery 
was  of  the  drawer's  signature.9  Such  payment  is  final.  But 
leaving  out  of  view  this  exceptional  case  of  a  certified  check, 
if  the  person  to  whom  the  check  was  paid  was  at  fault,10  or 
did  not  perform  his  whole  duty  in  the  matter,11  the  bank 
will  not  be  estopped  by  its  payment.  These  rules  suffer 
some  modification  owing  to  the  rules  of  clearing-houses  and 
transactions  between  banks,  as  will  appear  in  the  next  sec- 
tion. As  regards  the  depositor,  the  bank  cannot  charge 

7  See  the  cases  cited  in  notes  13  of  deposit.    Stout  v.    Benoist,  39 
and  14,  infra.  Mo.  277.   See  2  Har.  L.  R  297. 

8  In  that  case  there  would  be  no       10  Levy  v.  First  Nat.  Bank,  27  Neb. 
mistake,  since  the  check  would  be  537;  Merchants'  Bank  v.  Melntyre, 
genuine    as   to   the  drawer.    See  2   Sandf.  431;    National    Bank    v. 
Levy  v.  First  Nat.  Bank,  27  Neb.  Bangs,  106  Mass.  441.   This  last  case 
557,  which  apparently  recognizes  seems  to  say  that  where  a  payee  has 
that    the  bank  must  be  liable  to  given  credit  to  the  check  by  his 
the  drawer  if  it  pays  the  check.  indorsement,  he  cannot  claim  that 

9  See  Bank  of  U.  S.  v.  Bank  of  the  bank  was  bound  to  know  its 
Georgia,  10  Wheat  333;  First  Nat.  depositor's  signature.  But  this  rule 
Bank  v.  Ricker,  71  111.  439;  Deposit  only  applies  between  banks.    See 
Bank  v.  Fayette  Bank,  10  Ky.  Law  next  section. 

R  350;  Bank  of  St.  Albans  v.  Farm-  "City  Bank  v.  First  Nat.  Bank, 
ers'  Bank,  10  Vt.  141;  Germania  43  Tex.  203;  Rouvant  v.  National 
Bank  v.  Boutel,  60  Minn.  189.  The  Bank,  63  Tex.  610;  First  Nat.  Bank 
same  rule  applies  on  a  certificate  v.  Ricker,  71  III  439;  Ellis  v.  Ohio 

Life  Ins.  Co.,  4  Ohio  St  62a 


DEPOSITS. 


2G5 


against  him  paper  which  he  never  signed.12  But  the  de- 
positor may  have  been  at  fault  in  misleading  the  bank  by 
his  conduct  prior  to  the  time  the  bank  paid  the  forged  paper. 
In  such  a  case,  if  his  conduct  amounts  to  an  estoppel  upon 
him,  the  bank  may  charge  such  checks  against  him.13  The 
depositor  may  also  have  been  guilty  of  wrong  conduct  after 
the  bank  has  paid  the  check.  The  majority  of  courts,  basing 
their  holding  upon  the  proposition  that  the  subsequent  neg- 
ligence of  the  depositor  misleads  the  bank,  recognize  that  a 
depositor  owes  to  his  banker  the  duty  of  examining  the  re- 
turned vouchers  and  at  once  notifying  him  of  the  forgery.14 
The  failure  in  this  duty  is  said  to  be  an  implied  admission 
of  the  genuineness  of  the  signature,15  or  a  ratification  of  the 
payment.16  Even  if  the  depositor  commits  this  duty  to  an 
agent  who  happens  to  be  the  forger,  the  depositor  is  bound 
by  the  agent's  act,  either  in  not  communicating  his  own 


12  Hardy  v.  Chesapeake  Bank,  51 
Md.  562;  Hatton  v.  Holmes,  97  CaL 
208;  Frank  v.  Chemical  Bank,  84 
N.  Y.  209;  Georgia  Banking  Ass'n 
v.  Love  and  Good  Will  Soc.,  85  Ga. 
293;  Leavitt  v.  Stanton,  H.  &  D. 
Supp.  413  (a  very  peculiar  case). 

^Crawford  v.  West  Side  Bank, 
100  N.  Y.  50,  is  negligence  in  draw- 
ing the  check  as  to  form.  Smith 
v.  Mechanics'  Bank,  6  La.  Ann. 
610.  is  negligence  in  delivering  the 
check.  But  with  the  last  case 
compare  Welsh  v.  Germ.  Am.  Bank, 
73  N.  Y.  424.  The  use  of  a  rubber 
stamp  as  a  fac  simile  signature  is 
not  negligence  unless  it  was  neg- 
ligently kept.  Robb  v.  Pennsyl- 
vania Co.,  186  Pa.  456.  But  this 
proposition  must  be  very  carefully 
examined,  because  if,  in  spite  of  the 
depositor's  antecedent  negligence, 
the  bank  could  have  avoided  the 
payment  by  the  exercise  of  due 
care,  the  general  rule  (see  note 


14  to  §  363,  post)  requires  that  the 
antecedent  negligence  of  the  de- 
positor should  be  considered  imma- 
terial. 

14  Leather  Manuf.  Bank  v.   Mor- 
gan, 117  U.  S.  96;  Janin  v.  London 
Bank,    92    Cal.    14;  Dana  v.   Nat. 
Bank  of  Republic,  132  Mass.  156; 
Weinstein  v.  National  Bank,  69  Tex. 
38;  Hardy  v.  Chesapeake  Bank,  51 
Md.  562;  Wind  v.  Fifth  Nat.  Bank, 
39  Mo.  App.  72;  First  Nat.  Bank  v. 
Allen,  100  Ala.  476;  Am.  Nat.  Bank 
v.  Bushey,45  Mich.  135.  But  this  rule 
is  strenuously  denied  in  New  York. 
Welsh  v.  Germ.  Am.  Bank,  73  N.  Y. 
424;  Frank  v.  Chemical  Bank,  84 
N.  Y.  209;  Shipman  v.  State  Bank, 
126  N.  Y.  318  (the  last  was  a  very 
hard  case). 

15  Hardy  v.  Chesapeake  Bank,  51 
Md.  562. 

i«Dana   v.    National    Bank,   132 
Mass.  156. 


266  BANKS   AND   BANKING.  [§  154. 

forgery  to  his  employer  or  in  not  notifying  the  bank  to  put 
him  in  the  penitentiary.17  But,  nevertheless,  the  bank  must 
show  that  it  has  suffered  loss,18  and,  in  reason,  the  depositor 
ought  to  be  held  only  to  the  amount  of  that  loss.19  A  part 
of  the  depositor's  duty  is  to  return  at  once  the  forged  check 
to  the  bank.  If  he  holds  it  after  knowledge  of  the  forgery 
he  ratifies  the  bank's  act,20  unless  it  is  done  at  the  bank's  re- 
quest.21 The  next  case  to  consider  is  where  the  indorsement 
on  the  check  is  forged.  As  to  this  matter  the  bank  owes  a 
duty  only  to  its  depositor.22  All  other  people  through  whose 
hands  the  check  passes  have  an  equal  opportunity  with  it- 
self of  discovering  such  a  forgery.  Therefore,  if  the  bank 
pays  a  check  which  contains  a  forged  indorsement,  it  may 
collect  the  amount  paid  from  the  person  to  whom  it  was 
paid.23  If  that  person  were  innocent,  there  was  a  mutual  mis- 
take. If  he  knew  of  the  forgery  he  was  guilty  of  fraud, 
and  the  same  rule  exactly  applies  to  the  certification  of  a 
check.24  The  bank  by  its  certification  does  not  in  any  sense 
warrant  the  indorsement  upon  the  paper  or  check  which  it 
certifies.  Its  liability  is  confined  to  the  signature  of  the  de- 
positor in  the  bank,  which  would  be,  of  course,  the  first  in- 
dorsement on  a  certificate  of  deposit.25  Now  as  to  a  forged 

"  First  Nat  Bank  v.  Allen,  100  Merchants'  Bank  v.  Marine  Bank,  3 

Ala.  476.  This  rule  seems  strange,  Gill,  96.  But  where  the  payment 

but  it  is  sound.  See  note  18  to  is  made  upon  an  indorsement  of  a 

§  111,  ante.  Contra,  Weisser  v.  fictitious  name  assumed  by  the  per- 

Denison,  10  N.  Y.  68.  son  intended,  there  is  no  forgery; 

18  Janin  v.  London  Bank,  92  it  is  otherwise  if  the  indorser  per- 

CaL  14.  senates  a  real  person.  First  Nat. 

w  Brixen  v.  Deseret  Nat.  Bank,  5  Bank  v.  Farmers'  Bank,  76  N.  W.  R. 

Utah,  504.  430.  See  note  5  to  §  204,  post. 

20  Van  Wert  Nat.  Bank  v.  First  24  Meads  v.  Merchants'  Nat.  Bank, 
Nat.  Bank,  6  Ohio  Cir.  Ct  R  130.  25  N.  Y.  143;  Irving  Bank  v.  Weth- 

21  Brixen  v.  Deseret  Nat  Bank,  5  erald,  36  N.  Y.  335. 

Utah,  504.  25  See  note  32  to  this  section.    This 

22  Crawford  v.  West  Side  Bank,  statement    in    the   text  must   be 
100  N.  Y.  50.  understood  with  the  qualification 

23  Espy  v.  Bank  of  Cincinnati,  18  that  the  bank  itself  has  done  noth- 
WalL  605;  Corn  Exchange  Bank  v.  ing  to  mislead  the  person  to  whom 
Nassau  Bank,  91  N.  Y.  74.     Contra,  it  paid  or  gave  its  certification. 


DEPOSITS. 


207 


indorsement,  the  bank  cannot  charge  such  a  check  against 
the  depositor  if  it  pays  it ; a  and  the  situation  is  different  as 
to  the  duty  of  the  depositor.  While  he  is  under  the  duty  of 
examining  returned  vouchers,  he  is  not  expected  to  discover 
a  forged  indorsement.27  If  he  finds  a  forgery  he  should 
•within  a  reasonable  time  notify  the  bank,  and  his  failure  to 
do  so,  if  it  causes  injury  to  the  bank,  may  be  charged  against 
him  as  a  failure  of  duty.28  The  depositor  in  some  cases  has 
been  said  to  be  bound  by  a  forged  indorsement,  where  he 
has  himself  been  guilty  of  negligence  in  not  taking  care  as 
to  the  payee,29  but  this  statement  is  not  true.  There  must 
be  an  estoppel.30  The  last  case  to  be  considered  is  that  of 
forged  or  altered  paper,  where  the  amount  has  been  raised. 
It  is  necessary  to  consider  first  the  case  of  certification  and 
next  the  case  of  payment.  The  alteration  may  be  made 
either  before  or  after  certification.  If  made  before  certifi- 
cation, the  bank  by  its  certificate  simply  warrants  that  the 

Bank,  46  Ohio  St.  512.  Compare 
Burnet  Co.  v.  German  Nat.  Bank, 
4  Ohio  Dec.  290;  De  Feriet  v.  Bank 
of  America,  23  La.  Ann.  310;  Hardy 
v.  Chesapeake  Bank,  51  Md.  562  -t 
Mackintosh  v.  Eliot  Bank,  123  Mass. 
393;  Dana  v.  National  Bank  of  Re- 
public, 132  Mass.  146;  Robb  v.  Penn- 
sylvania Co.,  186  Pa.  456. 

30  Welch  v.  German-American 
Bank,  73  N.  Y.  494.  Compare  Goetz 
v.  Bank,  119  U.  S.  560.  It  is  diffi- 
cult to  see  how  the  antecedent  con- 
duct of  the  drawer  is  material, 
unless  it  amounts  to  a  representa- 
tion of  a  fact  or  a  concealment  of 
the  truth.  Otherwise  it  has  no 
causal  connection  with  the  bank's 
neglect  See  the  last  note  and  Na- 


26  See  note  12  to  this  section. 

27  Brixen  v.  Deseret  Nat.  Bank,  5 
Utah,  504    But   the    bank   must 
discover   forged    indorsements   as 
against  its  depositor.    Bank  of  Brit- 
ish North  America  v.  Merchants' 
Nat.  Bank,  91  N.  Y.  106;  Citizens' 
Nat.  Bank  v.  Importers'  &  Trad- 
ers' Bank,  119  N.  Y.  195.    The  fact 
that  the  last  indorsement  was  good 
is  immaterial.    Atlanta  Nat.  Bank 
v.  Burke,  81  Ga.  597.  The  bank  need 
not  regard  the  handwriting  of  the 
body  of  the  check.    Grain  v.  Hor- 
ton,  5  Wash.  479. 

28  United  States  v.  National  Ex. 
Bank,  45  Fed.  R.  163.    But  if  the 
bank's  officers  could  have  detected 
the  forgery  before  payment,  the 


depositor's  negligence  is  immate-  tional  Bank  v.  Nolting,  94  Va.  263. 

rial.    Bank  v.   Morgan,  117  U.  S.  The  depositor  ought  always  to  be 

112.    As  to  what  is  a  reasonable  permitted  to  assume  that  the  bank 

time,  see  Cooke  v.  United  States,  will  pay  only  on  a  genuine  signa- 

91  U.  S.  389,  402.  ture.    See  Dodge  v  Bank,  30  Ohio 

29  Armstrong    v.    Pomeroy   Nat.  St.  1,  20  id.  234. 


268  BANKS   AND   BANKING.  [§  154:. 

drawer's  signature  is  genuine  and  that  he  has  funds.  It  does 
not  warrant  the  amount  of  the  check  to  be  correct.81  There- 
fore the  bank  is  not  bound  to  even  a  Tjona  fide  holder  upon 
its  certificate,  if  it  acts  in  good  faith.32  It  need  not  revoke 
the  certificate,  because  it  cannot  be  held  on  it;  yet  banks 
often  take  precautions  to  warn  the  public  and  other  banks 
against  forgeries  and  altered  paper.33  But  the  law,  while  it 
does  not  hold  the  banker  liable  in  any  case  upon  the  certifi- 
cate as  a  contract,  where  paper  is  raised  before  certifying, 
nevertheless  holds  every  man  to  fair  and  honest  dealing  to- 
wards others,  so  far  as  such  dealing  can  be  brought  within 
legal  principles.  Therefore,  if  the  certifying  bank  acted 
with  such  culpable  negligence  in  not  ascertaining  facts 
which  would  have  indicated  to  it  the  forgery  that  its  con- 
duct amounts  to  bad  faith,  it  will  be  held  upon  its  certifi- 
cate. The  court  puts  it  upon  the  ground  of  negligence,  but 
it  is  more  consonant  with  legal  conceptions  to  call  it  estop- 
pel.34 If  the  alteration  is  made  after  the  certificate  was  given 
(the  drawer,  of  course,  having  the  right  to  change  the  payee 
before  he  delivers  the  check),35  it  is  not  liable  upon  the  cer- 
tificate,36 or  at  any  rate  for  not  more  than  the  check  orig- 
inally was,37  and  on  principle,  if  it  pay  the  check  without 
being  at  fault,  it  may  recover  from  the  payee,38  although  the 

31  Clews  v.  Bank  of  New  York,  89  34  Clews  v.  Bank  of  New  York,  105 
N.  Y.  418;  Parke  v.  Roser,  67  Ind.  N.  Y.  398,  114  N.  Y.  70.    Teller  who 
500;  First  Nat.  Bank  v.  Northwest--  says  his  own  forged  certificate  is 
ern  Nat.  Bank,  152  III  296  (as  to  good  binds  the  bank.    Continental 
the  certificate  being  a  warranty  Bank  v.  Commercial  Bank,  50  N.  Y. 
only  of  the  signature  of  the  drawer  575. 

and  the  presence  of  funds);  Marine  3*  Abrams  v.  Union  Nat.  Bank,  31 

Nat.  Bank  v.  National  City  Bank,  La.  Ann.  61. 

59  N.  Y.  67;  Espy  v.  Cincinnati  36  Clews  v.  Bank  of  New  York,  105 

Bank,  18  Wall  605.  N.  Y.  398,  114  N.  Y.  70. 

32  Clews  v.  Bank  of  New  York,  89  37  Merchants'  Bank  v.  Exchange 
N.  Y.  418.    Custom  is  not  admissi-  Bank,  16  La.  457. 

ble  to  charge  the  bank.    Security  ^Redington  v.  Woods,  45  CaL  406; 

Bank  v.  Nat.  Bank  of  Republic,  67  Parke  v.  Roser,  67  Ind.  500;  Espy 

N.  Y.  458.  v.  Cincinnati  Bank,  18  Wall  605; 

33  See  Hagan  v.  Bowery  Nat.  Bank,  Corn  Ex.  Bank  v.  Nassau  Bank,  91 
€4  Barb.  197.  N.  Y.  74.    See  note  23,  ante. 


§  154.]  DEPOSITS.  26D 

cases  are  not  consistent  in  their  language.39  But  there  are 
cases  which  hold  the  bank  liable  where  its  own  negligence 
gave  an  opportunity  for  the  raising  of  the  check.40  It  will  be 
seen  that  in  some  cases  the  bank,  even  if  it  has  paid  a  check 
that  has  been  raised,  may  charge  it  against  the  depositor.4 
Therefore,  if  it  can  charge  the  check  against  the  depositor, 
where  the  alteration  was  made  before  certifying,  the  bank 
ought  to  be  bound  to  make  the  certificate  good  to  the  holder, 
because  the  check  has  actually  become  genuine.42  The  same 
rules  exactly  apply  to  payment.  A  certified  check,  when 
paid,  is  paid  as  the  obligation  of  the  bank,  not  of  the  drawer. 
Therefore  the  depositor  is  not  concerned  with  an  alteration 
which  took  place  after  certifying.  He  was  no  longer  a  party 
to  the  contract.  It  has  already  been  stated  that  the  bank 
paying  without  fault  on  its  part  a  certified  check,  whether 
raised  before  or  after  certifying,  may  recover  of  the  person 
to  whom  it  paid.43  If  it  pay  an  uncertified  raised  check 
without  fault  on  its  part  it  may  recover  of  the  last  payee,44 
unless  it  can  charge  the  check  against  the  depositor,  when 
in  justice  it  ought  not  to  recover  against  the  payee.45  The 
bank,  as  a  general  rule,  cannot  charge  forged  paper  altered 
as  to  amount  against  the  depositor.  But  where  the  depos- 
itor has-  been  guilty  of  negligence  in  so  drawing  the  check 
as  to  facilitate  the  forgery,  the  bank  may  charge  the  check 
against  its  depositor.46  "What  would  be  negligence  in  the 

39  National  Bank  of  Commerce  v.  43  See  note  38  to  this  section. 
National  Mechanics'  Banking  Ass'n,  44  See  note  88  to  this  section.    Mer- 
55  N.  Y.  211,  seems  to  qualify  the  chants'  Bank  v.  Exchange  Bank,  16 
right  upon  the  holder  not  having  La.  457.    This  rule  as  to  an  uncerti- 
suffered  injury.    But  the  bank,  it  fled  check  must  be  governed  by  the 
is  said,  must  have  paid  without  same  qualification  as  to  the  bank's 
negligence.    Redington  v.  Woods,  exercise  of  due  care  in  payment 
45  CaL  406.  that  is  made  in  Redington  v.  Woods, 

40  Helwege  v.  Hibernia  Nat.  Bank,  45  Cal.  406.    This  qualification  holds 
28  La.  Ann.  520;  Godchauxv.  Union  as  between  banks.    See  note  1  to 
Nat.  Bank,  28  La.  Ann.  516.    This  next  section. 

is  the  rule  as  to  the  drawer  of  the  45  See  note  8  to  this  section, 

check.  4"  Crawford  v.  West  Side  Bank, 

41  See  note  46  to  this  section.  100  N.  Y.  50. 

42  See  note  8  to  this  section. 


270 


BANKS   AND   BANKING. 


[§  155. 


depositor  will  necessarily  be  a  difficult  question  to  solve.47 
But  the  bank's  contributory  negligence  ought  to  be  a  com- 
plete defense.48  The  reason  of  this  rule  is  that  the  bank  was 
guilty  of  the  last  clear  act  of  negligence  without  which  the 
payment  would  not  have  been  made.  The  negligence  of  the 
depositor  after  payment  in  failing  to  examine  the  vouchers, 
or  to  compare  the  amounts  of  the  checks  as  drawn  with  the 
checks  returned,  may  amount  to  a  ratification  or  an  implied 
admission,49  for  the  depositor  can  always  be  expected  to 
know  the  amounts  of  the  checks  which  he  has  drawn. 

§  155.  Forged  paper  as  between  banks. —  The  rule  that 
payment  by  a  bank  of  a  check  drawn  on  itself,  where  the 
drawer's  name  is  forged,  does  not  obtain  as  between  banks. 
The  rule  is  said  to  be  by  courts  of  not  the  highest  authority 
that  the  first  bank  indorsing  the  check  guarantees  the  sig- 
natures on  the  check,  including  the  maker's.1  It  is  impliedly 
decided  in  other  cases,  but  this  ^particular  language  is  not 
used.2  But  if  the  second  bank  is  guilty  of  negligence,3  or  of 

ment  having  been  forged,  the  for- 
gery of  the  drawer's  name  was  im- 
material. Custom  may  be  admitted 
to  prove  this  rule.  Ellis  v.  Ohio 
Life  Ins.  Co.,  4  Ohio  St.  628.  But 
if  the  paying  bank  was  negligent 
it  cannot  recover.  First  Nat.  Bank 
v.  First  Nat.  Bank,  58  Ohio  St.  207. 
Cases  seemingly  contra  to  the  text 
are  Deposit  Bank  v.  Fayette  Nat. 
Bank,  90  Ky.  10;  Comm.  Nat.  Bank 
v.  First  Nat.  Bank,  30  Md.  11,  and 
Northwestern  Nat.  Bank  v.  Bank 
of  Commerce,  107  Mo.  402. 

2  First  Nat.  Bank   v.  First  Nat. 
Bank,  151   Mass.   280;  Third  Nat 
Bank  v.  Allen,  59  Mo.  310;  First 
Nat.  Bank  v.  State  Bank,  22  Neb. 
769;  State  Nat.  Bank  v.  Freedman's 
Sav.  Bank,  2  Dili  11. 

3  Salt  Springs  Bank  v.  Syracuse 
Sav.  Inst,  62  Barb.  101. 


47  See  note  27  to  this  section,  and 
Crawford  v.  West  Side  Bank,  supra. 

48  Leather  Mfg.  Bank  v.  Morgan, 
117  U.  S.  96.     The  statement  in 
the  text  is  what  the  case  meant 
to  decide,  but  in  the  case  before 
it  the  court  was  concerned  with 
the  negligence  of  a  depositor  sub- 
sequent to  the  payment.     As  to 
that  negligence  the  antecedent  neg- 
ligence of  the  bank  would  be  im- 
material, but  as  this  case  stands  it 
is  an  authority  to  the  contrary. 

49  See  notes  14, 18,  19,  20,  ante,  to 
this  section. 

1  First  Nat.  Bank  v.  Northwest- 
ern Nat  Bank,  40  III  App.  640; 
First  Nat  Bank  v.  First  Nat.  Bank, 
4  Ind.  App.  355;  Indiana  Nat.  Bank 
v.  First  Nat  Bank,  9  Ind.  App.  185. 
The  first  case  on  appeal  (152  I1L 
296)  was  not  affirmed  as  to  this 
point,  the  court  saying,  the  indorse- 


§  156.]  DEPOSITS.  271 

a  delay  which  caused  injury,4  the  indorsing  bank  will  not 
be  liable  to  it.5  If  the  paper  is  a  forgery  owing  to  a  forged 
indorsement,  or  to  the  amount  being  altered,  the  first  bank 
indorsing  the  paper  is  liable  to  the  other  banks  taking  the 
paper  or  paying  it.6  The  reason  of  this  rule  is  so  plain  that 
it  needs  no  comment.  It  is  said,  however,  that  if  the  sec- 
ond bank  is  guilty  of  negligence  or  delay  in  reporting  the 
forgery  or  negligence  in  discovering  such  a  forgery,  the  in- 
dorsing bank  will  be  exonerated.7  But  this  statement  is 
strenuously  denied  by  very  high  authority.8  But  where  the 
statute  requires  diligence  to  be  shown,  the  failure  to  exhibit 
such  diligence  by  the  second  bank  will  be  a  defense  as  to 
the  bank  first  indorsing  the  paper.9  The  real  ground  of  re- 
covery is  upon  the  indorsement  or  receipt  of  the  money,  but 
some  courts  lay  stress  upon  the  indorsing  bank's  negligence.10 
The  rules  of  the  clearing-house  are  binding  upon  banks  set- 
tling accounts  by  that  medium,11  so  far  as  the  rule  extends, 
even  upon  forged  paper. 

§  156.  Lost  or  stolen  checks  or  certificates. —  The  bank 
takes  the  risk  as  to  the  ownership  of  stolen  or  lost  paper  not 
negotiable.  If  it  pay  such  paper  upon  forged  indorsements 

4  First  Nat.  Bank  v.  First  Nat.    N.  Y.  12;  Bank  of  Com.  v.  Grocers' 
Bank,  151  Mass.  280,  semble;  Third    Bank,  2  Daly,  289. 

Nat.  Bank  v.  Central  Nat.  Bank,  76  6  Corn  Exchange  Bank  v.  Nassau 

Hun,  475,  semble.  Bank,  91  N.  Y.  74;  First  Nat.  Bank 

5  Some  cases  put  the  right  of  re-  v.  Northwestern  Nat.  Bank,  152  111. 
co very  upon  the  ground  of  the  first  296;  Central  Nat.   Bank  v.  North 
bank's  negligence.    First  Nat.  Bank  River  Bank,  44  Hun,  114. 

v.  First  Nat.  Bank,  151  Mass.  280;  7Bank  of  St.  Albans  v.  Farmers' 

People's  Bank  v.  Franklin  Bank,  88  Bank,  10  Vt  141. 

Tenn.   299.    But  see  Comm.  Nat.  8  Corn  Ex.  Bank  v.  Nassau  Bank, 

Bank  v.  First  Nat  Bank,  30  Md.  11.  91  N.  Y.  74 

The  basis  of  the  rule  ought  to  be  9  Corn  Ex.  Bank  v.  Nat.  Bank  of 

that  the    bank   first  receiving   a  Republic,  78  Pa.  233 :  Iron  City  Nat. 

check  ought  to   be  compelled  to  Bank  v.  Fort  Pitt  Nat.  Bank,  159 

verify  the  various   indorsements.  Pa.  46. 

See  also  Van  Wert  Nat  Bank  v.  10  See  note  5,  ante,  to  this  section. 

First  Nat.  Bank,  6  Ohio  Cir.  Ct.  R.  »  Preston  v.  Canadian  Bank,  23 

130;  Allen  v.  Fourth  Nat  Bank,  59  Fed.  R.  179.    But  if  the  clearing- 


272  BANKS    AND   BANKING.  [§  156. 

it  does  it  at  its  peril.1  Even  though  the  stealing  and  forg- 
ing be  done  by  a  clerk 2  or  a  messenger 3  of  the  depositor, 
where  the  depositor  has  not  been  guilty  of  negligence,  the 
bank  .cannot  charge  the  check,  when  paid,  against  the  de- 
positor. But  where  the  depositor  has  been  guilty  of  negli- 
gence in  leaving  the  paper  in  negotiable  form,  he  will  be 
liable  to  the  bank.4  The  situation  of  the  payee  of  stolen  or 
lost  paper,  if  not  negotiable  in  form,  is  the  same  as  if  it  were 
forged  paper.  The  same  rules  precisely  ought  to  govern  as 
to  certifying  or  paying  such  paper,  whether  as  between  the 
depositor  and  the  bank  or  the  bank  and  third  parties.  As 
between  two  banks,  the  same  rules  ought  to  govern  as  obtain 
in  the  case  of  forged  paper.  The  principle  is  impliedly  laid 
down  in  a  case  where  stolen  paper  indorsed  by  a  forged  sig- 
nature was  paid  by  the  bank  on  which  it  was  drawn  to  an- 
other bank.  The  first  bank  was  held  entitled  to  recover  from 
the  second.8  Certificates  of  deposit  when  indorsed  are  nego- 
tiable. But  where  they  are  unindorsed  they  are  not  negotiable, 
and  the  owner  may  recover  the  amount  of  them  from  the  bank 
without  giving  security.6  The  situation  of  overdue  certificates 
of  deposit  would  be  the  same.7  A  certified  check,  payable 
to  order,  unindorsed,  ought  to  be  subject  to  the  same  rule  as 
certificates  of  deposit  unindorsed.  An  unaccepted  check, 
payable  to  order,  if  lost  can  be  stopped,  either  by  the  drawer 
or  payee,  and  the  payee  of  a  certified  check  may  stop  it. 
But  a  certified  check  payable  to  bearer  or  generally  indorsed 

house  rule  has  been  violated,  the  *  Bowden  v.  Third  Nat.  Bank,  12 

case  is  to  be  determined  under  the  Wkly.  Law  Bui.  184. 

general  rules  of  law  as  if  there  were  6  State  Nat.  Bank  v.  Freedmen's 

no  rule.    National  Bank  v.  Bangs,  Sav.  Bank,  2  Dill.  11. 

106  Mass.  441.    See  §  368,  post  6  Citizens'  Bank  v.  Brown,  45  Ohio 

!Belknap  v.  National  Bank,  100  St.  39;  National  Bank  v.  Ringel,  51 

Mass.    376;    First    Nat    Bank    v.  Ind.  393.    In  this  case  a  certificate 

Bremer,  7  Ind.  App.  685.  payable  in  current  funds  is  said  not 

2  Belknap     v.    National     Bank,  to  be  payable  in  money. 

supra.  7  Citizens'  Nat.  Bank  v.  Brown,  11 

8  Bristol  Knife  Co.  v.  First  Nat.  Wkly.  Law  Bui.  220,  at  the  end  of 

Bank,  41  Conn.  421.    There  was  no  the  opinion  recognizes  this  prin- 

forgery  in  this  case.  ciple,  but  the  syllabus  does  not  con- 
tain a  reference  to  this  holding. 


§§  157,  158.]  DEPOSITS.  273 

is  negotiable,  and  a  lonafide  holder  thereof  has  a  good  title, 
even  though  he  gain  it  from  a  thief. 

§  157.  Overpayment  and  wrongful  payment. — If  a  bank 
overpays  a  check  it  may  recover  from  the  person  to  whom 
it  paid.1  If  the  bank  pays  the  check  to  the  wrong  person, 
that  is  to  say,  a  person  who  cannot  claim  that  he  had  any 
authority  to  receive  the  money,  the  bank  may  recover  the 
amount  paid,  or,  if  the  bank  pays  money  to  a  person  who  is 
charged  with  notice  that  he  has  no  right  to  receive  the 
money,  the  bank  may  recover.2  In  two  preceding  sections 3 
has  been  discussed  the  bank's  right  upon  payment  of  forged 
or  altered  paper.  But  if  the  payee  of  a  check  has  no  notice 
of  any  want  of  authority  in  himself  to  receive  the  money, 
and  the  check  is  a  proper  and  genuine  check,  the  bank  can- 
not recover  from  him,  even  though  the  bank  had  no  author- 
ity to  pay  the  money.4  But  if  the  bank  pays  a  check  to  the 
Avrong  person,  the  depositor  gains  no  right  to  sue  that  per- 
son,5 nor  does  the  person  to  whom  the  check  was  properly 
payable  gain  any  right  to  sue  the  person  to  whom  the  check 
was  paid,6  nor,  as  we  have  already  seen,  can  he  sue  the  bank.7 
He  must  rely  upon  the  drawer. 

§  158.  Effect  of  payment. —  In  all  cases  where  a  bank 
pays  a  genuine  check  drawn  upon  itself  to  the  person  entitled 
thereto 1  (except  in  the  single  case  of  another  bank2 ),  but  not 

iKeene  v.  Collier,  1  Met.  (Ky.)  3  See  §§  154, 155,  ante. 

415.  The  amount  of  recovery  is  the  4  Manufacturers'   Nat.    Bank    v. 

amount  paid  less  the  check.    As  Swift,  70  Md.  515.    It  seems  that 

between  banks  in  those  states  which  statements  on  the  check  do  not 

recognize  the  right  of  one  bank  to  bind  the  payee.    Citizens'  Bank  v. 

recover  from  another  bank  a  pay-  Grand,  33  La.  Ann.  976. 

naent  without  funds,  the  amount  of  6  Davis  v.  Smith,  29  Minn.  201. 

recovery  is  the  check  less  the  de-  6  Unless  the  funds  were  a  trust, 

posit    Merchants'  Nat.  Bank  v.  Na-  for  the  holder, 

tional  Bank  of  Com.,  139  Mass.  513.  7  See  §  146,  note  7. 

2  The  bank  may  pursue  the  di-  JSee  United  States  v.  Nat.  Ex. 

verted  funds  until  they  come  to  a  Bank,  45  Fed.  R  163.    The  person 

bonafide  holder.    Anderson  v.  Kis-  entitled  is  the  person  intended  by 

sam,  35  Fed.  R  699;  Beard  v.  Lam-  the  drawer. 

son,  94  Fed.  R  30.  2  As  between  banks  such  payment, 
18 


274:  BANKS   AND   BANKING.  .   [§  159. 

perhaps  where  it  certifies  such  a  check,8  or  where  a  bank 
pays  to  the  proper  person  a  genuine  note  upon  its  depositor 
payable  at  the  bank,4  the  payment  is  final  and  cannot  be  re- 
scinded,5 except  for  fraud,  as,  for  example,  in  obtaining  an 
overdraft 6  participated  in  by  the  payee. 

§  159.  Liability  of  the  bank  for  interest. —  A  general 
deposit  in  a  bank,  except  by  agreement,  does  not  draw  in- 
terest, general  deposits  being  always  subject  to  check.1  A 
certificate  of  deposit  does  not  draw  interest,2  and  no  liabil- 
ity is  imposed  upon  the  bank  to  pay  interest  either  upon 
general  deposits  or  certificates  of  deposit;  but  the  bank 
by  agreement,  either  written  or  verbal,  may  bind  itself  to 
pay  interest  upon  general  deposits;3  but  it  would  seem  that 
a  certificate  of  deposit,  being  a  written  contract,  must  on 
its  face  determine  whether  it  is  to  draw  interest  or  not.  A 
verbal  agreement,  proven  as  a  part  of  the  written  docu- 
ment, would  fall  within  the  inhibition  against  parol  evidence 
to  add  to  or  contradict  the  terms  of  a  written  document. 

is  not  final    Merchants'  Nat.  Bank  6  Tradesmen's  Bank  v.  Merritt,  1 

v.  National  Eagle  Bank,  101  Mass.  Paige,  302. 

281;  National  Ex.  Bank  v.  National  *  Parsons  v.  Treadwell.  50  N.  H. 

Bank,  132  Mass.   147;   Merchants'  356;  Atlanta  Nat.  Bank  v.  Burke, 

Nat   Bank   v.  National   Bank  of  81  Ga.  597;  Cohn  v.  St.  Louis  Ins. 

Com.,  139  Mass.  513.    But  see  Pres-  Co.,  11  Mo.  374.    But  it  is  said  that 

ton  v.  Canadian  Bank,  23  Fed.  R.  a  bank  is  liable  for   interest  on 

176.  every  deposit  not  subject  to  check. 

3  See  §  150,  ante.  Parkersburg  Nat.  Bank  v.  Als,  5 

*  Riverside  Nat.  Bank  v.  First  Nat  W.  Va.  50.    But  as  to  deposits  in 

Bank,  74  Fed,  R.  276.  court,  see  Insurance  Co.  v.  National 

»  Riverside  Nat  Bank  v.  First  Nat  Bank,  93  Ky.  129,  which  holds  they 

Bank,  supra;  Boylston  Nat  Bank  draw  interest.     Contra,  Haswell  v. 

v.  Richardson,  101  Mass.  287;  First  Mechanics'  Bank,  26  Vt  100. 

Nat.  Bank  v.   Ricker,  71  III  439;  2See    Parsons    v.  Treadwell,  50 

Bank  of  U.  S.  v.  Bank  of  Georgia,  N.  EL  356.   If  the  certificates  are  not 

10  Wheat.  333;  Hull  v.  State  Bank,  paid  on  maturity,  and  are  interest 

Dud.  Law,  259.    For  other  authori-  bearing,  they  so  continue  without 

ties,  see  §  133,  ante,  note  &    But  a  a  demand,    Payne  v.  Clark,  23  Mo. 

mistaken  credit  and  remittance  re-  259;  Cordell  v.  First  Nat.  Bank,  64 

covered  from  the  postoffice  is  not  Mo.  600. 

payment    Carley  v.  Potters'  Bank,  3  Pelham  v.  Adams,  17  Barb.  384. 

46  S.  W.  R.  328.  See  McLochlin  v.  Bank,  139  N.  Y.  514. 


§  160.]  DEPOSITS.  275 

Whether  a  custom  would  be  admissible  to  charge  the  bank 
with  interest  may  be  a  matter  of  some  doubt,  but  the  better 
reason  would  be  that  it  would  be  admissible.  As  in  the  case 
of  other  obligations  payable  upon  demand,  bank  deposits  or 
demand  certificates  of  deposit 4  begin  to  draw  interest  from 
the  date  of  the  demand,5  or  the  date  when  a  demand  was 
rendered  useless  by  the  suspension  of  the  bank.6  The  bring- 
ing of  suit  is  a  demand,7  and  so  is  the  claim  of  set-off  by 
way  of  defense  or  affirmative  relief.8  If  a  bank  refuses  to 
pay  upon  garnishment,  it  will  become  liable  for  interest; 
this  result  could  be  avoided  by  payment  into  court. 

§  160.  Overdrafts. —  In  connection  with  the  criminal  lia- 
bility of  officers,  we  have  already  discussed  to  some  extent 
the  question  of  overdraft.1  In  connection  with  the  bank's 
right  to  refuse  payment  of  a  check,  the  question  was  inci- 
dentally considered.  It  should  be  noted  that  the  officer  of 
the  bank  has  no  right  to  permit  an  overdraft,  unless  the 
board  of  directors  give  him  that  authority,  either  expressly 
or  by  permitting  him  to  allow  it  by  a  course  of  dealing. 
But  the  board  of  directors  can  permit  an  overdraft  if  they 
please.  The  rule  is  that  the  state  of  the  depositor's  account 
is  to  be  determined  by  its  true  condition,  not  necessarily  by 
what  is  shown  on  the  books.2  An  overdraft  arises  when- 
ever the  bank  pays  upon  a  depositor's  checks  more  money 

<  Morse  v.  Rice,  36  Neb.  212;  Citi-  7  Watson  v.  Phoenix  Bank,  8  Met. 

zens'  Nat.  Bank  v.  Brown,  45  Ohio  217.   Even  though  bank  enjoined 

St.  39.  afterwards. 

8  If  the  liability  is  dependent  on  8  Sickles  v.  Herold,  149  N.  Y.  332. 

a  condition,  default  after  condition  l  See  §  92,  ante,  especially  notes 

performed  determines  the  liability  14-18. 

for  interest.     Cooper  v.  Townsend,  2  Merchants'  Nat.  Bank  v.  Nat. 

13  N.  Y.  Supp.  760.     A  refusal  to  Bank  of  Com.,  139  Mass.  513;  Am. . 

pay  on  a  garnishment  will  create  Ex.  Nat.  Bank  v.  Gregg,  138  111.  596; 

a  liability  to  pay  interest.    Jones  McLean  Co.  Bank  v.  Mitchell,  88 

v.  Manufacturers'  Bank,  10  AVkly.  Ill  52.    If  Munn  v.  Burch,  25  111. 

Notes  Cas.   102.     But  see  Comm.  35,  had  recognized  this  ruling,  there 

Bank  v.  Jones,  18  Tex.  81.  would  have  been  no  necessity  for  a 

6  McGowan  v.  McDonald,  111  Cal.  ruling  which  has  produced  so  much 

57.  error. 


276  BANKS  AND  BANKING.  [§  160 

than  the  amount  of  his  deposit.8  It  makes  no  difference 
whether  this  overpayment  is  guaranteed  or  not,4  or  whether 
an  indorsement  be  required  by  the  bank  upon  the  check.5 
But  if  the  depositor  is  given  a  credit  at  the  bank  in  such  a 
form,  whether  it  be  entered  upon  the  books  or  not,  that  the 
depositor  could  sue  the  bank  for  dishonoring  a  check  drawn 
upon  the  credit,  then  such  a  credit  ought  not  to  be  called 
an  overdraft,  because  there  is  no  overdrawing  of  the  ac- 
count.6 The  depositor  has  so  much  credit  given  to  him  at 
the  bank,  and  the  result  is  precisely  the  same  as  if  he  went 
to  the  bank  and  made  a  deposit  of  so  much  money,  although 
it  may  very  well  be  that  if  the  bank  .should  promise  the 
holder  of  a  check  to  accept  it,  the  promise  would  be  a  nudum 
jpactum,  if  the  drawer  had  no  funds.7  The  promise  to  the 
depositor,  in  the  case  we  are  considering,  is  performed  by 
loaning  him  the  money,  and  the  reciprocal  promise  of  the 
depositor  to  pay  the  loan  makes  a  perfectly  good  contract. 
Therefore  the  term  "  overdraft "  cannot  with  any  propriety 
be  applied  to  such  a  credit.8  Every  man  who  overdraws  his 

8  United  States  v.  Allis,  73  Fed.  there  is  also  a  loan,  but  it  is  a  loan 

R.  65.    There  is  no  division  as  to  which  goes  to  the  credit  of  the  de- 

the  definition.    The  difficulty  is  in  positor,  and  he  does  not  overdraw 

determining  the  amount  of  the  de-  his  account.    The  transaction  does 

posit  not  differ  in  the  least  from  one 

4  Low  v.  Taylor,  41  Mo.  App.  517.  where  the  depositor  discounts  his 

5  Marine  Bank  v.  Butler  Colliery  note  and  deposits  the  amount  real- 
Co.,  5  N.  Y.  Supp.  291, 125  N.  Y.  695.  ized  in  the  bank. 

6  See  §  92,  ante.     This  is  the  re-  7  Morse  v.  Mass.    Nat.    Bank,  1 
suit  implied  from  the  language  of  Holmes,  209.    But  it  has  been  held 
the  court  in  Graves  v.  United  States,  that  a  promise  to  pay  checks  made 
165  U.  S.  323.    If  a  bank  makes  a  to   drawer  communicated  to  the 
naked  agreement  with  a  depositor  seller  is  binding  upon  the  bank, 
to  pay  his  overdrafts  in  considera-  Nelson  v.  First  Nat.  Bank,  48  111.  36. 
tion  of  the  depositor  agreeing  to  See  §  146,  ante,  note  10,  and  Kol- 
pay  thereon  a  certain  rate  of  inter-  lock  v.  Enmert,  43  Mo.  App.  566. 
est,  there  is  simply  a  verbal  per-  8But  United  States  v.  Allis,  7& 
mission  to  overdraw.    If  the  de-  Fed.  R.  165,  holds  quite  confused 
positor  executes  a  demand  note  for  language    upon    this    point,   and 
a  certain  sum,  and  the  bank  agrees  Bacon  v.  United  States,  97  Fed.  R. 
to  let  the  depositor  overdraw  up  to  35,  is  hopelessly  confused.  This  late 
the  amount  of  the  demand  note,  case  holds  that  though  a  depositor 


§  160.]  DEPOSITS.  277 

account  at  the  bank,  by  the  fact  of  overdrawing  agrees  to 
repay  the  amount  upon  demand.9  But  when  a  check  is  paid 
by  a  bank  it  is  prima  facie  proof  of  a  previous  deposit  to 
that  amount,10  and  other  proof  than  the  checks  is  needed  to 
show  the  fact  of  overdraft.11  If  the  overdraft,  or  rather  the 
right  to  overdraw,  is  granted  by  competent  authority,  to  wit, 
by  the  board  of  directors  or  by  some  officer  to  whom  the 
board  by  express  authority  or  by  acquiescence  has  granted 
the  right  to  allow  an  overdraft,  the  overdrawing  is  not  a 
fraud.  But  if  the  overdrawing  be  done  without  authority 
it  is  fraudulent,  and  no  title  in  the  money  drawn  passes  ex- 
cept to  a  payee  who  is  in  good  faith.  If  the  overdraft  is 
obtained  by  fraud  from  the  bank,  if  it  be  a  fraud  in  which 
the  payee  of  the  check  can  be  held  to  have  participated,  the 
bank  does  not  lose  title  to  the  money  paid  out,  but  may  fol- 
low it  into  a  credit  in  another  bank.12  But  a  person  who 
merely  acted  in  cashing  a  check  without  any  participation 
in  the  overdraft  or  any  interest  in  the  check  is  not  liable  to 
the  bank.13  If  the  overdrawn  depositor  makes  a  general 
deposit  it  will  be  supposed  to  be  in  payment  pro  tanto  of  the 
overdrawn  account;14  yet  government  deposits  for  particular 
purposes  known  to  the  bank  cannot  be  applied  upon  other 

who  has  executed  a  demand  note  39  Ma  489.      Compare  Lancaster 

and  had  received  a  credit  to  the  Bank  v.  Woodward,  18  Pa.  357. 

amount  of  the  demand  note,  up  to  10  Bank  of  U.  S.v.  Wilson,  3  Cranch, 

which  he  has  the  right  to  draw,  is  C.  C.  213. 

nevertheless  overdrawing  his  ao  u  State  Bank  v.  Clark,  8  N.  C.  36. 

count,  because  his  note  is  not  dis-  12  Tradesmen's  Bank  v.  Merritt,  1 

counted.     But  the  apparent  state  Paige,  302. 

of  the  account  is  a  mere  matter  of  13  Savings  Bank  v.  Hubbard,  58 

book-keeping.     The  books  do  not  N.  H.  167. 

and  cannot  show  the  credit,  yet  u  Nichols  v.  State,  46  Neb.  715.   It 

the  depositor  undoubtedly  had  it.  seems  that  the  bank  may  agree  to 

This  opinion  represents  the  judi-  receive  what  it  knows  is  public 

cial  superstition  that  the  only  way  money  to  pay  the  officer's  private 

in  which  a  bank  can  loan  money  is  overdraft,  and  be   bound  by  the 

by  discounting.  agreement.    Hale  v.  Richards,  80 

9  Thomas  v.  Intern.  Bank,  46  111.  Iowa,  164.    But  if  the  public  sued 

App.  461 ;  Franklin  Bank  v.  Byram,  the  bank  for  the  money  it  would 

have  no  defense. 


278  BANKS   AND   BANKING.  [§  161. 

accounts.15  This  same  rule  has  been  applied  in  the  case  of 
a  private  depositor  with  two  different  accounts,  but  both 
belonging  to  him.16  But  in  the  nature  of  things  this  rule 
cannot  be  correct,  unless  the  deposits  were  held  by  the  de- 
positor in  different  rights,  one  for  himself  and  the  other  for 
some  one  else.17  In  other  cases  if  a  deposit  is  made  to  a  par- 
ticular account  it  is  really  immaterial  whether  the  bank 
places  the  deposit  to  the  particular  account  indicated  and 
immediately  charges  it  to  balance  another  account,  or  places 
it  to  the  credit  of  the  second  account  in  the  first  instance. 
If  the  overdraft  is  obtained,  the  depositor  cannot  refuse  to 
pay  because  the  cashier  had  no  power  to  allow  it.18  An 
overdraft  once  permitted  to  be  made  cannot  be  revoked 
by  the  bank  as  to  another  bank,  the  payee  of  a  check,  except 
under  a  clearing-house  rule.19  An  overdraft  does  not  draw 
interest  except  by  agreement20  or  custom,21  or  after  demand 
for  payment  or  rendition  of  an  account,22  or  where  the  over- 
draft was  wrongfully  obtained.23 

§  161.  Certificates  of  deposit. —  The  power  of  a  bank  to 
issue  certificates  of  deposit  is  a  part  of  the  power  to  carry 

15  United  States  Bank  v.  Macal-  17  In  such  a  case  the  bank  must 
ister,  9  Pa.  475.  respect  the  rights  of  the  true  owner 

16  Simmons  Co.  v.  Bank  of.  Green-  or  beneficiary,  if  it  knows  of  the  in- 
wood,  41  S.  C.  177.    This  was  a  case  terest. 

where  the  check-holder  sued,  and  18  Union  Mfg.   Co.  v.  Rocky  M. 

is  another  of  the  astonishing  decis-  Bank,  2  Colo.  248. 

ions  produced  by  this  extraordi-  19  Preston  v.  Canadian  Bank,  23 

nary  rula    The  decision  held  that  Fed.  R.  179.    But  this  decision  is 

the  balance  of  one  account  could  hardly  reconcilable  with  the  Mas- 

not  be  applied  upon  another  ao-  sachusetts  case  it  cites.    See  §  158, 

count  without  notice  to  the  depos-  ante,  note  2. 

itor.   But  the  decision  gives  no  idea  20  Owens  v.  Staff,  32  III  App.  653. 

of  the  real  issue.    As  a  matter  of  If  no  rate  is  fixed  the  legal  rate  will 

fact  the  account  was  insufficient  govern.    Loan  Bank  v.  Miller,  39 

including  both  accounts.   The  case  S.  C.  175. 

went  to  the  jury  on  the  theory  that  21  This  is  within  the  general  rula 

the  bank  was  estopped  by  its  books.  22  Casey  v.   Carver,    42   IlL   225; 

Yet  the  court  charged  exactly  the  Union  Bank  v.  Solee,  2  Strobh.  390. 

other  way.    The  whole  case,  when  23  Hubbard  v.  Charleston  Co.,  11 

carefully  examined,  is   incompre-  Met  124. 

hensible. 


§  161.] 


DEPOSITS. 


279 


on  a  banking  business.  Therefore  national  banks  have  power 
to  issue  certificates  of  deposit  payable  either  upon  demand 
or  upon  time.1  Sometimes,  however,  the  statute  has  for- 
bidden the  issuance  by  banks  of  such  paper; 2  yet  even  if  the 
certificate  itself  be  void  as  an  illegal  contract,3  the  deposit 
will  remain  enforceable  as  a  deposit.4  -Such  certificates  is- 
sued without  consideration  are,  like  other  contracts  without 
a  consideration  to  support  them,  of  no  efficacy,5  except  in  the 
hands  of  a  ~bonafide  holder.6  This  latter  statement  is  true 
if  the  particular  jurisdiction  holds  in  accordance  with  the 
great  weight  of  authority  that  the  ordinary  certificate  of 
deposit  of  a  banker  is  the  promissory  note  of  the  bank  or 
banker  issuing  it,  payable  upon  demand.7  But  certain  courts 
have  denied  this  obvious  proposition.8  The  certificates  are 
therefore  negotiable,9  and  an  indorser  upon  one  assumes  the 


1  See  notes  5  and  6,  §  125.  ante. 

2Darden  v.  Banks,  21  Ga.  297; 
Bank  of  Peru  v.  Farnsworth,  18  III 
565.  And  see  Hunt  v.  Divine,  37  111. 
137,  for  a  strict  construction  of  such 
a  statute. 

3  Bank  of  Peru  v.   Farnsworth, 
supra;  Bank  v.  Merrill,  2  Hill,  295; 
Leavitt  v.  Palmer,  3  N.  Y.  19.  Com- 
pare Curtis  v.  Leavitt,  17  Barb.  309. 
The  case  of  Hargroves  v.  Chambers, 
30  Ga.  580,  is  contra. 

4  Pelham  v.  Adams,  17  Barb.  384 
And  see  §  33,  ante.  Where  the  stat- 
ute requires  all  contracts  of  the 
bank  to  be  signed  by  both  president 
and  cashier,  a  certificate  signed  by 
either  is  good.    Kilgore  v.  Bulkley, 
14  Conn.   362;    Barnes  v.   Ontario 
Bank,  19  N.  Y.  152. 

5  Murray  v.  Pauly,  56  Fed.  R  962. 
But  see  Armstrong  v.  Am.  Ex.  Nat. 
Bank,  133  U.  S.  433.    Compare  Hol- 
land Trust  Co.  v.  Waddell,  75  Hun, 
104;  Logan  Nat.  Bank  v.  William- 
son, 2  Ohio  Cir.  Ct,  R.  118;  Citizens' 


Sav.  Bank  v.  Blakeley,  42  Ohio  St. 
645. 

6  Kirk  wood  v.  First  Nat.  Bank,  40 
Neb.  484:  First  Nat.  Bank  v.  Clark, 
42  Hun,  16.  It  is  good  though  known 
to  be  for  accommodation.   Holland 
Trust  Co.  v.  Waddell,  supra. 

7  Miller  v.  Austen,  13  How.  218; 
Beardsley  v.  Webber,  104  Mich.  88; 
Brummagim  v.  Tallent,  29  Cal.  503; 
Kilgore  v.  Bulkley,  14  Conn.  362; 
Swift  v.  Whitney,  20  III  144;  Cur- 
ran  v.  Witter,  68  Wis.  16;  Mitchell 
v.  Easton,  64  N.  Y.  155;  Citizens' 
Bank  v.  Brown,  45  Ohio  St.  39,  and 
many  other  cases. 

8  Shute  v.  Pacific  Nat.  Bank,  136 
Mass.    487;    Loudon    Sav.   Soc.   v. 
Hagerstown    Bank,    36    Pa.    498; 
Lebanon  Bank  v.  Mangan,  28  Pa, 
452;  O'Neill  v.  Bradford,  1  Pin.  390. 
The  latter  case  is  no  longer  au- 
thority. 

9  Miller  v.  Austen,  13  How.  218; 
Birch  v.  Fisher,  51  Mich.  86;  Lynch 
v.  Goldsmith,  64  Ga.  42;  Springfield 


280  BANKS    AND   BANKING.  [§  161. 

same  liability  as  the  indorser  of  a  promissory  note.10  The 
certificate  passes  by  indorsement  and  delivery,11  or  by  de- 
livery though  unindorsed.12  An  assignment  of  the  certifi- 
cate transfers  the  whole  sum  represented  by  it.13  A  certifi- 
cate must  be  delivered  up  upon  payment,14  unless  it  has  been 
lost  unindorsed.15  The  certificate  is  payable  where  the  bank 
is  located,18  but  one  extraordinary  case  has  lost  sight  of  this 
obvious  fact.17  Payment  by  the  bank  upon  an  unauthorized 
indorsement  is  not  payment  at  all,18  even  though  the  bank 
obtains  the  certificate.  Yet  it  has  been  erroneously  held 
that  if  the  bank  pay  the  certificate  once  it  cannot  be  called 
upon  after  six  years  to  pay  it  again,  in  spite  of  the  fact  that 
it  did  not  get  the  certificate.19  This  decision  ignores  the  fact 
that  the  certificate  is  a  promissory  note  and  is  entitled  to  no 
weight  whatever. 

Certificates  of  deposit  are  of  two  descriptions :  those  pay- 
able after  a  certain  time  and  those  payable  upon  demand. 
If  a  certificate  is  payable  after  a  certain  date  it  matures  at 
that  date,  and  becomes,  so  far  as  a  transferee  of  the  certifi- 
cate after  maturity  is  concerned,  overdue  paper,  and  is  sub- 
ject to  defenses  accordingly.20  A  demand  certificate  trans- 
Marine  Co.  v.  Peck,  102 11L  265;  and  mand,  and  an  injunction  forbid- 
under  a  statute,  Renfro  v.  Mer-  ding  a  transfer  was  held  to  be 
chants'  Bank,  83  Ala.  425.  But  good  as  against  every  one  except 
contra  where  payable  in  current  a  bona  fide  holder.  Springfield 
funds  not  negotiable  under  a  stat-  Marine  Co.  v.  Peck,  102  111.  265. 
ute.  Lafayette  Nat.  Bank  v.  Ringel,  15  See  note  6  to  §  156,  ante. 
51  Ind.  393.  16  Sanbourn  v.  Smith,  44  Iowa,  152. 

10  Gate  v.  Patterson,  25  Mich.  191.       "Renfro  v.  Merchants'  Bank,  83 

11  See  cases  under  notes  7  and  9,    Ala.  425. 

supra.    Contra,  cases  under  note  8,  18  Honig  v.  Pacific  Bank,  73  Cal. 

supra.  464. 

12  Shanklin  v.  Madison  Co.  Com'rs,  w  Gregg  v.  Union  Co.  Nat.  Bank, 
21  Ohio  St.  575;   Cassidy  v.  First  87  Ind.  238. 

Nat.  Bank,  30  Minn.  86.  20  First  Nat  Bank  v.  Security  Nat 

13  Springfield  Marine  Co.  v.  Peck,  Bank,  34  Neb.  71.    But  the  certifi- 
102  111.  265.  cate  does  not  mature  for  the  pur- 

14  Fells  Point  Sav.  Inst.  v.  Werdon,  pose  of  presenting  it  and  demand- 
18  Md.  320.    But  Hunt  v.  Divine,  37  ing  payment  at  the  place  where 
111.  137,  permits  a  suit  without  de-  payabla    It  was  upon  this  theory 


§  162.]  DEPOSITS.  281 

f erred  two  years  after  its  date  is  said  to  be  subject  to  a  set-off.21 
The  certificate  is  governed  by  the  general  rule  that  the  figures 
in  the  margin  are  governed  by  the  amount  stated  in  the  body 
of  the  certificate.22  Where  a  certificate  was  made  payable 
to  the  order  of  the  depositor  or  his  wife  by  name,  the  bank 
was  held  liable  for  paying  after  his  death  upon  the  indorse- 
ment of  the  widow.23  The  certificate  continues  to  draw  in- 
terest at  the  same  rate  after  maturity  as  before,24  whether 
the  certificate  so  states  or  not.25  The  damages  for  the  de- 
tention of  a  non-interest  bearing  certificate  are  interest  at 
the  legal  rate.26  If  a  suit  is  pending  upon  a  certificate  and 
a  new  certificate  is  accepted  instead  of  the  one  on  which 
suit  is  pending,  the  cause  of  action  is  destroyed.27  It  is  some- 
times difficult  to  decide  whether  a  document  is  a  certificate 
of  deposit  or  not,28  as  the  cases  show. 

§  162.  Special  deposits.— The  words  "special deposit"  are 
used  in  the  cases  in  two  senses  —  one,  as  a  deposit  for  safe- 
keeping; the  other,  as  a  deposit  for  a  particular  purpose. 
The  latter  kind  of  a  deposit  has  been  already  noticed.1  It 

that  banks  tried  to  establish  the  The  rule  as  to  certified  checks  is 

rule  that  an  unpresented  certificate  different  from  the  rule  stated  in 

ceased  to  draw  interest  after  ma-  Gregg   v.  Union   Co.  Nat.  Bank, 

turity.    Being  payable  at  the  bank,  supra. 

the    need    of   demand    there    of  22  Payne  v.  Clark,  19  Mo.  152. 

payment   could   only  be   met   by  23  See  Smiley  v.  Fry,  100  N.  Y.  262; 

presenting  the   certificate  at  the  First  Nat.  Bank  v.  Clark,  134  N.  Y. 

bank  for  payment.    It  must  be  ad-  368;  First  Nat.  Bank  v.  Greenville 

mitted  that  there  is  no  logical  es-  Nat.  Bank,  84  Tex.  40. 

cape  from  the  claim  made  by  the  24  Second  Nat.  Bank  v.  Wrightson, 

banks,  but  the    decisions  are  all  63  Md.  81. 

otherwise.  2&Cordell  v.  First  Nat  Bank,  64 

21  Tripp  v.  Curtenius,  36  Mich.  494.  Mo.  600. 

This  decision  would  be  correct  if  26  Payne  v.  Clark,  23  Mo.  259. 

an  assignee  or  indorsee  were  not  27Sleppy  v.  Bank  of  Commerce, 

bonafide;  but  the  case  in  the  last  17  Fed.  R.  712. 

note  is  not  sound,  and  National  28  Manuel  v.  Mississippi  R.  Co.,  2 

Bank  v.  Washington  Co.  Bank,  5  Pa.  198. 

Hun,  605,  is  contra.    It  is  difficult  x  See  §  136,  ante,  and  notes  14  and 

to  see  how  the  bank  gets  an  equity  15;  Moreland  v.  Brown,  86  Fed.  R. 

by  paying  to  the  wrong  person.  257;  Montague  v.  Pacific  Bank,  81 


282  BANKS  AND  BANKING.  [§  1C 2. 

remains  to  be  said  that  certifying  a  check  does  not  create 
such  a  deposit.2  A  deposit  to  pay  a  certain  claim  is  revoca- 
ble unless  assented  to  or  acted  upon  by  the  beneficiary,3  and 
such  a  deposit  remains  a  special  deposit,  although  mingled 
with  the  general  funds  of  the  bank;4  but  where  a  corpora- 
tion agreed  to  keep  its  general  deposit  up  to  a  certain  amount 
in  order  to  protect  certain  loans,  the  deposit  was  general  and 
not  special.5  But  a  deposit  has  been  held  in  one  case  to  re- 
main special,  although  upon  its  credit  checks  were  drawn  and 
paid.6  Money  delivered  to  a  bank  for  transmission,7  or  paid 
to  a  bank  for  a  note  upon  an  order  given  for  delivery  of  the 
note,8  or  for  any  other  special  purpose,9  is  a  special  deposit. 
But  where  the  bank  agreed  to  put  a  special  amount  in  a 
separate  package,  but  did  not  do  so,  no  special  deposit  re- 
sulted ; lo  although  had  the  bank  done  so,  a  special  deposit 
would  have  been  created.11  Paper  delivered  to  a  bank  for 
collection,  as  we  have  seen,  remains  a  special  deposit  as  to 
that  bank  and  all  others  with  notice,  unt^l  it  is  collected  and 
the  procee'ds  become  mingled  with  the  bank's  funds.12  The 
other  cases  of  special  deposit  are  where  either  money  or  se- 
curities or  other  valuables  are  delivered  to  a  bank  for  safe- 
keeping.13 

Fed.  R.  602:  Am.  Ex.  Nat.  Bank  v.  6  Chesapeake  Bank  v.  Swain,  29 
Loretta  Mfg.  Co.,  165  III  103.  Md.  483,  an  extreme  case. 

2  People  v.  St  Nicholas  Bank,  28       7  Stoller  v.  Coates,  88  Mo.  514 

N.  Y.  Supp.  407.  8  Massey  v.  Fisher,  62  Fed.  R.  958; 

3  See  £  136,  ante,  and  notes  14  and  Clots  v.  Dickson,  5  Alb.  Law  J.  286; 
15;  Star  Cutter  Co.  v.  Smith,  37  111.  Peak  v.  Ellicott.  30  Kan.  156;  Elli- 
App.  212;  Bank  of  Leroy  v.  Hard-  cott  v.  Barnes,  31  Kan.  170;  Ryan 
ing,  1  Kan.  App.  389.  v.  Phillips,  3  Kan.  App.  704. 

*Kimmel  v.  Dickson,  5  S.  D.  221;  9  Harrison  v.  Smith,  83  Ma  210. 

Star  Cutter  Co.  v.  Smith,  37  111.  App.  But  see  Edson  v.  Angell,  58  Mich. 

212.    This  matter  becomes  of  im-  336  (wrong). 

portance  in  case  the  bank  is  robbed  10  Bayor  v.  Shaffner,  51  I1L  App 

or  in  the  case  of  insolvency.    See  180. 

§  342,  post.    But  the  depositor  in  n  In  re  Comm.  Bank,  2  Ohio  Dec. 

a  case  of  robbery  ought  to  ratify  304. 

the  mingling  and  claim  a  general  12See  §  133,  ante. 

deposit  13  Pattison  v.  Syracuse  Nat  Bank, 

6  State  Building  Ass'n  v.  Merch.  80  N.  Y.  82.    See  Kupfer  v.  Bank  of 

Sav.  Bank,  36  S.  W.  R.  967.  Galena,  34  III  328.    Though  a  de- 


§  163.]  DEPOSITS.  283 

§  163.  When  special  deposit  created. —  A  special  deposit 
is  created,  in  addition  to  the  cases  stated  in  the  preceding 
section,  whenever  a  particular  thing  is  delivered  to  a  bank 
to  be  returned  in  corpore  upon  demand.1  But  if  a  note  is 
merely  delivered  to  a  bank  without  any  direction  to  or 
agreement  by  the  bank,  the  bank  is  at  liberty  to  either  dis- 
count the  note  or  hold  it  for  collection  at  maturity.2  The 
fact  that  a  credit  in  a  pass-book  is  marked  as  a  special  de- 
posit is  not  conclusive,  it  may  be  shown  to  have  been  gen- 
eral.3 Certificates  of  deposit,  or  certified  checks,  are  not 
special  but  general  deposits,4  and  every  deposit  of  money  is- 
general  unless  expressly  made  special  or  deposited  in  some 
particular  way.5  Money  deposited  to  indemnify  the  bank 
for  its  liability  in  becoming  surety  upon  a  bond  is  general 
where  a  certificate  of  deposit  was  issued  and  the  money,  to 
the  knowledge  of  the  depositor,  went  into  the  general  funds 
of  the  bank; 6  but  where  the  depositor  did  not  know  the  bank 
was  treating  such  a  deposit  as  a  general  one,  it  remains  a 
special  deposit.7  The  addition  of  descriptive  words  to  the 
depositor's  name  does  not  render  the  deposit  special;8  but 
where  a  mortgage  was  left  with  a  bank  for  collection  and 
not  to  be  credited,  and  the  amount  to  be  kept  until  the  de- 
positor could  withdraw  it  after  notification,  the  transaction 
was  held  to  create  a  special  deposit ; 9  but  where  such  a  secu- 

posit  is  marked   "special"  in  the  N.  Y.  Supp.  407;  Mutual  Ass'n  v.. 

pass-book,  it  may  be  shown  to  be  Jacobs,  141  111.  261. 

general    Carr  v.  State,  104  Ala.  43.  5  Ward   v.  Johnson,  95  III  215; 

But  whether  this  rule  would  apply  Matthews  v.  Creditors,  10  La.  Ann. 

between  the  bank  and  depositor  is  342. 

questionable.  6  Mutual  Ass'n  v.  Jacobs,  43  III 

1  In  re  Mutual  Building  Soc.,  2  App.  340. 

Hughes,    374    Receiver's    moneys  'Anderson  v.  Pacific  Bank,  112 

deposited  in  a  bank  are  not  special  CaL  598.     See   also    Dearborn    v. 

deposits.    South  Development  Co.  Wash.  Sav.  Bank,  13  Wash.  345. 

v.  Houston,  etc.  Ry.  Co.,  27  Fed.  R.  »McLain  v.  Wallace,  103  Ind.  562. 

344.  Compare  Otis  v.  Gross,  96  111.  612, 

2  Drawn  v.  Pawtucket  Bank,  15  which    was   a   deposit   of  public 
Pick.  88.  funds. 

»Carr  v.  State,  104  Ala.  43.  9In  re  Johnson,  103  Mich.  109;. 

4  People  v.  St  Nicholas  Bank,  28    State  v.  State  Bank,  42  Neb.  896. 


BANKS   AND    BANKING. 


[§  164. 


rity  was  credited  to  the  depositor  as  cash,  the  deposit  was 
general;10  and  the  invariable  rule  is  that  whether  securities 
are  deposited  for  collection  or  for  credit,  as  soon  as  they  are 
collected  and  go  into  the  general  funds  of  the  bank  the  de- 
posit becomes  a  general  one,  creating  the  relation  of  debtor 
and  creditor.11  The  proof  to  identify  the  special  deposit  is 
often  necessarily  circumstantial.12 

§  164.  Liability  of  bank  upon  special  deposit. —  The  re- 
lation of  the  bank  to  its  special  depositor  is  that  of  bailee.1 
Whether  it  is  a  gratuitous  bailment  or  one  for  hire  depends 
upon  circumstances.  Since,  by  the  very  definition  of  the 
word  "special"  deposit,  the  bank  can  obtain  no  advantage 
by  using  the  deposit,  if  it  is  not  paid  for  the  work  which  it 
does,  it  is  a  gratuitous  bailee,  the  consideration  being  simply 
the  delivery  of  the  thing.2  If  the  bank  has  any  claim  upon 
the  thing  deposited,  such  as  a  claim  upon  it  as  collateral 
security,  the  bank  is  pledgee  and  not  gratuitous  bailee.  The 
degree  of  care  required  from  a  gratuitous  bailee  has  been 
variously  defined  by  courts.  It  is  a  liability  for  gross  neg- 
ligence only,3  for  ordinary  care  under  the  circumstances,4  or 


10  Bennett  v.  Knapp,  9  N.  Y.  Supp. 
766. 

11  See  §  133,  ante.    And  see  also 
§  343,  post.    The  same  rule  applies 
to  savings  deposits,  where  savings 
banks  are  debtors  to  their  depos- 
itors.   Wetherell  v.  O'Brien,  140  III 
146.    This  last  case,  however,  gives 
the  extreme  rule  against  the  pri- 
ority of  a  special  depositor.    The 
decision  is  not  sound  upon  that 
point,  although  in  accordance  with 
the  rule  in  "Illinois.     The  better 
rule  is  that  stated  in  §  342,  post, 
where  the  right  of  priority  is  con- 
sidered. 

12.  Dougherty   v.   Vanderpool,  35 
Miss.  165. 


1  McLain  v.  Wallace,  103  Ind.  562; 
Kinsela  v.  Cataract  City  Bank,  18 
N.  J.  Eq.  158.    It  is  the  bank  which 
is  the  bailee,  not  the  officers.    Fos- 
ter v.   Essex  Bank,  17  Mass.  479. 
This  decision  is  in  its  result  wholly 
and    completely   erroneous.     The 
bank  is  also  called  agent.    In  re 
Johnson,  103  Mich.  109;  L'Herbette 
v.  Pittsfield  Nat.  Bank,  162  Mass. 
137. 

2  Robinson  v.  Threadgill,  13  Ired. 
39.    A  statute  sometimes  makes  a 
gratuitous  bailment  one  for  hire. 
Merchants'  Nat  Bank  v.  Guilmar- 
tin,  93  Ga.  503. 

8  Foster  v.  Essex  Bank,  17  Mass. 
479;  White  v.  Commonwealth  Nat. 


<Maury  v.  Cole,  34  Md.  235;  First    Lancaster  Co.  Bank   v.  Smith,  62 
Nat.  Bank  v.  Zent,  39  Ohio  St  105;    Pa.  47. 


§164.] 


DEPOSITS. 


285 


for  the  care  it  bestows  upon  its  own  goods.5  The  two  first 
descriptions  do  not  differ  in  any  rational  sense.6  The  lia- 
bility of  the  bank  for  its  agents'  and  officers'  acts  has  been 
defined  to  be  absolute,7  or  simply  ordinary  care  in  employ- 
ing an  apparently  reliable  agent,  where  the  loss  does  not 
arise  from  a  delivery  to  the  wrong  person  or  from  an  act  of 
the  agent  in  the  due  course  of  his  employment.8  But  where 
the  bank  was  benefited  by  the  agent's  act,  its  liability  re- 
mains, whatever  the  care  shown  in  his  employment.9  But 
whatever  the  rule  as  to  liability  may  be,  if  the  bank  through 
any  of  its  proper  officers  has  notice  of  the  particular  officer's 
unreliability,  where  the  loss  is  caused  by  such  an  officer,  the 
bank  will  be  liable  for  the  special  deposit.10  Certain  facts 
are  considered  absolute  evidence  of  gross  negligence,  such 
as  to  leave  the  special  deposit  in  a  place  to  which  others 
than  the  agents  of  the  bank  have  access.11  But  where  the 


Bank,  Fed.  Cas.  No.  17,544;  Hale  v. 
llawallie,  8  Kan.  136;  Sturges  v. 
Keith,  57  111.  451;  Carlisle  Bank  v. 
Graham,  100  U.  S.  699;  First  Nat. 
Bank  v.  Graham,  79  Pa.  106:  Whit- 
ney v.  Brattle boro  Bank,  55  Vt.  154; 
First  Nat.  Bank  v.  Rex,  89  Pa.  308. 

5  Scott  v.  National  Bank,  72  Pa. 
471.    Pennsylvania  is  on  all  sides  of 
the  question.    Levy  v.  Pike,  25  La. 
Ann.  630. 

6  See  §  79,  note  20.    Gross  negli- 
gence is  said  to  be  equivalent  to 
fraud.  Foster  v.  Essex  Bank,  supra. 
But  the  point  where  ordinary  neg- 
ligence ends  and  gross  negligence 
begins  is  too  shadowy  to  furnish 
any  reasonable  guide. 

7  United  Soc.  v.  Underwood,   9 
Bush,  609;  First  Nat.  Bank  v.  Gra- 
ham, 85  Pa.  91;  El  Paso  Nat.  Bank 
v.  Fuchs,  84  S.  W.  R  203;  Carlisle 
Bank  v.  Graham,  100  U.  S.  699.   This 
is  the  correct  rule.    The  opposing 
cases  are  founded  upon  an  obsolete 
rule  as  to  torts. 


8  Scott  v.  National  Bank,  72  Pa. 
471 ;  De  Haven  v.  Kensington  Nat. 
Bank,  81  Pa.  95;  White  v.  Common- 
wealth Nat.  Bank,  Fed.  Cas.  No. 
17,544;  Smith  v.  First  Nat.  Bank,  99 
Mass.  605;  Sturges  v.  Keith,  57111. 
451 ;  and  see  Preston  v.  Prather,  137 
U.  S.  604.  If  a  court  is  unable  to  un- 
derstand the  fallacy  involved  in 
these  holdings,  no  amount  of  argu- 
ment upon  the  question  will  do  any 
good.  The  employer  is  held  liable 
because  as  bailee  he  owes  a  duty, 
which  he  does  not  perform  by 
merely  exercising  due  care  in  hir- 
ing his  servants.  See  1  Jaggard, 
Torts,  261  et  seq. 

9Monmouth  First  Nat.  Bank  v. 
Dunbar,  118  111.  625. 

10  Merchants'  Nat.  Bank  v.  Guil- 
martin,    93    Ga.    503;    Preston    v. 
Prather,  137  U.  S.  604 

11  Gray  v.  Merriam,  46  111.  App. 
337;   Pattison    v.    Syracuse    Nat. 
Bank,  80  N.  Y.  82;  but  see  Scott  v. 
National  Bank.  72  Pa.  471. 


286  BANKS  AND  BANKING.  [§  164 

bank  is  a  bailee  for  hire  or  is  a  mandatary,  the  bank  will  be 
held  liable  for  ordinary  care  and  diligence ; 12  but  the  bail- 
ment cannot  be  assumed  to  be  for  hire.13  Since  the  bank  is 
a  bailee  it  is  liable  for  no  Iqss  that  occurred  through  a  burg- 
lary u  or  theft,15  unless  its  negligence  contributed  to  the  loss. 
A  fraudulent  release  obtained  by  the  bank  will  be  no  de- 
fense.16 The  bank  is  at  all  events  liable  for  a  delivery  to 
the  wrong  person; "  but  a  delivery  to  one  authorized  to  re- 
ceive the  deposit  will  be  good,18  even  though  the  bank  did 
not  know  of  the  authority  at  the  time  of  the  delivery.19  The 
bank,  if  the  deposit  is  lost,  has  the  burden  of  showing  that 
the  loss  was  not  due  to  its  fault,20  although  one  case  holds 
that  the  burden  of  proof  is  on  the  depositor  to  show  gross 
negligence  on  the  part  of  the  bank.21  The  depositor  may 
sue  both  the  bank  and  the  officer  whose  negligence  caused 
the  loss.22  The  statute  of  limitations  begins  to  run  from 
the  date  of  the  demand  for  the  return  of  the  deposit,23  but 
it  is  also  said  that  it  begins  to  run  from  the  date  of  the  dis- 
covery of  the  fraud.24  If  a  bank  converts  a  special  deposit 

12Pratherv.  Kean,  29  Fed.  R498;  U.  S.  267;  Fisk  v.  Germania  Nat. 

Hollister  v.  Central  Nat.  Bank,  119  Bank,  40  La.  Ann.  820. 

N.   Y.   634;   Ouderkirk  v.  Central  19Chattahpochie    Nat.  Bank  v. 

Nat.  Bank,  119  N.  Y.  263.  Schley,  58  Ga.  369. 

13  Merchants'  Nat  Bank  v.  Guil-  20  White  v.  Commonwealth  Nat. 
martin,  88  Ga.  797.  Bank,  Fed.   Gas.  No.  17,544:   Her- 

14  Wylie  v.   Northampton  Bank,  chants'  Nat.  Bank  v.  Carhart,  95 
119  U.  S.  361.  Ga.  394;  First  Nat.  Bank  v.  Zent, 

15Dearbourn  v.  Union  Nat.  Bank,  39  Ohio  St.  105.    The  Pennsylvania 

58  Me.  273.  court,  which  appears  to  have  an 

16  Gould  v.  Cay uga  Co.  Bank,  86  uncontrollable  antipathy  to  special 
N.  Y.  75.  deposits,  says  the  burden  is  on  the 

17  White  v.  Commonwealth  Nat.  plaintiff  to  show  gross  negligence. 
Bank,  Fed.  Cas.  No.  17,544;  Walker  First  Nat.  Bank  v.  Rex,  89  Pa.  30a 
v.  Manhattan  Bank,  130  U.  S.  267;  21See  last  note. 

Gaulyv.  Troy  City  Bank,  98  N.  Y.       22  Coffin  v.   Anderson,  4  Blackf. 
487.    Care  used  is  immaterial   Lan-    395.    They  are  joint  tort-feasors. 
caster  County  Bank  v.  Smith,  62      23  Gauley  v.  Troy  City  Bank,  98 
Pa.  47.  N.  Y.  487. 

is  Walker  v.  Manhattan  Bank,  130      2*  Hughes  v.  First  Nat.  Bank,  110 

Pa,  428. 


§§  1G5,  166.]  DEPOSITS.  287 

into  money  and  mingles  the  funds,  the  depositor  could  ratify 
the  act  and  hold  the  bank  liable  as  debtor  and  not  as  bailee.25 

§  165.  Banks   which   may  receive    special  deposits. — 

Whether  a  bank  has  power  to  receive  special  deposits  or  not, 
if  it  is  accustomed  to  do  so  it  will  be  liable  for  them;1  yet 
if  the  directors  of  the  bank  did  not  know  of  the  cashier's 
act  in  receiving  the  special  deposit  and  were  not  guilty  of 
negligence,  where  the  bank  has  no  such  power  the  bank  will 
not  be  liable.2  But  if  the  bank  receives  a  benefit  from  the 
deposit,  it  will  not  be  heard  to  object  that  it  had  not  author- 
ity to  receive  it.3  National  banks  are  by  necessary  implica- 
tion, if  not  by  express  grant,  given  the  power  to  receive 
special  deposits ; 4  but  such  a  power  is  not  granted  by  an  au- 
thority conferred  to  carry  on  the  business  of  receiving  money 
on  deposit.5 

§  166.  Actions  upon  deposits. —  No  right  of  action  ac- 
crues upon  a  general  deposit  until  a  demand  has  been  made,1 
unless  on  account  of  circumstances  no  demand  is  required.2 
Thus,  if  the  contract  was  illegal  whereby  the  deposit  was 
received,3  or  if  the  bank  suspends  payment,4  or  notifies  the 

25  If  such  were  the  case,  due  care  Bank,  50  Vt.  388;  First  Nat.  Bank 

would  not  exonerate  the  bank,  if  v.  Accam  Nat.  Bank,  60  N.  Y.  278. 

the  special  deposit  should  be  lost.  8  First    Nat.   Bank   v.    Citizens' 

1  First  Nat.  Bank  v.  Zent,  39  Ohio  Bank,  Fed.  Gas.  No.  4802.    This  de- 
St.  105;  First  Nat.  Bank  v.  Graham,  cision  is  probably  not  sound  even 
79  Pa.   106;   Pattison  v.  Syracuse  on  this    ground,  nor  is  Lloyd  v. 
Nat.  Bank,  80  N.  Y.  82;  Chattahoo-  West  Branch  Bank,  15  Pa.  172. 
chie  Nat.  Bank  v.  Schley,  58  Ga.  369.  l  Johnson   v.   Farmers'  Bank,   1 

2  Lloyd  v.  West  Branch  Bank,  15  Har.  117;  Bank  of  British  No.  Am. 
Pa.  172.     On  the  construction  of  v.  Merchants'  Nat  Bank,  91  N.  Y. 
the  word  "deposits"  this  case  is  106;  Brahm  v.  Adkins,  77  111.  263; 
wrong.  Sickles  v.  Herold,  149  N.  Y.  332. 

8  Sykes  v.  First  Nat.  Bank,  2  S.  2  See  two  last  cases  cited. 

Dak.  242.  8  White    v.    Franklin    Bank,    22 

4  Carlisle  First  Nat.  Bank  v.  Gra-  Pick.  181. 

ham,  100  U.  S.  699 ;  First  Nat.  Bank  *  Planters'  Bank  v.  Farmers'  Bank, 

v.  Strang,  138  111.  347.    Yet  even  8  Gill  &  J.  449;  Watson  v.  Phoenix 

this  obvious  proposition  has  been  Bank,  8  Met.  217. 
denied.     Whitney   v.    First    Nat. 


288  BANKS   AND    BANKING.  [§  167. 

depositor  that  it  will  not  pay  the  deposit,5  or  claims  the 
deposit  as  its  own,6  or  for  a  third  person,7  or  where  the  bank 
has  stated  an  account,8  or  where  an  overpayment  was  allowed 
to  the  bank  by  a  mistake,9 —  in  either  case  no  demand  is 
needed.  On  certificates  of  deposit  the  right  of  action  does 
not  accrue  until  a  demand  has  been  made,10  unless  a  demand 
is  excused  by  circumstances.  The  right  of  action  against 
the  bank  will  not  be  taken  away  by  the  fact  that  the  depos- 
itor has  elected  to  sue  one  who  fraudulently  received  the 
deposit,11  nor  by  the  fact  that  the  depositor  has  proven  his 
claim  before  the  receiver,  where  no  payment  was  made  on 
the  claim.12  But  if  it  appears  that  the  deposit  has  been  at- 
tached in  favor  of  a  third  party,  the  bank  is  entitled  to  a 
stay  until  that  matter  is  determined.13  The  remedy  on  a  gen- 
eral deposit  is  at  law,  as  a  general  rule,14  and  so  it  is  upon  a 
certificate  of  deposit,  even  though  the  person  in  whose  name 
the  certificate  of  deposit  was  issued  refuses  to  indorse  it.15 

§  167.  Who  may  maintain  action. —  If  the  deposit  is  in 
the  name  of  the  real  owner,  he,  of  course,  may  sue  or  his 
assignee.  If  the  depositor  is  dead,  the  personal  representative 
should  sue.  It  seems  that  the  true  owner  of  the  deposit  may 
sue  the  bank  without  joining  the  depositor.1  If  the  deposit 

6  Farmers' Bank  v.  Planters' Bank,  same  rule  applies  to  special  depos- 

10  Gill  &  J.  422.  its,  but  none  is  needed  if  a  conver- 

6  Bank  of  Mo.  v.  Benoist,  10  Mo.  sion  has  taken  placa    Monmouth 
519.  Bank  v.  Dunbar,  19  Bradw.  558. 

7  Carroll  v.  Clone,  40  Barb.  220.  "  August  v.  Fourth  Nat.  Bank,  1 

8  Bank  of  Mo.  v.  Benoist,  10  Mo.  N.  Y.  Supp.  139. 

519.    Contra,  Downes  v.  Bank  of  12  Watson  v.  Phoenix  Bank,  8  Met. 

Charleston,  6  Hill  (S.  C.),  297.  217. 

9  Goodell  v.  Brandon  Nat.  Bank,  "  Ferguson  v.  Bank.  25  Kan.  333. 
63  Vt  SOa  14  The  action  would  be  debt  or  as- 

10  Brown  v.  McElroy,  52  Ind.  404;  sumpsit,  unless,  of  course,  it  is  neo 

Howell  v.  Adams,  68  N.  Y.  314;  essary  to  enforce  a  trust  or  some 

Munger  v.  Albany  Nat.  Bank,  85  other  equitable  right. 

N.  Y.  580;  Bellows  Falls  Bank  v.  "Fultz  v.  Walters,  2  Mont  165. 

Rutland  Co.  Bank,  40  Vt.  377.    The  Compare    Chosen    Freeholders   v. 

demand  is  good  if  on  bank  exam-  Newark  City  Bank,  48  N.  J.  Eq.  51. 

iner  in  possession.   First  Nat.  Bank  *  Walsh    v.  National    Broadway 

v.  Strang,  28  111.  App.  325.    The  Bank,  33  N.  Y.  Supp.  998. 


§  168.]  DEPOSITS.  289 

was  made  by  the  husband  in  his  wife's  name,  but  not  as  a 
gift  to  her,  and  she  be  dead,  the  husband  may  sue  without 
joining  her  representative.2  Similarly  a  deposit  made  in 
escrow  to  be  paid  to  a  third  party  may  be  sued  for  by  the 
depositor  without  joining  the  third  party.3  A  deposit  by  a 
man  as  agent  may  be  sued  for  by  him  even  where  a  suit  is 
required  to  be  brought  by  the  real  party  in  interest.4  A 
trustee  may  sue  in  his  own  name,  either  joining  the  bene- 
ficiary or  not.5  Joint  deposits  to  be  drawn  upon  a  joint 
check  must  be  sued  for  by  the  partners  jointly;6  but  a  joint 
deposit  of  collaterals  upon  a  debt  after  the  debt  has  been 
paid  does  not  give  a  joint  right  of  action  for  the  collaterals; 
each  one  must  sue  for  his  own  collaterals.7  Where  the  depos- 
itor has  an  action  against  the  stockholders,  the  parties  de- 
fendant must  be  determined  according  to  the  right  given  by 
the  statute.8 

§  168.  Bank's  rights  when  sued. —  Wherever  conflicting 
claims  are  made  u-pon  the  bank  by  different  persons,  the  bank 
has  the  undoubted  right  to  compel  the  parties  to  interplead 
and  relieve  it  of  the  necessity  of  contending  with  either.1 
"When  an  action  is  brought  by  a  third  party  against  the  bank 
for  the  deposit,  the  bank  performs  its  duty  to  the  depositor 
by  giving  him  full  and  timely  notice  and  requiring  him  to 
defend  the  action.2 

2  Davis  v.  Lebanon  Co.  Sav.  Bank,  not  in  a  manner  required  by  the 
53  Mich.  163.  articles  of  incorporation.  Informer 

3  Ullrich  v.  National  Bank  (Cal.),  sections  the  persons  to  be  sued  as 
37  Pac.  R  500.  stockholders  upon  the  liability  to 

4  McLaughlin  v.  First  Nat  Bank,  creditors  has  been  considered.   See 
0  Dak.  406.  §  58,  ante,  et  seq.,  for  the  liability 

5Munnerlyn    v.    Augusta    Sav.  upon  the  stock  subscription  and  the 

Bank,  88  Ga.  333.  liability  for  debts.    Deposits  are, 

6  Rand  v.  State  Bank,  77,  N.  C.  152.  of  course,  debts  of  the  corporation. 

7  Henelly  v.  Rittenhouse,  7  D.  C.  l  Foss  v.  First  Nat.  Bank,  3  Fed. 
76.  R   185;    Dreschied    v.    Exchange 

"Wadsworth  v.  Hocking,  61  III  Bank,  28  W.  Va.  340;  Ullrich  v. 

App.  156.    Here  the  party  suing  National  Bank,  37  Pac.  R  500. 
was  not  required  to  join  those  who       2  Detroit  Sav.  Bank  v.  Burrows,, 

had  transferred  their  stock,  though  34  Mich.  153. 
19 


290  BANKS   AND   BANKING.  [§  169. 

§  169.  Limitations  upon  actions  for  deposits. —  Various 
rules  have  been  laid  down  as  to  when  the  statute  of  limita- 
tions will  begin  to  run  upon  a  deposit.  Under  some  statutes 
there  is  no  limitation.1  In  another  state  the  pass-book  is 
held  to  be  an  evidence  of  indebtedness  in  writing  and  the 
action  is  governed  by  the  provision  applicable  thereto.2  But 
*n  another  state  a  receipt  for  a  deposit  was  held  to  be  not  a 
written  contract.3  Other  states  hold  that  the  statute  begins 
to  run  from  the  statement  of  the  account,4  which  would  be 
the  monthly  balance  struck.5  The  rule  is  held  in  another 
jurisdiction  that  the  statute  begins  to  run  from  the  date  of 
the  deposit.6  This  rule  is  held  in  other  states  as  to  certifi- 
cates of  deposit  payable  upon  demand.7  But  the  rule  ought 
to  be  in  reason  and  common  sense  that  the  statute  begins 
to  run  both  upon  deposits8  and  upon  certificates  of  deposit, 
whether  payable  on  demand  or  not,  from  the  demand,9  or 
from  a  refusal  to  pay  the  deposit,10  or  something  equivalent 
thereto,  such  as  a  notification  that  the  bank  will  not  pay  u  or 
its  suspension.12  The  publication  of  an  unclaimed  deposit 

1  Green  v.  Odd  Fellows  Bank,  65    Gill  &  J.  439;  Munnerlyn  v.  Augusta 
Cal.  71.  Sav.  Bank,  88  Ga.  333.     The  last 

2  Schalucky  v.  Field,  124  III  617.    case  contains  a  foolish  suggestion 
3Talcott  v.  First  Nat.  Bank,  53    as  to  laches. 

Kan.  480.  SHowell  v.  Adams,  68  N.  Y.  314; 

4  In  re  Penn  Bank,  152  Pa.  65.  McGough  v.  Jamison,  107  Pa.  336; 

5  Union  Bank  v.  Knapp,  3  Pick  Fells  Point  Sav.  Inst  v.  Weedon,  18 
96.    See  Dickinson  v.  Leominster  Md.  320.    If  it  be  a  time  certificate 
Bank,  152  Mass.  49.  the  same  rule  ought  to  apply,  be- 

6  Locke  v.   First  Nat.   Bank,  65  cause  no  suit  lies  until  a  demand  is 
N.  H.  670.    This  is  the  rule  as  to  made. 

certificates  of  deposit  payable  on  de-  10  This  is  equivalent  to  a  demand, 

mand  in  some  jurisdictions.   Brum-  Farmers'  Bank  v.  Planters'  Bank, 

magim    v.    Tallent,   29    CaL    503;  10 Gill  &J.  422;  Vietsv.  Union  Nat. 

Mitchell  v.  Easton,  37  Minn.  335.  Bank,  101  N.  Y.  563,  a  refusal  to  pay 

7  See  the  last  note.  a  check. 
8Viets  v.  Union  Nat  Bank,  101  u  See  last  note. 

N.  Y.  563;  Starr  v.  Stiles,  19  Pac.  R.  u  Union  Bank  v.  Planters'  Bank, 

225;  Branch  v.  Dawson,  33  Minn.  9  Gill  &  J.  439;  but  Riddle  v.  First 

399;  Girard  Bank  v.  Bank,  39  Pa.  92;  Nat.  Bank,  27  Fed.  R  503,  is  contra 

Brown  v.  Pike,  34  La.  Ann.  576;  as  to  certificates  of  deposit,  where 

Union  Bank  v.  Planters'  Bank,  9  a  receiver  was  appointed. 


§  170.]  DEPOSITS.  291 

has  been  held  to  be  a  new  promise  to  take  the  case  out  of 
the  statute.13  But  the  payment  of  interest  after  the  with- 
drawal of  a  partner  will  not  continue  the  cause  of  action 
against  the  withdrawing  partner.14  And  a  bank  may  pay 
an  undisputed  check  without  suspending  the  statute  as  to  a 
disputed  part  of  the  deposit.15 

§  170.  Presumptions  and  burden  of  proof. — Wherever 
the  fact  of  a  deposit  appears,  the  burden  is  on  the  bank  to 
prove  payment;1  although,  if  the  depositor  retains  his  pass- 
book for  a  time  without  objection,  the  burden  is  upon  him 
to  show  a  mistake.2  So  likewise,  although  the  burden  is 
upon  the  bank  to  show  that  the  payee's  indorsement  upon  a 
check  is  genuine,3  yet  the  retention  of  the  check  by  the  de- 
positor for  a  long  time  without  objection  throws  the  burden 
of  proof  upon  him.4  Where  it  is  shown  that  notice  was 
given  to  the  bank  by  the  depositor  not  to  pay  a  check,  the 
burden  is  upon  the  bank  to  show  that  the  check  was  paid 
before  the  notice  was  received ; 5  and  after  notice  given  by 
the  person  claiming  to  be  the  true  owner,  where  the  deposit 
indicates  the  ownership,  has  been  shown  to  the  bank,  the 
burden  is  upon  the  bank  to  show  payment  to  the  true  owner.6 
Where  funds  are  mingled  in  one  deposit,  the  presumption  is 
that  the  depositor's  checks  were  drawn  against  and  paid 
from  the  funds  belonging  to  the  person  drawing  the  check.7 
Where  the  administrator  of  a  decedent  makes  claim  to  a 
deposit  upon  the  fact  of  a  pass-book  being  found  among  the 
decedent's  effects,  if  the  name  upon  the  pass-book  and  the 
description  of  the  depositor  do  not  correspond  to  that  of 
the  deceased,  the  burden  is  upon  the  administrator  to  show 

13  Adams  v.  Orange  Co.  Bank,  17  *  Morgan  v.  State  Bank,  1  Duer, 
Wend  514  434;  August  v.  Fourth  Nat.  Bank, 

14  Robinson  v.  Floyd,  159  Pa.  165.  1  N.  Y.  Supp.  139. 

15  Viets  v.  Union  Nat.  Bank,  101  4  See  last  case. 

N.  Y.  563.  B  Albers  v.  Commercial  Bank,  85 

1  De  Land  v.  Dixon  Nat.  Bank,    Mo.  173. 

Ill  III  323.  6  Arnold  v.  Macungie  Sav.  Bank, 

2  Anderson  v.  Leverich,  70  Iowa,    71  Pa.  287. 

741.  7  Hall  v.  Otis,  77  Me.  122. 


292  BANKS   AND   BANKING.  [§  170. 

the  decedent's  ownership.8  The  receipt  of  the  cashier  is 
presumptive  proof  of  a  deposit,9  and  where  the  amount  in 
the  body  of  the  certificate  differs  from  the  amount  stated 
in  the  margin,  the  presumption  is  that  the  body  of  the  cer- 
tificate is  correct.10  But  a  certificate  of  deposit  is  said  to  be 
a  receipt  and  explainable  by  parol  evidence,11  but  the  certifi- 
cate can  be  overcome  only  by  clear  and  satisfactory  proof.12 
It  is  presumptively  correct,13  as  are  the  books  of  the  bank 
even  as  against  the  stockholders  in  favor  of  the  depositor.14 

8  People  v.  Third  Ave.  Sav.  Bank,  13  Cushman  v.  Illinois  Starch  Co., 

98  N.  Y.  661.  79  III  281. 

»State  Bank  v.  Kain,  1  111  4£  "  Davis  v.  Naper,  91 IU.  44.    They 

10  Payne  v.  Clark,  19  Ma  152.  are  admissions,  and  hence  need  not 

"Hotchkiss  v.  Mosher,  48  N.  Y.  be  the  books  of  original  entry.    The 

478.    This  case  is  not  correct  on  books  of  a  savings  bank  are  admis- 

this  point.     All  the  authority  is  sible  to  show  the  fact  of  deposit 

that  a  certificate  of  deposit  is  the  and  ownership.    McKavlin  v.  Bress- 

bank's  promissory  note.  lin,  8  Gray,  177.  See  also  §  132,  ante. 

12  First  Nat.  Bank  v.  Myers,  83  HL 
507. 


CHAPTEE  YIIL 

COLLECTIONS. 

§  171.  The  nature  of  the  relation. —  The  deposit  of 
paper  with  a  banker  for  collection  creates  a  relation  which 
has  generally  been  defined  as  that  of  principal  and  agent. 
But  an  accurate  use  of  language  requires  something  other 
than  such  a  description.  The  banker  is  certainly  an  agent 
in  so  far  as  he  is  authorized  to  receive  payment.  But  he  is 
certainly  not  an  agent  to  collect  the  paper,  because  there  are 
numerous  steps  which  the  principal  might  take  in  collecting 
which  the  bank  cannot  take.  All  paper  deposited  for  col- 
lection necessarily  requires  an  indorsement  either  general  or 
for  collection.  In  either  case  the  legal  right  to  the  posses- 
sion of  the  paper  passes  to  the  bank.1  The  relation  is  prop- 
erly called  a  bailment,  because  while  it  does  not  contemplate 
the  receiving  back  of  the  particular  thing,  yet,  as  in  cases  of 
pledges  of  negotiable  paper,  it  may  be  collected  and  yet  re- 
main a  bailment  as  to  the  proceeds.2  The  relation  is  not 
that  of  trustee  and  cestui  gue  trust,  because  the  remedy  is  at 
law,  not  solely  in  equity,  where  a  breach  of  trust  must  be 
redressed.  It  is  a  trifle  singular  that  in  our  day  the  old 
confusion  which  existed  between  agency,  trust  and  bailment 
should  reappear.  We  are  told  in  that  work  which  represents 
such  a  marvelous  amount  of  industry  and  acumen,  Pollock 
and  Maitland's  History  of  English  Law,  that  originally  there 
was  no  distinction  made  between  agency,  trust  and  bailment. 
See  pages  226,  227,  231,  of  volume  2.  The  relation  being 
that  o'f  bailment,  it  has  an  important  bearing  upon  the  ques- 
tion of  the  collecting  bank's  liability  for  the  acts  of  its 

1  Evansville  Bank  v.  German  Am.  title  against  every  one  except  the 

Nat.  Bank,  155  U.  S.  556.   It  is  con-  bailor. 

ceived  that  this  statement  means  *  Beal  v.  Somerville,  50  Fed  R. 

no  more  than  that  the  bailee  has  649,  5  U.  8.  App.  14 


291  BANKS    AND   BANKING.  [§  172. 

agents.  This  contract  of  bailment  has  annexed  to  it  certain 
duties  created  by  the  usages  of  commerce  which  have  be- 
come recognized  as  rules  of  law.  The  law  defines  the  duties 
of  the  collecting  bank,  and  it  need  not  be  proven  what  the 
contract  was,  even  where  it  is  alleged.8  Yet  if  any  specific 
agreement  was  made  by  or  direction  given  to  the  bank,  it 
must  be  observed,4  if  the  bank  accepts  the  collection.  The 
analogy  of  this  bailment*and  that  of  the  common  carrier  is 
complete.  The  quasi-contract  created  by  custom  may  be 
modified  by  express  agreement.  And  it  is  believed  that  a 
bank  could  no  more  contract  against  its  own  negligence 
than  a  common  carrier  could.  But  it  has  been  said,  where 
a  note  is  left  with  a  bank  without  any  direction  whatever, 
the  bank  may  either  discount  the  note  or  hold  it  until  ma- 
turity and  collect  it.5  "Where  the  collection  is  on  the  par- 
ticular bank  wherein  it  is  placed  for  collection,  and  the 
request  is  to  remit  by  mail,  the  relation  created  is  that  of 
depositor  and  banker.6  The  consideration  for  the  acceptance 
of  the  duty  is  the  advantage  which  the  bank  receives  from 
the  rate  of  exchange,7  or,  where  there  is  no  charge,  the  use 
of  the  money;8  but  in  truth  no  consideration  is  needed  be- 
yond the  acceptance,  as  every  court  and  lawyer  ought  to 
have  known. 

§  172.  What  law  governs. —  "Where  the  duty  of  collec- 
tion is  to  be  wholly  performed  in  one  state  where  both  the 

8  Jagger  v.  German  Am.  Bank,  53  would  make  the  proceeds  a  special 

Minn.  386.    See  the  form  of  plead-  deposit. 

ing  at  common  law  on  the  bailment,  7  Titus  v.  Mechanics'  Nat.  Bank, 

note  7  to  §  184,  post,  and  note  2  to  35  N.  J.  Law,  588. 

§186,.pos£  8  Exchange  Nat.  Bank  v.  Third 

4  Power   v.  First  Nat.   Bank,   6  Nat.  Bank,  112  U.S.  288;  Mechanics' 
Mont.  251;  Central  Georgia  Bank  v.  Bank  v.  Merchants'  Bank,  6  Met. 
Cleveland  Nat  Bank,  59  Ga.  667.  13;  Merchants'  Nat  Bank  v.  Good- 

5  Drown  v.  Pawtucket  Bank,  15  man,  109  Pa.  426.  But  if  the  deposit 
Pick.  88.  is  a  bailment  no  consideration  is 

6  People  v.  Merchants'  Bank,  78  needed  beyond  the  delivery,  except 
N.  Y.  269.    This  is  on  the  supposi-  to  make  the  bank  liable  for  ordi- 
tion  that  the  collection  is  honored  nary  diligence. 

and  paid.    But  a  special  contract 


§  173.]  COLLECTIONS.  295 

owner  of  the  collection  and  the  bank  reside,  the  relation  is 
to  be  governed  by  the  law  of  that  state;  but  where  a  bank  in 
one  state  sends  a  draft  into  another  state  to  a  bank  for  col- 
lection, the  relation  is  governed  by  the  law  of  the  latter 
state,  if  the  collection  is  to  be  made  therein ; l  otherwise  it  is 
to  be  governed  by  the  law  of  the  state  where  the  contract 
is  to  be  performed.2 

§  173.  Collection  to  foe  made  at  bank. — Where  a  note  or 
other  security  is  made  payable  at  a  bank,  the  bank  is  not 
thereby  made  the  agent  of  the  payee  or  holder  to  receive 
payment,1  and  any  payment  which  it  receives  from  the 
maker  on  such  a  security  it  receives  as  the  maker's  agent 
and  not  the  payee's.2  One  case  has  gone  so  far  as  to  hold 
that  the  presentation  of  the  note  and  the  having  it  marked 
good  by  the  teller  of  the  bank  does  not  constitute  payment 
to  the  payee.3  But  the  payee  of  the  note  may  make  the 
bank  his  agent  to  receive  payment  on  the  note.4  If  he 
does  so,  the  bank  is  bound  to  the  same  duties  that  any  other 
bank  owes  to  one  depositing  paper  for  collection.5  If  it  has 
funds  of  the  maker  and  fails  to  credit  them  on  a  check,  it 

1  Kent  v.Dawson  Bank,  13  Blatchf.  correct.    If  the  note  were  a  check 
237.  and  presented  and  certified  to  the 

2  St.  Nicholas  Bank  v.  State  Nat  payee,  there  would  be  a  novation 
Bank,  128  N.  Y.  26.     It  is  amusing  and  the  drawer  would  be  released, 
to  note  that  the  court  does  not  con-  The  same  rule  applies  to  the  certi- 
sider  the  decisions  of  the  Supreme  fication  of  a  note.    Riverside  Bank 
Court  of  Tennessee  any  proof  of  v.  First  Nat.  Bank,  74  Fed.  R.  276. 
what  the  common  law  is.  The  bank  becomes  liable  and  the 

JWard  v.  Smith,  7  Wall.  447;  drawer  is  released.  The  court  in 
Wood  v.  Merchants'  Sav.  Co.,  41  this  case  did  not  seem  to  under- 
Ill.  267;  Caldwell  v.  Evans,  5  Bush,  stand  that  a  certification  takes  so 
380;  Pease  v.  Warren,  29  Mich.  9;  much  of  the  drawer's  money  and 
Williamsport  Gas  Co.  v.  Pinkerton,  gives  it  to  the  bank.  The  payee  by 
95  Pa.  62;  Grissom  v.  Commercial  obtaining  the  certification  asks  for 
Nat.  Bank,  87  Tenn.  350.  it.  The  case  is  wrong. 

2  Ward  v.  Smith,  7  Wall.  447.  «  Ward  v.  Smith,  7  WalL  447. 

3  Wood  v.  Merchants'  Sav.  Co.,  8Blakeslee  v.   Hewitt,    76    Wis. 
41  III  267.     But  there  is  a  grave  341;  Wood  River  Bank  v.  First  Nat; 
question  whether  this  decision  is  Bank,  36  Neb.  744 


296  BANKS   AND   BANKING.  [§  174. 

will  make  itself  liable  for  the  check,6  but  not  if  it  credits  the 
check  and,  finding  the  depositor  insolvent,  before  it  com- 
municates the  credit  to  the  payee,  revokes  it.7  Where  a 
note  is  made  payable  at  a  bank,  as  we  have  seen,  the  great 
weight  of  authority  is  that  the  bank  has  the  right  to  apply 
upon  it  a  deposit  to  the  credit  of  the  person  liable  to  pay 
the  note;8  but  this  rule  would  properly  apply  only  to  the 
actual  presence  of  funds,  although  if  it  did  pay  the  note  it 
would  thereby  become  the  owner  and  could  enforce  it  against 
the  maker.9  Hence  if  there  is  a  credit  to  the  maker  in  the 
bank  which  is  made  the  payee's  agent,  in  those  jurisdictions 
which  admit  the  bank's  right  to  make  the  application,  the 
bank  would  be  liable  for  failing  to  make  the  application  of 
the  deposit.10  But  in  those  jurisdictions  which  do  not  admit 
this  right  in  the  bank,  there  would  probably  be  no  such 
duty ; ll  certainly  not  unless  the  payee  agreed  to  it,12  and  cer- 
tainly not  as  to  deposits  afterwards  received.13 

§  174.  Revocation  of  the  power  to  collect. —  The  col- 
lecting bank  receives  a  certain  power  over  the  collection 
when  it  receives  it.  On  the  analogy  of  an  agency,  the  holder 
may  revoke  the  power,  if  the  bank  has  not  acquired  a  lien 
upon  the  proceeds,  at  any  time  before  the  collection  has  been 
made.1  An  injunctional  order  forbidding  the  collection  re- 
vokes the  power  and  is  binding  upon  all  those  who  have 

6  Minier  v.  Second  Nat.  Bank,  13  w  This  follows  from  the  fact  that 
N.  Y.  St  R.  222.    But  not  if  the  the  bank  must  take  all  steps  proper 
person  depositing   the    check  de-  to  collect.    See  Indig  v.  Nat  City 
ceives  the  bank.    Middlesex  Co.  v.  Bank,  80  N.  Y.  100. 

State  Bank,  32  N.  J.  Eq.  467.  "  The  bank  would  not  transfer 

7  Steinhart  v.  National  Bank,  94  anything  by  applying  on  the  note. 
Cal.  362.    This  case  can  hardly  be  12  Bellows    v.   Norton,   12  Heisk. 
reconciled  with    cases   of  higher  319. 

authority  on  the  effect  of  payment.  13  Merchants'  Bank  v.  Meyer,  56 

See  §  158,  ante.  Ark.  499,  and  cases  cited  therein. 

8  See  §  142,  ante.    This  is  the  rule  l  Semble,  Ward  v.  Smith,  7  Wall, 
in  England.    Roberts  v.  Tucker,  16  447.    But  revocation  could  not  cut 
Q.  B.  560.  off  the  bank's  lien. 

9Watervliet  Bank  v.  White,   1 
Denio,  60a 


§  175.]  COLLECTIONS.  297 

notice  or  knowledge  of  the  order.2  The  power  is  revoked, 
also,  by  the  insolvency  of  the  collecting  bank ; 3  and  since 
the  reception  of  a  collection  by  a  bank  which  is  known  to 
its  officers  to  be  insolvent  is  a  fraud,  the  power  to  collect 
in  such  a  case  ought  to  be  considered  as  never  having  been 
given  to  the  bank.4  The  bank  itself  cannot  revoke  the  so- 
called  agency  merely  by  making  an  erasure  upon  its  books.5 

§  175.  Bank-lien  upon  collections. —  The  bank  has  its 
customary  lien  upon  a  collection  left  with  it  or  the  proceeds 
for  any  debt  that  is  matured  owing  by  the  owner  of  the 
paper  to  the  bank  unless  there  be  a  special  agreement  not 
consistent  therewith.1  If  the  paper  comes  to  a  correspond- 
ent bank  which  has  notice  of  the  fact  that  it  is  a  collection 
for  the  owner,  not  the  bank,  it  has  no  lien  upon  the  paper 
for  a  claim  which  it  has  against  its  correspondent  bank.2 
The  form  of  the  indorsement  may  be  notice  to  it.  Thus,  an 
indorsement  for  collection  is  full  notice  of  the  owner's 
rights ; 3  so  is  an  indorsement  for  the  account  of  the  depos- 
itor;4 ^and  it  has  been  held  that  an  indorsement  for  collec- 
tion and  credit  is  also  notice.5  A  mere  indorsement  for 
credit  ought  to  be  just  as  much  notice  as  an  indorsement 

2  Louisiana  Ice  Co.  v.  State  Nat.  l  Cockrill  v.  Joyce,  62  Ark.  216; 
Bank,  1  McGloin,  181.  Gibbons  v.  Hecox,  105  Mich.  509. 

3  First  Nat.   Bank  v.  First  Nat.  In    cases  of  insolvency  it  would 
Bank,  76  Ind.  561;  Bank  of  Clarke  have  lien  for  an  unmatured  debt, 
Co.  v.   Oilman,  81   Hun,  486,   152  except  in  a  few  states. 

N.  Y.  634    But  of  course  the  cor-  2  Lawrence  v.  Stonington  Bank, 

respondent  bank's  right  to  collect  6  Conn.  521;  Bank  of  Metropolis  v. 

remains  as  to  paper  in  its  hands.  New  England  Bank,  1  How.  234,  6 

But  it  cannot  pay  over  to  the  in-  How.  212;   Sweeney  v.  Easter,   1 

solvent  bank.    Evansville  Bank  v.  Wall.  166. 

Bank,  155  U.  S.  556.  3  Sweeney  v.  Easter,  1  Wall.  166; 

4  This  would    not    affect  corre-  Evansville  Bank  v.  German  Am. 
spondent  banks  without  notice,  ex-  Bank,  155  U.  S.  556. 

cept  that  they  would  have  no  right  4  White    v.  National   Bank,  102 

after  notice  to  pay  to  the  insolvent  U.  S.  658. 

bank.  Armstrong  v.  National  Bank,  5  Armstrong  v.  National  Bank,  90 

90  Ky.  431.  Ky.  431. 

6  Bank-  of  Mobile  v.  Hugging,  3 
Ala  206. 


298  BANKS   AND   BANKING.  [§  176. 

for  collection  and  credit,  since  both  indorsements  mean  ex- 
actly the  same  thing,  and  the  fact  shows  from  the  deposit 
in  a  bank.  A  general  indorsement,  however,  shows  nothing, 
and  hence  would  not  be  notice.  The  correspondent  bank, 
if  it  has  no  notice  of  any  ownership  other  than  that  of  the 
remitting  bank,  may  claim  a  lien  upon  the  paper  or  its  pro- 
ceeds to  the  extent  of  any  credit  given  to  the  correspondent 
bank  upon  its  presumed  ownership  of  the  paper,6  or  it  may 
claim  a  lien  created  by  agreement  or  by  a  course  of  deal- 
ing.7 If,  however,  the  paper  transmitted  by  another  bank 
be  generally  indorsed  and  for  account,  yet,  if  it  be  accom- 
panied by  an  explanatory  letter,  the  receiving  bank  will 
have  notice  of  whatever  is  communicated  to  it  by  the  let- 
ter.8 

§  176.  Authority  of  the  collecting  bank. —  As  a  general 
rule  the  collecting  bank  cannot  take  anything  else  than 
money  in  payment  of  a  collection  except  by  agreement  with 
the  apparent  owner.1  If  it  take  anything  else  than  money, 
such  as  a  certificate  of  deposit  upon  the  bank  where  the 
paper  is  payable,  it  takes  the  risk  of  the  payment  of  it;2 
but,  it  seems,  if  there  is  such  a  custom,  it  may  take  its  own 
certificate  of  deposit,  and  if  it  does  the  collection  is  paid ; 8 
and  another  case  holds  that  the  collecting  bank  may  take  a 
certified  check,  and  that  such  a  check  is  payment  of  the  col- 

6  Bank  of  Metropolis  v.  New  Eng-  8  Williams  v.  Jones,  77  Ala.  294 
land  Bank,  1  How.  234.    The  lower  *  Whipple  v.  Walker,  2  Thoinp.  & 
court  was  unable  to  understand  the  C.  456;  German  Am.  Bank  v.  Third 
opinion    (New   England    Bank   v.  Nat.  Bank,  5  Dili  104;  Scott  v.  Gil- 
Bank  of  Metropolis,  Fed.  Gas.  No.  key,  153  III  168;  Graydon  v.  Pat- 
10,152),  and  on  a  second  appeal  the  terson,  13  Iowa,  256. 

Supreme  Court  furnished  it  with  a  2  Essex  Co.  Nat.  Bank  v.  Montreal 

set  of  instructions.    Bank  of  Me-  Bank,    7    Biss.    193;    Commercial 

tropolis  v.  New  England  Bank,  6  Bank  v.  Union  Bank,  Jl  N.  Y.  203; 

How.  212.    For  other  authorities,  Hazlett  v.  Comm.  Nat.  Bank,  132 

see  §  193,  post,  note  1.  Pa.  118. 

7  See  Studebaker  Mfg.  Co.  v.  First  s  British  Mort  Co.  v.  Tibballs,  63 
Nat  Bank,  42  S.  W.  R.  573;  Com-  Iowa,  468. 

mercial  Bank  v.  Armstrong,   148 
U.  a  50. 


§  176.]  COLLECTIONS.  299 

lection.4  There  is  recognized,  too,  in  some  jurisdictions  the 
right  of  the  collecting  bank  to  take  from  the  person  upon 
whom  the  collection  is,  his  check,  and  if  the  check  is  col- 
lected with  due  diligence  the  collecting  bank  incurs  no  re- 
sponsibility, provided  it  does  not  surrender  the  paper,5  and 
one  case  has  so  held  even  where  the  paper  is  surrendered.6 
Presentment  through  the  clearing-house  has  been  held  to  be 
not  negligence  where  the  check  or  paper  went  to  the  bank 
on  which  it  was  drawn.7  But  the  owner  may  waive  the 
default  of  the  bank  in  collecting  something  other  than 
money,  and  claim  as  owner  whatever  the  bank  has  obtained 
for  the  collection.8  The  collecting  bank  has  no  right  to  ac- 
cept a  partial  payment.9  If  the  collection  is  a  draft,  accom- 
panied by  a  bill  of  lading,  the  bank  may  surrender  the  bill 
of  lading  upon  acceptance  of  the  draft,10  unless  it  has  agreed 
otherwise,11  and  the  burden  is  upon  the  drawer  to  show  his 
instruction.12  But  the  fact  that  the  bill  of  lading  is  drawn 
to  the  drawer  and  not  to  the  drawee  is  persuasive  evidence 
of  such  an  instruction  from  the  bill  of  lading  itself.13  The 
bank  has  the  right,  according  to  an  incorrect  doctrine,  to 
employ  agents  for  the  owner  in  making  the  collection,14  but 
it  has  no  right  to  employ  an  attorney l5  or  to  bring  suit  with- 

4  Jefferson  Co.   Bank  v.  Comm.  Blatchf.   359;  Moore  v.  Louisiana 

Nat.  Bank,  39  S.  W.  R.  338.  Nat.   Bank,  44  La.  Ann.  99.    See 

8  St.  Nicholas  Bank  v.  State  Nat.  Commercial  Bank  v.  Railway  Co.r 

Bank,  128  N.  Y.  26;  Second  Nat  160  111.  401. 

Bank  v.  Cummings,  89  Tenn.  609;  "See  cases  last  cited. 

Citizens'  Bank  v.  Houston,  98  Ky.  12  Second  Nat.  Bank  v.  Cummings, 

139.    See  note  7  to  §  180,  post.  89  Tenn.  609.    See  Addendum. 

6  Indig  v.  Nat.  City  Bank,  80  N.  Y.  13  Case  last  cited ;  and  see  Security 

100.  Bank  v.  Suttgen,  29  Minn.  363. 

^ Turner  v.  Bank  of  Fox  Lake,  3  "Planters'    Bank    v.  First   Nat. 

Keyes,  425.  Bank,  75    N.  C.  534;    Dorchester 

8  German  Am.  Bank  v.  Third  Nat.  Bank    v.   New  England    Bank,  1 

Bank,  5  Dili  104,  Fed.  Cas.  No.  5359.  Gush.  177.    And  see  §  181,  post. 

SLowensteinv.Bressler,  109  Ala.  15Ryan    v.    Manufacturers'    Nat. 

326.  Bank,  9  Daly,  308;  Crow  v.  Me- 

10  National  Bank  of  Commerce  v.  chanics'  Bank,  12  La.   Ann.  692; 

Merchants'  Nat.  Bank,  91  U.  S.  92;  Freeman  v.  Citizens'  Nat.  Bank,  78 

Woolen    v.  New   York    Bank,  12  Iowa,  150. 


300  BANKS  AND  BANKING.        [§§  177,  178. 

out  previous  instruction.18  The  bank  may  also  receive  pay- 
ment before  maturity  of  the  debt  to  be  collected.17 

§  177.  Liability  of  the  bank  in  making  collection. — The 

bank  may  incur  a  liability  to  the  person  from  whom  it  col- 
lects. For  example,  a  bank  collected  the  amount  of  a  note 
from  the  maker  and  delivered  to  him  the  wrong  note,  re- 
turning the  right  note  to  the  holder,  who  collected  it  again 
from  the  maker.  The  maker  at  once  returned  the  wrong 
note  which  had  been  given  to  him  by  the  bank,  and  de- 
manded the  amount  paid.  The  bank  was  compelled  to  pay, 
although  during  the  interval  the  indorsers  upon  the  latter 
note  had  become  discharged  and  the  maker  was  insolvent.1 
But  the  collecting  bank  is  not  the  agent  of  the  person  from 
whom  it  collects,  except  when  the  paper  is  payable  at  that 
bank;  and  hence  he  cannot  sue  the  bank  for  misappropriat- 
ing the  proceeds  of  the  collection.2 

§  178.  When  collection  complete. —  As  we  have  hereto- 
fore seen,1  the  collection  does  not  become  complete  until  the 
collection  is  made  by  the  bank  crediting  to  the  owner  the 
money  realized  as  so  much  cash.2  This  result  may  be  arrived 
at  either  by  the  collecting  bank  receiving  the  money  or  re- 

16  If  so  instructed  it  must  do  so.    Barb.  627.    But  one  case  holds  that 
Finch  v.  Karate,  97  Mich.  20.  the  drawee  who  gives  a  check  to 

17  Bliss  v.  Cutler,  19  Barb.  9.  a  collecting  bank  may  sue  it  for 

1  Andrews  v.   Suffolk    Bank,   12  failure  to  make  timely  presentment 
Gray,  461.    So  as  to  raised  paper,  where  he  pays  the  collection  again. 
National   Bank   of   Commerce   v.  Morris  v.  Eufala  Nat.  Bank,  106  Ala. 
Manufacturers'  Bank,  122  N.  Y.  367.  383. 

But  not  liable  where  it  acted  as  1  See  §  133,  ante. 

agent  and  has  paid  over  proceeds  2See  §  133,  ante,  and  Moore  v. 

by  crediting.    National  Park  Bank  Meyer,  57  Ala.  20.    This  is  as  be- 

v.  Seaboard  Bank,  114  N.  Y.  28;  tween  the  owner  and  the  primary 

United  States  v.  American  Ex.  Nat  bank.    But  as  between  the  payer 

Bank,  70  Fed.  R.  232.    If  the  bank  and  the  owner  the   collection  is 

has  not  paid  the  proceeds  it  may  complete  when  he  makes  payment 

correct  the  mistake.    Birmingham  to  the  collecting  bank,  whether  it 

Nat.  Bank  v.  Bradley,  103  Ala.  109.  is  the  primary  bank  or  not 

2  Smith  v.   Essex  Co.   Bank,  22 


§  178.]  COLLECTIONS. 

ceiving  credit  from  another  bank.3  If  the  collecting  bank 
received  something  else  than  cash  and  credits  the  amount 
received  as  so  much  cash,  the  transaction  is  complete  as  to 
the  owner  of  the  collection.  The  collecting  bank  becomes 
liable  to  him  as  for  so  much  money  deposited.4  But  the 
owner  may  claim  the  check  or  draft  taken  by  the  collecting 
bank  as  his  own,8  a  fact  which  has  already  appeared.  If, 
however,  the  holder  has  instructed  the  collecting  bank  not 
to  credit  him  upon  collection,  but  to  hold  the  amount  and 
notify  him  so  that  he  might  withdraw  it,  some  courts  recog- 
nize that  the  holder  becomes  a  special  depositor,  not  a  gen- 
eral creditor;6  and  in  reason  this  is  the  proper  rule.7  But 
where  no  specific  instruction  has  been  given8  or  special 
agreement  made,9  and  where  no  special  course  of  dealing  has 
been  had  authorizing  a  different  conclusion,10  the  proceeds,, 
as  soon  as  collected  and  deposited  to  the  credit  of  the  owner 
of  the  paper,  become  a  general  deposit  in  the  bank,11  but 
not  until  then.12  Being  then  a  general  deposit,  it  is  subject 
to  all  rights  which  the  bank  has  upon  deposits  by  way  of 
lien,  although  the  bank  had  a  lien  upon  the  paper  before.13 

8  Corn  Ex.  Bank  v.  Farmers'  Nat.  tion  was  to  collect  and  remit.  Peo- 

Bank,  118  N.  Y.  443;   Howard  v.  pie  v.  Merchants'  Bank,  78  N.  Y. 

Walker,  92  Tenn.  452;    Briggs   v.  269.    The  bank  becomes  merely  a 

Central  Bank,  89  N.  Y.  182.  substituted  debtor. 

4  National  Comm.  Bank  v.  Miller,  8  Such  instructions  govern.    See 
77  Ala.  168.    And  see  §  176,  ante,  notes  6  and  7  to  this  section. 

5  See  §  176.  ante,  note  5.  9  See  last  note. 
«In  re  Johnson,  103  Mich.  109;       10  See  §  133,  ante. 

State  v.  State  Bank,  42  Neb.  896.  n  Anheuser-Busch  Ass'n  v.  Clay- 

7  See  §  133,  ante.     This   results  ton,  56  Fed.  R.  759,  13  U.  S.  App. 

from  the  fact  that  the  question  of  295;  In  re  Bank  of  Madison,  5  Biss. 

special  deposit  or  general  deposit  515.    See  §  133,  ante. 

is  either  one  of  mere  presumption  12Evansville  Bank  v.  Germ.  Am. 

or  of  actual  agreement.    If  there  is  Bank,  155  U.  S.  556;   Levi  v.  Na- 

an  actual  understanding  resulting  tional  Bank,  5  Dili  104;  First  Nat. 

from  an  instruction  given,  that  con-  Bank  v.  Bank  of  Monroe,  33  Fed.  R. 

trols  any  presumption  that  would  408;  First  Nat.  Bank  v.  Armstrong, 

otherwise  arise.    If,  however,  the  36  Fed.  R.  59.    In  this  latter  case 

instruction  is  to  collect  and  hold  the  court's  holding  as  to  mingling 

until  called  for,  a  general  deposit  is  pure  dictum, 

results,  as  it  would  if  the  instruo  13  See  §  175,  ante.    There  are  nu- 


302  BANKS  AND  BANKING,        [§§  179,  180. 

§  179.  Liability  of  the  bank  for  failure.— The  collect- 
ing bank  may  be  the  bank  upon  which  the  paper  is  drawn 
or  another  bank.  The  duties  of  the  banks  in  such  cases  are 
not  wholly  similar.  The  collecting  bank  may  itself  collect 
the  paper  or  may  send  the  paper  to  another  bank  for  collec- 
tion. It  may  be  guilty,  if  itself  doing  the  act  of  collecting, 
of  negligence  in  presenting  the  paper  or  in  what  it  takes  for 
payment,  or  in  taking  proper  steps  to  hold  the  parties  liable 
upon  the  paper.  If  the  bank,  in  collecting,  finds  it  neces- 
sary to  employ  a  notary,  the  notary  may  be  guilty  of  negli- 
gence. The  bank  to  which  it  sends  the  paper  may  be  guilty 
of  negligence  in  collecting,  or  after  collecting  may  hold  the 
proceeds  as  against  the  first  bank,  or  may  become  insolvent. 
In  all  such  cases  the  rules  applicable  will  be  examined,  and 
then  the  forms  of  action  upon  such  negligence  and  the  meas- 
ure of  recovery  will  be  set  forth  so  far  as  the  decisions  upon 
banking  cases  are  applicable. 

§  180,  Liability  for  its  own  negligence. —  The  general 
law  applicable  to  presentment  for  acceptance  and  payment, 
demand,  notice  of  non-payment  and  protest  will  be  assumed 
for  the  present.  The  matter  will  be  found  fully  considered 
under  the  head  of  "  Exchanges,"  at  section  205,  post,  et  seq. 
The  primary  duty  imposed  upon  a  bank  by  taking  paper  for 
collection  is  to  present  it  at  the  proper  time,  if  presentment 
is  necessary,  and  to  demand  payment  at  the  proper  time.1 
But  banking  law  permits  some  modification  in  some  juris- 
dictions to  the  effect  that  banking  customs  may  vary  the 
rules  otherwise  applicable.  Thus,  the  owner  of  paper  has 

merous  other  cases  which  can  be  Utica,  9  Wend.  46;  Capitol  State 

cited  in  support  of  the  text,  and  it  Bank  v.  Lane,  52  Miss.  677;  Ameri- 

is  believed  that   no   court  would  can  Exp.  Co.  v.  Pinckney,  29111.  392; 

now  hold  otherwise.    The  principle  Fabens  v.  Mercantile  Bank,  23  Pick, 

applies  between   banks  as  if  the  330.    It  must  follow  instructions  if 

transmitting  bank  were  holder  and  any  are  given  (Cent.  Ga.  Bank  v. 

the  corresponding   bank   the  pri-  Cleveland  Nat  Bank,  59  Ga  667), 

mary  collecting  agent.  and  otherwise  it  may  follow  the 

1  Bank  of  Washington  v.  Triplett,  course  of  business.    Ide  v.  Bremer 

1  Pet.  25;  McKinster  v.  Bank  of  Co.  Bank,  73  Iowa,  58. 


§  180.]  COLLECTIONS.  303 

been  held  bound  by  a  banking  custom  to  held  the  paper  for 
a  few  days  after  promise  of  payment.2  If  no  demand  for 
payment  be  made,  the  bank  makes  the  paper  its  own  "and 
becomes  liable  therefor.3  It  will  be  assumed,  in  the  absence 
of  proof,  if  the  paper  is  not  protested  for  non-payment,  that 
the  drawers  are  solvent.4  Ordinarily  it  will  be  held  for  the 
amount  of  the  paper  if  it  takes  something  else  than  money; 5 
yet  its  own  certificate  of  deposit  may  be  taken  for  money 
if  such  was  the  custom.6  Some  courts  permit  the  taking  of 
a  check  as  provisional  payment,  and  exonerate  the  bank  if 
it  uses  due  diligence  in  collecting  the  check.7  The  bank's 
ignorance  of  the  law  is  no  defense.8  In  addition  to  making 
presentation  of  the  paper,  the  bank  must  use  all  the  ordi- 
nary legal  means  to  secure  payment.9  If  it  has  secured  the 
acceptance  of  a  draft,  and  fails  to  present  it  for  payment  as 
required  by  law,  it  will  be  none  the  less  liable.10  It  must 
take  proper  steps  to  ascertain  the  place  of  residence  of  the 
party  liable  on  the  paper  whom  it  is  seeking  to  charge.11 
It  has  no  authority  to  engage  an  attorney  to  bring  suit,12  yet 
if  so  instructed  it  must  do  so.13  Being  a  fiduciary  it  cannot 

2Sahlien  v.  Bank,  90  Tenn.  221.  Co.,  149  111.  343.    One  case,  by  a  di- 

A  full  collection  of  cases  upon  this  vided  court,  applied  this  rule  to  a 

subject  may  be  found  in  21  L.  R.  A.  draft.    Indig  v.  City  Nat.  Bank,  80 

441.    They  are  generally  upheld  as  N.  Y.  100.    But  the  usual  mode  of 

against  those  who  know  of  them  payment  is  to  credit  the  remitting 

and  those  who  ought  to  be  held  to  bank.    In  the  particular  case  it  is 

have  known.  difficult   to    see    what    difference 

3  See  cases  cited  in  note  1  to  this  there  would  have   been   between 
section.  crediting  the  amount  and  sending 

4  Capitol  State  Bank  v.  Lane,  52  the  draft. 

Miss.  677.  8  Ivory  v.  State  Bank,  36  Mo.  475. 

8  See  §  176,  ante.  9  Huff  v.  Hatch,  2  Disn.  68. 

6  British  Mort.  Co.  v.  Tibbals,  63  w  Mound  City  Co.  v.  Comm.  Nat. 
Iowa,  468.    And  some  courts  apply  Bank,  4  Utah,  353. 

this  rule  to  a  check  taken.    Citi-  n  Louisiana  Ins.  Co.  v.  Louisiana 

zens'  Bank  v.  Houston,  98  Ky.  139.  State  Bank,  3  Mart.  (N.  S.)  610.   But 

See  Second  Nat.  Bank  v.  Cummings,  if  otherwise  uninformed  may  foi- 

89  Tenn.  609.  low  the  address  on  note.    Chapman 

7  See  §  176,  ante.  Contra  are  Essex  v.  Union  Bank,  32  How.  Pr.  95. 
Bank  v.  Bank  of  Montreal,  7  Biss.  12  See  §  176,  ante,  notes  12  and  13. 
193 ;  Bank  of  Antigo  v.  Union  Trust  13  Finch  v.  Karste,  97  Mich.  20.    It 


304 


BANKS   AND   BANKING. 


[§180: 


defer  the  holder's  claim  while  it  secures  its  own  claim ; 14  but 
if  it  give  the  owner  of  the  paper  timely  notice  it  may  se- 
cure a  priority  for  itself.15  If  payment  or  acceptance  be  re- 
fused, the  bank  must  immediately  give  notice  of  non-payment 
or  non-acceptance  as  required  by  law,16  and  must  take  all  the 
steps  necessary  to  charge  any  indorser  upon  the  paper.  Any 
failure  to  do  so  is  a  breach  of  duty  and  is  negligence.11 
If  the  draft  shows  the  bank  where  the  acceptor  is  supposed 
to  have  funds,  it  should  present  to  that  bank,18  for  it  is  the 
d  uty  of  the  collecting  bank  to  make  demand  at  that  place 
or  presentment  for  payment.19  If  the  paper  is  indorsed  gen- 
erally to  the  collecting  bank,  it  is  not  negligence  in  it  to  in- 
dorse it  generally.20  The  liability  of  a  correspondent  bank 


may  have  the  implied  authority  to 
buy  in  the  property  sold.  Marks 
v.  Bodie  Bank,  8  Pac.  R.  807. 

"Finch  v.  Karste,  97  Mich.  20. 
See  U.  S.  Nat  Bank  v.  Westervelt, 
75  N.  W.  R.  857  (wrong). 

15  Freeman  v.  Citizens'  Nat.  Bank, 
78  Iowa,  150. 

16  Bank  of  Mobile  v.  Huggins,  8 
Ala.  206;  Nat.  Pahquioque  Bank  v. 
First    Nat.   Bank,   36    Conn.    225; 
Bank    of  Hanover   v.   Kenan,   76 
N.  C.  340;  Wingate  v.  Mechanics' 
Bank,  10  Pa.  104;  Woolen  v.  New- 
York  Bank,  12  Blatchf.  359;  Bank 
of  Liudsborg  v.  Ober,  31  Kan.  599; 
Exchange  Bank  v.  Sutton  Bank,  78 
Md.  577.    A  fire  does  not  excuse  it. 
Merchants'  State    Bank    v.   State 
Bank,  69  N.  W.  R  170.    If  accepted 
in  the  wrong  name  it  is  liable. 
Walker  v.  State  Bank,  9  N.  Y.  582. 
But  it  may  act  in  accordance  with 
established  usage.    Patriotic  Bank 
v.  Farmers'  Bank,  2  Cranch  C.  C. 
560;  Warren  Bank  v.  Suffolk  Bank, 
10  Cush.  582;  Haddock  v.  Citizens' 
Nat  Bank,  53  Iowa,  542. 

17  The  bank  must  notify  all  the 


indorsers.  Steele  v.  Russell,  5  Neb. 
211;  Smedes  v.  Utica  Bank,  20 
Johns.  372;  Fabens  v.  Mercantile 
Bank,  23  Pick.  330;  Thompson  v. 
State  Bank,  3  Hill  (S.  C.),  77;  Bird 
v.  La.  St.  Bank,  93  U.  S.  96,  semble; 
Woolen  v.  New  York  Bank.  12 
Blatchf.  359;  Chapman  v.  McCrea, 
63  Ind.  360;  West  v.  St.  Paul  Nat. 
Bank,  54  Minn.  466.  Contra,  Bank 
of  Mobile  v.  Huggins,  3  Ala.  206;. 
United  States  Bank  v.  Goddard, 
Fed.  Gas.  No.  2937;  State  Bank  v. 
Bank  of  Capitol,  41  Barb.  343; 
Phipps  v.  Milbury  Bank,  8  Met  79. 

18  This  is,  of  course,  the  general 
rule. 

19  Illinois  seems  to  hold  the  as- 
tonishing doctrine  that  since  the 
bank  where  payable  has  no  right 
to  pay  the  draft  for  the  depositor's 
credit,  there  is  no  necessity  of  mak- 
ing demand  at  that  place  (Haines 
v.  McFerron,  19  Bradw.  172),  unless 
the  depositor  has  directed  the  pay- 
ment 

20  Dorchester  Bank  v.  New  Eng- 
land  Bank,  1  Cush.  177. 


§  181.]  COLLECTIONS.  305 

is  governed  by  the  same  rules,  whether  it  is  held  liable  to 
the  holder  or  its  immediate  employer.21 

§  181.  Liability  for  correspondent  bank.— It  is  a  prac- 
tice so  universal  that  any  one  must  be  held  to  know  it,  that 
a  bank  will  employ  another  bank  to  make  collections  at  a 
distance.  But  the  legal  relations  that  result  are  matters 
upon  which  courts  are  not  agreed.  But  most  courts  agree 
that  if  the  collecting  bank  employs  as  its  agent  the  bank 
upon  which  the  paper  is  drawn,  or  where  it  is  payable,  it  is 
guilty  of  negligence.1  and  where  that  negligence  can  be  con- 
sidered the  cause  of  an  injury  to  the  holder  the  first  bank  is 
liable.2  But  if  such  a  proceeding  is  customary,  one  court 
affirms  that  customary  negligence  is  not  negligence.3  All 
courts  agree  that  if  the  bank  of  primary^collection  does  not 
use  ordinary  and  reasonable  care  and  diligence  in  selecting 
its  correspondent  bank,  it  is  liable  for  the  negligent  acts  and 
the  defaults  of  that  bank.4  If  there  is  an  express  contract 
governing  the  liability  of  the  initial  bank,  that  contract  will 
govern.5  But  there  being  no  express  contract,  the  liability 
of  the  initial  bank  has  been  the  subject  of  hot  debate  be- 

21  To  determine  to  whom  liable  2  This  is  simply  the  rule  of  proxi- 

consult  the  next  section.  mate  cause.    First  Nat.   Bank  v. 

i  First  Nat.  Bank  v.  Fourth  Nat.  City  Nat.  Bank,  34  S.  W.  R  458. 

Bank,  56  Fed.  R.  967,  16  U.  S.  App.  3  Indig  v.  Nat.  City  Bank,  80  N.  Y. 

1;  Germ.  Nat.  Bank  v.  Burns,  12  100.    See  note  1,  ante. 

Colo.  539;  Western  Scraper  Co.  v.  4^Etna  Ins.   Co.  v.  Alton    City 

Sadilek,  69  N.  W.  R.  765;  Drovers'  Bank,  25  111.  243;  Dorchester  Bank 

Nat  Bank  v.  Anglo-Am.  Co.,  117  v.  New  England  Bank,  1  Gush.  177. 

Ill  100;  Merchants'  Nat.  Bank  v.  See  the  cases  cited  in  notes  16  to 

Goodman,   109   Pa.  422.      Contra,  28  to  this  section. 

Indig  v.  Nat.  City  Bank,  80  N.  Y.  » Exchange  Nat  Bank  v.  Third 

100;  Briggs  v.  Cent.  Nat.  Bank,  89  Nat.  Bank,  112  U.  S.  276;  In  re  State 

N.  Y.  182.    But  the  New  York  court  Bank,  56  Minn.  119;  Power  v.  First 

say  the  collecting  bank  does  not  Nat.   Bank,  6  Mont  251.     But  it 

make  the  second  bank  its  agent  would  be  against  public  policy  for 

St  Nicholas  Bank  v.   State  Nat  the  bank  to  contract  against  liabil- 

Bank,  128  N.  Y.  26.    And  the  Eng-  ity  for  its  own  negligence,  although 

lish  court  so   held.    Heywood   v.  it  could  contract  against  liability 

Pickering,  43  L.  J.  Q.  B.  145.  for  its  correspondent's  negligence^ 
20 


30G  BANKS   AND   BANKING.  [§  181. 

tween  the  different  courts.  The  Supreme  Court  of  Pennsyl- 
vania has  been  unable  to  agree  with  itself,6  but  it  is  probably 
to  be  classed  upon  one  side  of  the  question.  The  courts  of 
the  United  States 7  and  of  New  York,8  New  Jersey,9  Ohio,10 
Indiana,11  probably  Pennsylvania,12  Michigan,13  Montana14 
and  Minnesota,18  maintain  the  absolute  liability  of  the  first 
bank  for  all  defaults  of  its  correspondent  banks.  It  need 
not  be  said  that  if  the  owner  of  the  collection  himself  treats 
with  the  correspondent,  he  makes  the  correspondent  his 
own  agent.  And  the  same  result  follows  if  he,  himself, 
selects  the  correspondent.  Many  of  these  courts  treat  the 
question  as  one  of  delegation  of  power  and  not  possession  of 
power.  The  question  is  not  whether  the  first  bank  is  dele- 
gating any  power,  but  rather,  has  it  the  power  to  appoint  a 
sub-agent  for  the  principal,  if  the  relation  is  one  of  agency? 
The  above  cases  make  answer  that  it  has  no  such  power 
granted  to  it  by  the  contract  of  collection,  and  therefore  the 
initial  bank  is  liable  for  all  defaults  of  its  correspondent,  in- 
cluding a  failure  to  pay  over  the  proceeds.  But  the  courts  of 
Louisiana,16  Massachusetts,17  Iowa,18  Mississippi,19  Missouri,20 

See  Minneapolis  Co.  v.  Metropolitan       H  Tyson  v.  State  Bank,  6  Blackf. 

Bank,  44  L.  R.  A.  504  225. 

6  Cora  pare    Mechanics'  Bank   v.       12Siner  v.  Stearne,  155  Pa.  662; 
Earp,  4  Rawle,  384;    Bellmire  v.  Bradstreet  v.  Everson,  72  Pa.  124. 
United  States  Bank,  4  Whart.  109,       "Simpson  v.  Waldby,  63  Mich, 
with  Wingate  v.  Mechanics'  Bank,  439. 

10  Pa.  104;  Bradstreet  v.  Everson,  "Power   v.  First  Nat.    Bank,  6 

72  Pa.  124  Mont.  251. 

7  Exchange  Nat.  Bank  v.  Third  15  Streissguth  v.  National  Germ. 
Nat.  Bank,  112  U.  S.  276;  Hoover  v.  Am.  Bank,  43  Minn.  50. 

Wise,  91  U.  S.  308;  Kent  v.  Dawson  leHum  v.  Union   Bank,  4  Rob. 

Bank,  13  Blatch.  237.    The  English  (La.)  109. 

rule  is  the  same.  17  Fabens  v.  Mercantile  Bank,  23 

8  Castle  v.  Corn  Exchange  Bank,  Pick.  330. 

148  N.  Y.  122.  18  Guelick  v.  National  State  Bank, 

9  Davey  v.  Jones,  42  N.  J.  Law,  28;    56  Iowa,  434 

Titus  v.  Mechanics'  Bank,  35  N.  J.       19  Third  Nat.  Bank  v.  Vicksburg, 

Law,  588.  61  Miss.  112. 

w  Reeves  v.  State  Bank,  8  Ohio  St      w  Daly  v.  Butchers'  Bank,  56  Mo. 

465.  94 


§  181.]  COLLECTIONS.  307 

Nebraska,21  Illinois,22  Connecticut,23  Maryland,24  Wisconsin,25 
Colorado,26  Tennessee27  and  Kansas28  affirm  that  the  first 
bank  is  liable  only  for  due  care  and  diligence  in  the  selec- 
tion of  a  trustworthy  correspondent;  that  it  is  given  power 
by  the  very  fact  of  the  deposit  for  collection  to  employ  sub- 
agents,  who  thereupon  become  the  agents  of  the  holder. 
This  divergence  of  authority  is  exceedingly  unfortunate, 
since  in  the  states  which  hold  this  rule,  if  a  party  can  bring 
his  action  in  a  United  States  court,  the  state  rule  will  not  be 
followed,  and  the  practitioner  is  confronted  with  one  kind  of 
law  in  one  court  and  another  kind  of  law  in  another  court, 
both  within  the  same  state,  and  with,  in  some  cases,  concur- 
rent jurisdiction.  The  primary  difficulty  with  this  latter 
view  is  that  it  is  based  upon  the  idea  that  the  collecting 
bank  is  an  agent  of  the  holder,  but  the  collecting  bank  is 
bailee  and  its  agents  are  its  own  agents.29  What  the  collect- 
ing bank  does  is  not  in  the  principal's  name,  but  in  its  own 
name  as  bailee  and  qualified  owner  of  the  paper.30  In  the 
next  place,  if  the  collecting  bank  is  merely  an  agent,  and 
sends  the  paper  to  another  agent,  the  primary  bank  could 
claim  no  lien  as  against  a  garnishment  directed  to  the  sec- 
ondary bank  against  the  owner,  and  hence  it  would  lose 
its  banker's  lien,  although  checks  might  have  been  drawn 
against  the  very  collection  and  paid.  In  the  third  place  this 

21  First  Nat.  Bank  v.  Sprague,  34  agency.    Had  it  been  discerned  to 
Neb.  318.  be  a  bailment,  the  difficulty  would 

22  Waterloo  Milling  Co.  v.  Kuen-  not  have  resulted.    See  §  171,  ante. 
ster,  158  III  259.    See  §  186,  note  2.  30No  one  probably  would  dispute 

23  East  Haddam  Bank  v.  Scovil,  12  that,  if  the  paper  were  deposited  as 
Conn.  303.  collateral  security,  a  typical  bail- 

24  Citizens'  Bank  v.  Howell,  8  Md.  ment,  and  the  bank  proceeded  to 
530.  collect  it  under  a  power,  the  agents 

25  Stacy  v.  Dane  Co.  Bank,  12  Wis.  used    in    the    collection,  whether 
629.  banks  or  individuals,  would  be  the 

26  Bank  v.  Burns,  12  Colo.  539.  agents  of  the  bailee.    It  is  conced- 

27  Bank  of  Louisville  v.  Bank,  8  edly  true  in  the  case  of  common 
Baxt.  101.  carriers  that  the    successive  car- 

28  Bank  v.  Ober,  31  Kan.  599.  riers,  unless  the  contract  is  special, 

29  It  is  unfortunate  that  the  ques-  are  agents  of  the  initial  carrier, 
tion  has  been  considered   one  of 


308  BANKS   AND   BANKING.  [§  182. 

view  requires  the  holder  of  a  collection,  in  order  to  protect 
himself  fully,  to  ascartain  the  name  of  the  correspondent 
bank  and  delay  the  collection  until  he  can  acquire  satisfac- 
tory information.  This  argument  db  inconvenienti  ought  to 
be  controlling  in  the  absence  of  some  imperative  rule  of 
law.  There  are  certain  other  states  which,  adopting  the  rule 
that  the  primary  bank  is  not  liable  in  general  for  the  acts 
of  the  correspondent  bank,  yet  claim  the  rule  to  be  that,  if 
the  payee  resides  at  the  place  where  the  collecting  bank  is 
located,  that  bank  is  liable  for  the  acts  of  its  correspondent 
at  all  events.31  It  is  hardly  necessary  to  add  that  the  cor- 
respondent bank  is  liable  to  whomever  the  particular  rule 
adopted  makes  its  employer.32 

§  182.  Liability  of  bank  for  notary. —  If  the  deposit  of 
paper  for  collection  in  a  bank  is  a  bailment,  it  follows  nec- 
essarily that  the  default  of  the  notary  to  which  the  bank 
confides  the  performance  of  some  duty  concerning  the  paper 
for  the  bank  is  the  default  of  the  bank,  and  so  some  cases 
hold; l  but  the  great  weight  of  authority  is  otherwise,  and  it 
is  held  that  if  the  bank  shows  due  care  and  diligence  in  the 
selection  of  a  notary  it  has  discharged  its  whole  duty.2  Log- 

81  .(Etna  Ins.   Co.   v.   Alton    City  Conn.   565;    Locke   v.  Merchants' 

Bank,  25  111.  243;  Bank  of  Louisville  Nat.  Bank,  66  Ind.  353:  First  Nat. 

v.  Bank  of  Knoxville,  8  Baxt.  101;  Bank    v.   Mansfield  Sav.   Bank,  a 

Stacy  v.  Dane  Co.  Bank,  12  Wis.  Ohio  Dec.  141.    Yet,  if  the  first  bank 

629,  and  a  number  of  the  cases  cited  is  bailee,  it  may  sue  and  recover 

in  the  preceding   note    recognize  for  the  negligence  up  to  the  whole 

this  distinction.    If  the  correspond-  loss,  even  in  those  states  which  say 

ent  resides  in  the  same  place,  he  is  that  the  correspondent  bank  is  the 

a  servant  of  the  bank;  but  if  he  re-  agent  of  the  holder.    So  the  first 

sides  in  another  place,  he  is  an  case  in  this  note  holds, 

agent  of  the  holder.  There  is  no  rea-  l  Ayrault  v.  Pacific  Bank,  47  N.  Y. 

son  in  the  distinction.    The  courts  570;  Davey  y.  Jones,  42  N.  J.  Law,  28. 

see  the  wrong  of  the  rule  when  ap-  2  Britton  v.  Nicholls,  104  U.  S.  757 

plied  to  a  home  collection,  but  are  (but  see  this  case  explained,  112 

unable  to  see  it  when  applied  to  U.  S.  284);  Tiernan  v.  Commercial 

a  collection  to  be  made  at  a  dis-  Bank,  7  How.  (Miss.)  648;   Agric. 

tance.  Bank  v.  Comm.  Bank,  15  Miss.  592 

32 To  the  first  bank:   Merchants'  (this  case  contains  some  admirable 

Bank    v.  Stafford    Nat   Bank,  44  dicta  for  drinking  men);  Bellmire 


§  183.]  COLLECTIONS.  309 

ically  those  courts  which  hold  a  bank  responsible  for  the 
defaults  of  its  correspondent  bank  ought  to  hold  .a  bank 
liable  for  the  acts  of  its  notary,3  unless  the  fact  that  the 
notary  is  a  public  officer  is  entitled  to  a  controlling  consid- 
eration ;  but  even  then  the  exemption  ought  to  be  allowed 
only  as  to  those  duties  which  a  notary  must  perform,  and 
which  are  not  merely  ministerial.  It  is  said  in  one  court 
that  if  the  bank  makes  use  of  its  own  notary  it  is  not  liable,4 
but  other  cases  assert  that  this  is  a  good  reason  for  making 
it  liable.5 

§  183.  Waiver  of  negligence. —  Where  the  collecting  bank 
or  one  of  its  agents,  where  it  is  held  liable  for  the  acts  of  its 
agents,  has  been  guilty  of  negligence  or  of  improper  con- 
duct in  the  making  of  the  collection,  the  owner  may  waive 
his  right  to  claim  anything  therefor.  But  this  rule  is  gov- 
erned by  the  general  rule  applicable  to  all  classes  of  ratifi- 
cation—  the  act  must  be  done  with  knowledge  of  the  circum- 
stances.1 But  if  the  bank  returns  a  part  of  the  proceeds  of  the 
collection  and  a  note  for  the  balance  thereof  and  the  owner 
accepts  it,  he  thereby  waives  any  right  which  he  has  to  ob- 
ject to  the  bank's  conduct.2  But  if  he  withdraws  the  collec- 
tion after  the  bank  has  been  guilty  of  negligence,  he  does 
not  thereby  waive  the  bank's  liability.3  Nor  does  the  drawer 
of  a  bill,  by  paying  to  the  payee  in  ignorance  of  the  negli- 
gence of  the  bank,  waive  his  claim  upon  the  bank.4  If  the 
bank  has  failed  to  present  the  paper,  instructions  given  by 

v.  Bank  of  U.  S.,  4  Whart.   105;  Inst,  38  Mo.  60;  Wood  River  Bank 
Stacy  v.  Dane  Co.  Bank,  12  Wis.  v.  First  Nat.  Bank,  36  Neb.  744 
629;  First  Nat.  Bank  v.  Butler,  41  iRoanoke    Nat.    Bank  v.   Ham- 
Ohio  St.  519;  Bank  of  Louisville  T.  berck,  82  Va.  135. 
Bank  of  Knoxville,  8  Baxt.  101.  2  Hughes  v.  Neal  Banking  Co.,  97 

3  The  same  result  follows  if  the  Ga.  383.   Or  accepts  check.  Hazlett 
collection    is   considered  to  be  a  v.  Comm.  Nat.  Bank,  132  Pa.  118. 
bailment.  3  Branch  Bank  v.  Knox,  1  Ala. 

4  Bald  win  v.  State  Bank,  1  La.  148. 

Ann.  13.  4  Merchants'    Bank  v.  Bank   of 

5  Gerhardt    v.    Boatmen's    Sav.    Commerce,  34  Md.  13. 


310  BANKS   AND    BANKING.  [§  184:. 

the  owner  to  protect  it  are  not  a  waiver  of  the  bank's  neg- 
ligent failure.6 

§  184.  Actions  for  negligence. —  The  bank  of  primary 
collection  in  the  states  which  recognize  its  liability  for  the 
acts  of  its  correspondent  banks  may  maintain  an  action 
against  the  last-named  bank  for  negligence,1  but  the  holder 
of  the  paper  cannofc.2  In  those  jurisdictions  which  hold  the 
rule  that  the  correspondent  bank  is  the  agent  of  the  owner 
of  the  paper,  the  owner  may  sue  the  correspondent  bank  for 
negligence ; 3  and  this  would  seem  to  be  the  proper  rule,  even 
though  the  fact  of  the  collection  being  for  the  owner,  and 
not  for  the  first  bank,  did  not  appear,  as  it  would  not,  if  the 
owner  indorsed  generally  to  the  first  bank.  The  real  owner 
of  the  paper  may  maintain  the  action  against  the  collecting 
bank,  even  though  the  paper  had  been  pledged  and  the  paper 
was  not  placed  in  the  bank  for  collection  by  the  pledgee.4 
"Where  note  was  returned  to  the  owner  after  the  negligence 
occurred,  it  is  of  course  not  necessary  to  show  a  redelivery 
to  the  bank.5  The  fact  that  the  note  was  received  for  collec- 
tion by  the  bank  is  sufficient  proof  of  the  general  contract  of 
collection,6  and  unless  it  is  sought  to  charge  the  bank  with 
knowledge  of  special  instructions,  it  is  not  necessary  to  prove 
them  or  to  allege  them.  It  is  said  in  one  case  that  only  that 
part  of  the  contract  of  which  the  breach  occurred  needs  to 
be  set  out  in  the  pleading.7  The  pleading  and  the  proof 

5  First   Nat    Bank  v.   Price,  52  Bank,  44  Conn.  565,  and  note  32  to 

Iowa,  570.  §  181. 

JSee  cases  cited  in  note  32  to  8A11   the    cases   recognize   this 

§  181,  ante.  principle. 

2  Montgomery  Co.  Bank  v.  Albany  <  Bank  of  Utica  v.  McKinster,  11 

City  Bank,  7  N.  Y.  459.    Bank  of  Wend.  473. 

Washington  v.  Triplett,  1  Pet.  25,  5  Merchants'  Bank    v.   Bank    of 
has  a  dictum  to  the  contrary.    Even  Commerce,  24  Md.  12. 
in  those  states  which  consider  the  6  Jagger  v.  National  Germ.  Am. 
correspondent  bank  as  the  agent  of  Bunk,  53  Minn.  386. 
the  primary  bank,  the  latter  bank  7  American  Exp.  Co.  v.  Pinckney, 
ought  to  have  an  action  against  its  29  111.  392.    This  case  shows  clearly 
correspondent  for  negligence.    See  the  fact  that  a  collection  is  a  bail- 
Merchants'  Bank  v.  Stafford  Nat.  ment  from  the  form  of  the  plead- 


§  185.]  COLLECTIONS.  311 

must  show  damage.8  If  it  is  alleged  that  certain  parties  to 
the  paper  were  discharged,  it  must  be  alleged  and  proven 
that  those  remaining  liable  are  not  good  and  that  the  parties 
discharged  were.9  If  the  negligence  complained  of  was  a 
delivery  to  the  payer,  the  loss  of  the  claim  must  be  averred 
as  a  consequence.10  The  allegation  of  a  consideration  is  not 
material  where  an  acceptance  of  the  collection  is  averred.11 
It  certainly  is  not  necessary  where  the  action  is  one  against 
the  bank  for  conversion.12 

§  185.  Matters  of  proof, —  "Where  the  negligence  com- 
plained of  consists  in  a  loss  of  the  paper  in  transmitting  it, 
the  burden  is  upon  the  bank  to  show  that  the  loss  happened 
without  its  fault.1  There  arises,  upon  the  fact  being  shown, 
a  presumption  of  carelessness.2  Even  though  the  paper  was 
lost  without  its  fault,  the  bank  must  show  that  it  used  due 
diligence  in  ascertaining  the  fact.3  Where  the  bank  has 
failed  to  present  the  check  or  other  paper  for  payment  or 
has  failed  to  give  notice  of  non-payment,  the  fact  of  the  in- 
dorser's  insolvency  ought  to  be  proof  in  mitigation  of  dam- 
ages.4 It  has  been  held  that  the  burden  of  proof  is  upon  the 

ing.    First  there  is  alleged  the  fact  10  Farmers'  Bank  v.  Newland,  97 

of  deposit  and  acceptance  for  col-  Ky.  464 

lection,  next  the  duty,  and  then  the  nThe   relation  raises  the  duty. 

breach  of  the  duty.    Yet  the  court  Special  instructions  and  the  posted 

with  this  before  it  talks  about  the  terms  of  collection  are  material, 

contract,  as  if  it  were  an  express  since  they  may  modify  the  relation. 

contract,  and  not  the  clearest  case  Wingate  v.  Mechanics'  Bank,  10  Pa. 

possible  of  a  guasi-contract.    See  104. 

note  2  to  §  186,  and  note  22  to  §  181.  12  Keyes  v.  Bank  of  Hardin,  52  Ma 

8  Morris  v.  Eufala  Bank,  106  Ala,  App.  323. 

383;  Farmers' Bank  v.  Newland,  97  ^hicopee  Bank  v.  Philadelphia 

Ky.  464;  Finch  v.  Karste,  97  Mich.  Bank,  8  Wall  641. 

20.  2  American  Exp.  Co.  v.  Parsons, 

9  Bank  of  Mobile  v.  Huggins,  3  44  III  312. 

Ala.  206.   But  the  better  rule  would  3  First  Nat.  Bank   v.  First  Nat. 

be  that  the  insolvency  of  parties  Bank,  Fed.  Cas.  No.  4810;  Shepley 

discharged  goes  in  mitigation  of  v.  Bowery  Nat.  Bank,  59  N.  Y.  485. 

damages.    Stowe  v.  Bank  of  Cape  4  Coghlan  v.  Dinsmore,  9  Bosw. 

Fear,  3  Dev.  408;  Borup  v.  Nininger,  453;  Borup  v.  Nininger,  5  Minn.  523. 

5  Minn.  523.  But  First  Nat.  Bank  v.  Fourth  Nat. 


312 


BANKS   AND   BANKING. 


[§  186. 


plaintiff  to  show  in  regard  to  a  check  that  the  drawee  was 
solvent  and  the  check  collectible.5  And  where  the  negligence 
alleged  is  a  failure  to  present  a  check  which  was  given  for  a 
draft,  whereby  the  payment  of  the  check  was  lost,  the  holder 
must  show  that  the  drawer  of  the  draft  became  insolvent.6 
The  fact  that  checks  of  the  drawer  were  paid  up  to  the  day 
after  the  check  should  have  been  presented  is  proof  that 
the  check  would  have  been  paid  if  presented  at  the  proper 
time.7  In  proving  insolvency  of  a  particular  person  a  re- 
turn of  nulla  bona  against  him  is  competent  proof,8  or  a  gen- 
eral reputation  of  insolvency  within  a  reasonable  time  after 
the  maturity  of  the  paper  on  which  he  is  liable.9  But  the 
fact  that  a  person  was  in  embarrassed  circumstances  does 
not  necessarily  indicate  insolvency.10  Other  questions  that 
have  arisen  are  noticed  in  the  note.11 

§  186.  Measure  of  recovery. —  Where  paper  is  a  total 
loss  the  measure  of  recovery  would  be  the  face  value  of  the 


Bank,  77  N.  Y.  320,  and  Bamberger 
v.  Bank  of  Tupelo,  15  Ky.  Law  R. 
361,  are  to  the  effect  that  plaintiff 
must  show  an  actual  loss. 

8Sahlien  v.  Bank  of  Lonoke,  90 
Tenn.221.  Compare  Lienau  v.  Dins- 
more,  3  Daly,  365. 

«  First  Nat.  Bank  v.  Fourth  Nat. 
Bank,  77  N.  Y.  320;  Citizens'  Nat, 
Bank  v.  Third  Nat.  Bank,  49  N.  E. 
R.171. 

7  First  Nat  Bank  v.  Fourth  Nat. 
Bank,  77  N.  Y.  320. 

8  Eschelberger   v.  Pike,   22   La. 
Ann.  142. 

9  West  v.  St  Paul  Nat  Bank,  54 
Minn.  466. 

10Steele  v.  Russell,  5  Neb.  211. 
Just  when  a  person  becomes  so 
embarrassed  as  to  be  insolvent  is  a 
matter  of  some  apparent  doubt  in 
Nebraska. 

11  Payments  made  on  the  collec- 
tion after  the  negligence  occurred 
are  proper  evidence  in  mitigation 


of  damages.  Borup  v.  Nininger,  5 
Minn.  523.  But  the  case  of  Fifth 
Nat  Bank  v.  Ashworth,  123  Pa. 
212,  decides  that  where  a  collect- 
ing bank  has  accepted  a  cashier's 
check  for  a  collection,  and  thus 
made  the  collection  its  own,  pay- 
ment by  the  drawer  of  the  check 
to  the  holder  is  no  defense  in  favor 
of  the  bank  against  the  holder  of 
the  check  suing  it  for  negligence. 
The  possession  of  collateral  by  the 
holder  is  mitigati  ng  evidence.  Mott 
v.  Havana  Bank,  22  Hun,  354  But 
not  the  fact  that  on  a  foreclosure 
sale  the  holder  bought  in  real  prop- 
erty for  less  than  it  was  worth. 
West  v.  St  Paul  Nat  Bank,  54 
Minn.  466.  A  judgment  in  another 
state  exonerating  the  drawer  is 
conclusive  as  to  the  drawer's  lia- 
bility when  the  payee  sues  the 
bank.  First  Nat.  Bank  v.  Fourth 
Nat  Bank,  supra. 


§  187.]  COLLECTIONS.  313 

paper  where  there  was  no  proof  of  the  insolvency  of  the 
maker  and  of  the  other  parties  liable  upon  it.1  The  same 
rule  would  apply  where  negotiable  paper  is  lost  in  the 
course  of  transmission,2  but  not,  of  course,  to  non-negotiable 
paper.  The  other  matters  bearing  upon  the  amount  of  the 
recovery  will  be  found  treated  in  the  preceding  section. 

§  187.  Rights  in  proceeds. —  It  is  apparent  that  this 
question  may  take  different  phases.  First,  we  may  consider 
the  question  as  between  the  owner  and  the  bank  to  which 
he  consigns  the  paper  for  collection.  This  bank,  for  want 
of  a  better  term,  we  will  call,  after  the  analogy  of  carriers, 
the  initial  bank.  The  situation  as  to  the  holder  after  col- 
lection of  the  proceeds  and  the  final  crediting  of  them  in 
the  initial  bank  differs  from  the  situation  before  being  cred- 
ited there.  If  the  proceeds  have  been  collected  and  cred- 
ited, the  relation  resulting  between  the  depositor  and  the 
bank  will  vary  with  the  instruction  given  or  the  course  of 
dealing  between  the  parties.  It  may  also  be  varied  by  the 
fact  that  the  initial  bank  was  insolvent  when  it  received 
the  collection.  Before  collection  has  been  made,  the  holder 
may  have  rights  which  are  controlled  by  the  form  of  in- 
dorsement to  the  initial  bank  or  the  form  of  its  communi- 
cation of  the  paper  to  a  correspondent  bank.  Between  the 
banks  doing  the  collecting,  the  initial  bank,  when  the  paper 
is  credited  to  it,  will  be  in  the  same  situation  relative  to  the 
secondary  bank  as  the  holder  occupies  toward  the  initial 
bank  when  it  has  credited  the  proceeds  after  collection  to 
him.  The  situation  of  the  secondary  bank  may  vary  with 
its  claims  against  the  initial  bank  and  the  nature  of  the  in- 
dorsements on  the  paper.  The  whole  situation  as  between 
the  various  parties  will  be  subject  to  a  sudden  change  upon 

1  Wingate  v.  Mechanics'  Bank,  10  which  is  the  exact  contrary  of  the 
Pa.  104  rule  applied  here  to  banks;  and 

2  Am.  Exp.  Co.  v.  Parsons,  44  III  (2)  the  court  recognizes  that  a  de- 
312.    This  case  is  remarkable  for  posit  for  collection  is  a  bailment 
two  reasons:  (1)  In  Illinois  an  ex-  when    given  to  an  express  com- 
press company  collecting  paper  is  pany.    See  note  7  to  §  184,  ante. 
liable  for  all  connecting  companies, 


314:  BANKS    AND   BANKING.  [§  188. 

the  insolvency  of  any  of  the  parties.  These  various  ques- 
tions will  be  considered  in  the  order  of  the  holder's  rights, 
the  initial  bank's  rights,  and  the  correspondent  bank's  rights 
in  the  proceeds.  Most  of  the  law  upon  this  subject  has  been 
produced  in  the  last  decade  or  two. 

§  188.  The  rights  of  the  owner  of  collection. —  As  we 

have  heretofore  said,1  the  deposit  of  paper  for  collection  in 
a  bank  creates  the  relation  between  the  banker  and  customer 
of  bailor  and  bailee.  It  is  submitted  that  this  is  the  only 
relation  that  will  answer  the  situation.  The  bank  is  owner 
against  all  the  world  except  the  true  owner.  It  is  liable  for 
negligence  in  an  action  at  law.  The  owner  can  follow  the 
proceeds  of  the  collection  in  an  action  at  law.  The  initial 
bank  is  liable  for  its  correspondent's  defaults,  except  in  some 
jurisdictions,  which  recognize,  however,  that  the  bank  can 
sue  as  owner  itself,  although  it  is  not  the  owner,  because  it 
can  charge  off  a  credit  given.  What  legal  relation  except 
bailment  will  answer  these  conditions?  If,  however,  the 
paper  be  sold  or  discounted  to  the  bank,  it  is,  of  course,  not 
deposited  for  collection.2  The  contract  of  bailment  may 
be  either  the  one  which  results  from  custom  recognized  as  a 
rule  of  law,  or  it  may  be  that  customary  duty  modified  by 
an  express  agreement  or  by  a  course  of  dealing  between 
the  bank  and  its  depositor.  This  fact  is  material  as  to  the 
relation  which  results  upon  the  completion  of  the  collec- 
tion;8 it  may  also  be  material  as  defining  the  duty  of  the 
bank  in  making  the  collection,  or  its  responsibility  if  the 
collection  be  not  made.  But  whatever  the  relation  between 
the  holder  of  the  collection  and  the  bank  in  which  he  depos- 
its it,  the  depositor,  when  placing  the  paper  in  the  bank,  must 
indorse  it.  This  indorsement  may  be  for  credit  or  for  col- 
lection, or  for  collection  and  credit,  or  for  account.  The 

1  See  §  133,  ante.  Mayer,  89  Ga.  10&  But  these  courts 

2  This  view  must  be  taken  in  re-  involve  themselves  in  a  flat  contra- 
gard  to  those  cases  which  affirm  diction  by  allowing  the  credit  to 
that  all  title  passes  to  the  bank  be  revoked  for  non-collection, 
upon  a  deposit  for  credit.  See  §  133,  3  See  §  133,  ante. 

ante,    and  Fourth    Nat.    Bank  v. 


§  188.]  COLLECTIONS.  315 

form  of  indorsement  is  not  material  between  the  bank  and 
the  customer,  if  there  is  an  agreement  or  understanding  be- 
tween the  parties,  except  that  it  may  be  evidence  as  to  the 
relation  between  them.  The  actual  agreement  governs.  But 
the  indorsement  is  exceedingly  material  where  the  collection 
is  to  pass  through  other  banks.  Whether  the  paper  is  in- 
dorsed for  collection  or  credit,  the  bank  may  permit  the 
deposit  that  requires  collection  to  be  checked  against.  Tak- 
ing first  a  deposit  for  credit  where  the  responsibility  on  the 
paper  remains  with  the  customer,  the  beneficial  ownership 
of  the  proceeds  after  collection  and  the  ownership  of  the 
paper  before  collection  remains  with  the  depositor  until,  at 
least,  the  reception  of  the  proceeds  by  the  bank  dealing 
immediately  with  him.4  It  matters  little  whether  the  rela- 
tion is  called  that  of  bailor  to  bailee,  or  that  of  cestui  que 
trust  to  trustee,  or  that  of  agent  to  principal,  except  that 
the  last  two  views  introduce  serious  difiiculties  as  to  proced- 
ure. Being  the  ultimate  owner,  the  depositor  of  the  paper 
can  claim  it  against  any  one  who  cannot  show  a  better  right. 
A  better  right  can  be  shown  by  any  correspondent  bank 
having  a  lien  on  the  proceeds  which  received  the  paper  as 
the  property  of  the  bank  transmitting  to  it,  when  it  was  not 
put  upon  notice  that  the  paper  was  held  by  the  initial  bank 
for  collection  and  not  as  owner.5  An  original  indorsement 
for  collection,  or  any  indorsement  for  collection  or  for  ac- 
count prior  to  the  indorsement  to  it,  is  notice  that  the  trans- 

4  Evansville  Bank  v.  German  Am.  (see  §  133,  ante),  unless  he  treated 

Bank,  155  U.  S.  556;  Beal  v.  Somer-  with  the  correspondent  bank.  Pick- 

ville,  50  Fed.  R.  647,  5  U.  S.  App.  14;  ering  v.  Cameron,  103  Iowa,  186. 

Beal  v.  National  Ex.  Bank,  55  Fed.  5  Bank  of  Metropolis  v.  New  Eng- 

R.  894, 5  U.  S.  App.  376.    These  cases  land  Bank,  1  How.  234, 6  How.  212;. 

must  be  taken  to  have  settled  the  Elaine  v.  Bourne,  11  R.  L  119;  Cecil 

law  contrary  to  the  view  held  by  Bank  v.  Farmers'  Bank,  22  Md.  148; 

the  text  books,  which  asserted  a  City  Bank  v.  Weiss,  67  Tex.  331; 

contrary  principle.     But  in  those  Lindauer  v.  Fourth  Nat.  Bank,  55 

states  which  hold  that  a  deposit  for  Barb.  75;  Sweeney  v.  Easter,  1  Wall, 

credit  passes  title  to  the  bank,  the  166;  Hackett  v.  Reynolds,  114  Pa, 

proceeds  are  lost  to  the  depositor  32& 


516  BANKS    AND   BANKING.  [§  188. 

mitting  bank  is  not  the  owner;6  so  is  notice  communicated 
in  any  other  way.7  But  such  correspondent  bank  by  its 
agreement  with  its  transmitting  bank  cannot  control  the 
effect  of  such  an  indorsement  or  other  notice.8  If  it  has  a 
lien  it  is  only  to  the  extent  of  a  credit  allowed,  or  detriment 
suffered  by  it  on  the  credit  of  this  particular  paper,9  unless 
it  has  a  lien  by  agreement  or  by  a  course  of  dealing.  The 
next  person  that  ma}T  be  able  to  claim  a  lien  on  the  paper 
as  against  the  owner  is  the  bank  which  deals  directly  with 
him.  This  bank  has  a  lien  or  a  set-off  upon  the  proceeds  of 
the  collection  for  any  matured  claim  which  it  may  have 
against  the  depositor  of  the  paper,10  and  in  most  jurisdictions 
a  set-off,  where  the  claim  is  unmatured  and  the  depositor 
insolvent,11  provided  the  proceeds  of  the  collection  in  the 
initial  bank  would  become  a  general  deposit  of  the  holder.12 
It  would  also  necessarily  have  a  lien  for  any  credit  allowed 
the  holder  upon  the  particular  paper  deposited  for  collec- 
tion. But  whenever  in  the  chain  of  collecting  banks  the 
proceeds  are  lawfully  taken  by  a  bank  for  a  claim  owed  to 
it  by  its  predecessor  in  the  collection,  that  predecessor  be- 
comes at  once  liable  to  its  immediate  predecessor  as  for  the 

6  First  Nat.  Bank  v.  Bank  of  Mon-  rine  Bank,  3  Keyes,  337.    The  case 
roe,  33  Fed.  R.408;  Evansville  Bank  of  Wyman  v.  Colo.  Nat.  Bank,  5 
v.  Germ.  Am.  Bank,  155  U.  S.  556.  Colo.  30,  wrongly  held  an  overdraft 
It  is  held  that  an  indorsement  for  already  existing  sufficient.  Milliken 
collection  and  credit  does  not  pass  v.  Shapleigh,  36  Mo.  596,  is  to  the 
title  to  the  bank,  even  though  it  be  contrary.    Carrol  v.  Exo.  Bank,  30 
credited  as  cash.     Armstrong    v.  W.  Va.  518,  holds  that  general  bal- 
National  Bank,  90  Ky.  431.    But  ances  are  sufficient,  but  Bank  of 
every  indorsement  for  credit  to  any  Syracuse  v.  Wis.  Ins.  Co.,  12  N.  Y. 
bank,  not  the  one  on  which  the  Supp.  952,  contradicts  it  The  New 
paper  is  drawn,  shows  that  very  York  cases  do  not  recognize  an  ex- 
same  fact.  isting  debt  as  sufficient 

7  See  §  133,  ante.  10  Greene  v.  Jackson  Bank,  18  R  L 
8Hutchins  v.  Manhattan  Co.,  29    779;   In  re  Armstrong,  41  Fed.  R 

N.  Y.  Supp.  1103.  381. 

9  Cody  v.  City  Nat.  Bank,  55  Mich.       "  See  §  140,  ante. 
379;  McBride  v.  Farmers'  Bank,  26       12The  rule  as  to  application  ap- 

N.  Y.  450;  Dod  v.  Fourth  Nat.  Bank,  plies  only  to  general  deposits. 
59  Barb.  265;  Comm.  Bank  v.  Ma- 


§  188.]  COLLECTIONS.  317 

reception  of  the  proceeds ; 13  and  the  same  result  follows  where 
a  bank  receives  the  proceeds  by  a  lawful  credit  to  it ;  and 
whenever  in  the  chain  of  collection  any  bank  has  parted 
with  the  proceeds,  either  by  transmission  or  credit  lawfully 
given,  its  connection  with  the  collection  has  ceased.14  But 
as  between  banks  it  should  not  be  forgotten  that  they  are 
governed  by  the  same  rules  as  apply  to  the  original  depos- 
itor and  the  initial  bank,  as  to  notice  by  the  form  of  indorse- 
ment to  itself  or  to  some  of  its  predecessors;  and  where  the 
bank  receiving  the  paper  has  the  right  to  assume  that  it  is 
the  property  of  the  bank  transmitting  to  it,  yet  it  has  no 
lien  except  where  it  grants  a  credit  upon  the  particular 
paper,  or  has  one  by  an  agreement  or  course  of  dealing. 
The  third  class  of  persons  who  may  show  a  better  right  may 
be  assignees  or  garnishers  of  the  owner  of  the  paper.15  The 
case  of  assignees  calls  for  no  particular  mention.  They  gain 
the  rights  of  their  assignors  and  no  more ;  and  in  order  to- 
protect  themselves  should  give  notice  to  any  bank  which  they 
desire  to  be  affected,  unless  notice  to  the  first  or  initial  bank 

13  The  initial  bank  becomes  re-  breth,  49  Ohio  St.  401.  One  case 
sponsible  to  the  holder  because  it  holds  that  if  no  collection  is  made 
obtains  the  proceeds  by  a  credit  except  by  a  credit  allowed  the 
which  if  lawfully  given  is  precisely  debtor  on  an  overdraft,  the  collec- 
the  same  as  the  receipt  of  so  much  tion  is  not  paid.  Kinney  v.  Paine, 
actual  money.  See  In  re  Madison  68  Miss.  258.  This  is  a  sound  decis- 
Bank,  5  Biss.  515.  But  it  should  be  ion  as  applied  to  a  credit  allowed  in 
remembered  that  if  the  deposit  for  an  insolvent  bank.  Other  cases  hold 
collection  was  taken  by  a  bank  that  if  a  remittance  is  made  by  ex- 
known  to  its  officers  to  be  insolvent,  change,  which  is  a  bank  check,  the 
a  fraud  was  committed  upon  the  collection  is  complete  as  to  the  re- 
depositor,  and  a  credit  by  one  bank  mitting  bank.  Aken  v.  Jones,  93 
to  another  bank  would  not  relieve  Tenn.  358;  Sayles  v.  Cox,  95  Tenn. 
it  from  its  liability  to  the  owner,  579.  But  this  is  true  only  when  the 
unless  it  could  claim  to  be  a  bona  exchange  is  paid.  As  to  the  rela- 
te holder  of  the  proceeds.  See  tion  that  results  upon  collection, 
note  25,  infra.  compare  Billingsley  v.  Pollock,  69 
14  This  principle  is  recognized  in  Miss.  659;  Bowman  v.  First  Nat. 
most  of  the  cases.  See  Evansville  Ban.k,  9  Wash.  614,  with  Hunt  v. 
Bank  v.  Germ.  Am.  Bank,  155  U.  S.  Townsend,  26  S.  W.  R.  310. 
556.  But  the  crediting  cannot  be  15  As  to  assignees  see  Greene  v. 
made  before  payment  Jones  v.  Kil-  Jackson  Bank,  18  R  I.  779. 


318  BANKS   AND   BANKING.  [§  188. 

would  be  considered  notice  to  all  the  others,  where  they  are 
considered  successive  bailees  or  agents  under  the  initial  bank. 
The  garnishment  may  be  either  upon  the  correspondent  bank 
or  the  initial  bank.  If  it  be  upon  the  initial  bank  before  it  has 
received  the  proceeds,  the  holder  of  the  collection  may  pro- 
tect himself  by  reclaiming  the  proceeds  from  the  correspond- 
ent bank  which  holds  them.  But  in  any  event  the  garnisher 
gets  no  better  title  or  right  than  the  holder  had,  and  the 
garnishment  is  therefore  subject  to  any  claims  which  the 
correspondent  bank  or  the  initial  bank  may  have  upon  the 
paper.  "Whether  the  proceeds  would  be  subject  to  garnish- 
ment at  all  or  not  must  depend  upon  the  terms  of  the  partic- 
ular governing  statute.18  But  it  can  be  said  that  at  common 
law,  certainly,  it  is  not  subject  to  attachment  or  execution 
by  direct  levy.17  But  if  the  deposit  for  collection  be  subject 
to  check,  there  ought  to  be  no  question  that  it  is  not  subject 
to  garnishment  until  the  proceeds  have  been  received  by  the 
initial  bank  and  there  credited  or  held  for  the  depositor.18 
But  where  the  deposit  is  for  collection  merely  and  not 
checked  against,  there  seems  to  be  no  good  reason  why  the 
proceeds  could  not  be  garnished  in  the  hands  of  any  corre- 

16  Ordinarily  garnishment  is  for  subject  of  attachment  and  garnish- 
the  purpose  of  reaching  those  assets  ment.  The  leading  authorities  upon 
of  the  debtor  which  are  not  capable  the  question  will  be  found  in  note 
of  manual  delivery.  Such  would  20,  infra.  But  it  is  such  a  simple 
be  a  bailor's  interest  where  the  matter  for  the  holder  of  the  collec- 
bailee  was  in  possession  and  enti-  tion  to  avoid  the  effect  of  a  garnish- 
tied  to  the  possession.  The  bailor's  ment,  and  it  is  so  difficult  for  the 
interest  is  recognized  as  attachable  creditor,  unless  he  can  obtain  con- 
in  Warner  v.  Fourth  Nat.  Bank.  115  fidential  information  from  the 
N.  Y.  251,  but  if  it  be  attachable,  it  banks,  that  the  whole  inquiry  can 
could  only  be  by  process  of  garnish-  hardly  be  considered  practical, 
ment  under  most  systems.  Where  17  It  is  not  subject  to  execution  be- 
a  chose  in  action  is  garnished  the  cause  not  capable  of  being  taken 
usual  course  is  to  garnish  the  debtor,  possession  of  as  against  the  bailee 
Manual  delivery  of  the  document  in  possession  with  a  right  to  retain 
itself  would  not  necessarily  confer  possession. 

any  lien  against  the  debtor.    This  18  Fourth  Nat.  Bank  v.  Meyer,  89 

question  must  be  settled  by  refer-  Ga.  108. 
ence  to  special  treatises  upon  the 


§  138.] 


COLLECTIONS. 


319 


spondent  bank.19  But  the  general  principle  unquestionably 
is  that  uncollected  paper  is  not  subject  to  garnishment.20 
When  the  collection  comes  into  the  hands  of  the  primary 
bank  it  becomes  subject  either  to  garnishment,  if  a  general 
deposit  or  if  a  special  deposit,  and  in  some  cases  might  be 
reached  by  direct  levy.21  But  the  creditor  may  proceed,  if 
he  is  otherwise  entitled,  in  equity,  and  by  means  of  injunc- 
tional  orders  obtain  what  relief  could  be  granted  him  in 
the  particular  case.22  "When  the  proceeds  have  been  received 
by  the  primary  bank  they  become  a  general  deposit  to  the 
credit  of  the  depositor,23  unless  by  special  agreement  or  by  a 
course  of  dealing  they  become  a  special  deposit,24  or  unless 
the  collection  was  received  by  the  primary  bank  under  such 
circumstances  that  it  became  a  constructive  trustee  for  the 
depositor,  as,  for  example,  by  receiving  the  deposit  when  it 
was  known  to  its  officers  to  be  insolvent.25  In  this  latter 


19  Freeman  v.  Exchange  Bank,  87 
Ga.  45;  Naser  v.  First  Nat.  Bank,  36 
Hun,  343. 

20  Moore  v.  Goddard,  1?  N.  E.  R. 
535;  Hancock  v.  Colyer,  99  Mass. 
187;  Levisohn  v.  Wagner,  76  Ala. 
412;  Howland  v.  Spencer,  14  N.  H. 
580;  Fuller  v.  Jewett,  37  Vt.  473; 
Bowker  v.  Hill,  60  Me.  172;  Gros- 
ners  v.  Farmers'  Bank,  13  Conn. 
104;  Moore  v.  Pillow,  3  Humph.  448; 
Allen  v.  Erie  City  Bank,  57  Pa.  129; 
Deacon   v.   Oliver,   14    How.    610, 
semble;  Ellison  v.  Tuttle.  26  Tex. 
283.  The  case  of  Trunkey  v.  Crosby, 
33  Minn,  464,  seems  to  be  contra. 

21  See  note  16,  supra. 

22  See  Louisiana  Ice  Co.  v.  State 
Nat  Bank,  1  McGloin,  181. 

23  Comm.  Bank  v.  Armstrong,  148 
U.  S.  50;  Anheuser-Busch  Ass'n  v. 
Clayton,  56  Fed.  R.  759, 13  U.  S.  App. 
295.    See  §  133,  ante. 

24  Wallace  v.  Stone,  107  Mich.  190; 
Hunt  v.  Townsend,  26  S.  W.  R.  310; 


Continental  Nat.  Bank  v.  Weems, 
69  Tex.  489;  and  see  §  133,  ante. 

25  St.  Louis  Ry.  Co.  v.  Johnston, 
133  U.  S.  566;  Peck  v.  First  Nat. 
Bank,  43  Fed.  R.  357.  Imp.  &  Trad. 
Bank  v.  Peters,  123  N.  Y.  272,  rec- 
ognizes the  principle,  but  the  case 
is  not  correctly  decided.  A  primary 
bank  in  an  insolvent  condition  re- 
ceived a  collection.  It  was  appar- 
ently indorsed  by  the  holder  for 
credit.  Therefore  the  primary  bank 
became  a  trustee.  It  sent  the  col- 
lection to  its  correspondent.  The 
correspondent  collected  and  re- 
mitted by  credit  to  the  insolvent 
bank.  It  does  not  seem  to  have 
given  the  insolvent  any  credit  upon 
the  strength  of  the  paper.  Yet  it 
was  held  that  the  holder  could  re- 
cover from  the  correspondent  bank 
only  the  balance  due  from  the  cor- 
respondent to  the  insolvent.  This 
case  is  wrong  because  the  corre- 
spondent bank  was  not  a  bona  fide 


320  BANKS    AND   BANKING.  [§  188. 

case  the  relation  of  debtor  and  creditor  does  not  result,  be- 
cause the  act  of  the  bank  was  a  gross  fraud.26  If  for  any 
reason  the  correspondent  bank  fails  to  pay  over  the  funds 
collected,  the  primary  bank  is  liable  in  those  jurisdictions 
which  recognize  the  rule,27  but  in  other  states  the  holder 
must  sue  the  correspondent  bank.28  The  primary  bank  hav- 
ing received  the  funds  must  perform  its  duty  by  crediting 
them  or  paying  them  over.  It  cannot  refuse  because  the 
paper  collected  was  given  to  defraud  creditors,  unless  it  was 
a  creditor;29  but  it  may  refuse  if  it  is  enjoined  from  so  doing 
by  some  legal  process,30  or  if  the  true  owner  has  given  it 
notice  not  to  pay  over  the  proceeds.31  The  bank  must  pay 
to  a  third  party  if  it  has  been  so  directed.32  If  it  pays  a 
collection  by  mistake  it  may  recover  the  payment,33  unless 
the  collection  was  upon  itself.34  But  if  it  pays  a  collection 
on  itself  it  may  set  up,  if  such  was  the  fact,  that  the  pay- 
ment was  merely  provisional.35  If  the  collection  is  upon 
another  bank  it  may  recover  the  amount  if  it  pays  to  the 
holder  through  a  mistake  in  thinking  the  collection  paid,36 
even  though  the  maker  or  drawer  of  the  paper  is  insolvent.37 
When,  through  mistake,  it  has  paid  by  a  credit  it  may  re- 
holder.  But  the  question  was  not  31  First  Nat.  Bank  v.  Bache,  71  Pa. 
in  the  case  because  the  party  prej-  213;  Union  Bank  v.  Johnson,  9  Gill 
udiced  by  this  ruling  in  the  lower  &  J.  297. 
court  did  not  appeal.  32  Wiedsport  Bank  v.  Park  Bank, 

26  There  is  no  question  that  the  re-    2  Robt  418.    Or  it  may  pay  to  the 
lation  does  not  become  debtor  and    one  indicated  by  a  course  of  dealing 
creditor  if  the  remittance  is  made    with  the  bank.   Craig  Medicine  Co. 
to  the  primary  bank  after  notice    v.  Merchants'  Bank,  59  Hun,  561. 
of  insolvency.    See   next  section.       33See  the  cases  cited  in  the  fol- 
Hence  the  same  must  be  true  where    lowing  notes. 

the  primary  bank  never  became  the  34  See  Whiting  v.  City  Bank,  77 

bailor  on  account  of  its  fraud  in  N.  Y.  363,  and  see  §  158,  ante. 

concealing  its  insolvent  condition.  35  First  Nat.  Bank  v.  Devenish,  15 

27  See  §  181,  ante.  Colo.  229. 

28  See  §181,  ante.  36  First  Nat.  Bank  v.  Behan,  91 

29  First  Nat  Bank  v.  Lippel,  9  Colo.  Ky.  560;  Mechanics'  Bank  v.  Earp, 
594  4  Rawle,  384. 

30  Louisiana  Ice  Co.  v.  State  Nat.  87  De  Mayer  v.  State  Nat  Bank,  8 
Bank,  1  McGloin,  18L  Neb.  104. 


§  189.]  COLLECTIONS.  321 

voke  the  credit,38  or  if  the  proceeds  have  passed  back  to 
holder  it  may  recover  from  the  holder.39  A  depreciation  in 
the  medium  of  payment  must  fall  on  the  bank  which  at  the 
time  holds  the  proceeds.40 

§189.  Rights  to  proceeds  as  between  banks. —  Where 
the  paper  is  notice  that  it  was  indorsed  for  collection,1  or 
where  the  correspondent  bank  has  other  notice  of  the  fact,2 
the  correspondent  bank  can  retain  no  portion  of  the  pro- 
ceeds as  against  the  holder  for  the  debt  of  the  remitting 
bank.3  But  where  the  paper  does  not  so  indicate  and  it  has 
no  notice,  it  may  hold  the  proceeds  against  the  holder  for  a 
claim  due  it  from  the  remitting  bank  which  has  been  con- 
tracted on  account  of  the  paper.4  As  against  the  remitting 
bank  it  may,  of  course,  hold  the  proceeds,  or  if  it  credits 
them  by  mistake  it  may  recover  from  the  remitting  bank,5 
or  from  the  holder  if  he  has  received  the  proceeds.6  Where 
the  proceeds  of  the  collection  have  been  credited  by  the  cor- 
respondent bank  to  the  initial  bank,  the  latter  bank  is  simply 
a  general  creditor,  unless  the  former  agreed  to  hold  the  pro- 
ceeds as  the  property  of  the  initial  bank.7  As  long  as  it  holds 
the  proceeds  of  a  collection  in  its  hands  it  is  responsible  to 
the  true  owner.  It  cannot  cut  off  the  true  owner's  claim  by 
paying  to  some  one  else,  even  the  clearing-house.8 

88  Mechanics'    Bank   v.    Earp,    4  8  First  Nat.  Bank  v.  Behan,  91  Ky. 

Rawle,  384;  Union  Nat.  Bank  v.  560. 

Sixth  Nat.  Bank,  43  N.  Y.  452.  •  Bank  of  Orleans  v.  Smith,  3  Hill, 

39  Bank  of  Orleans  v.  Smith,  3  Hill,  560.    Compare  Canterbury  v.  Bank 
560.    But  acquiescence  in  the  pay-  of  Sparta,  91  Wis.  53.    The  same 
ment  will  be  a  waiver  of  the  right  result  is  attained  by  revoking  a 
to   recover.     Harley   v.   Eleventh  credit.    When  forged  paper  is  re- 
Ward  Bank,  76  N.  Y.  618.  mitted  for  collection,  see  §  155,  ante, 

40  Marine  Bank  v.  Fulton  Bank,  2  7  Continental  Nat.  Bank  v.  Weeros, 
Wall.  252.  As  to  taking  in  payment  69  Tex.  489;  Hunt  v.  Townsend,  26 
Confederate  money,  see  Strauss  v.  S.  W.  R.  (Tex.)  310.    In  the  latter 
Bloom,  18  La.  Ann.  48.  case  there  was  an  agreement  im- 

1  See  last  section,  notes  5,  6  and  7.  plied  from  a  course  of  dealing. 

2  See  last  section,  notes  5,  6  and  7.  8  First  Nat.  Bank  v.  Bache,  71  Pa. 

3  See  last  section,  notes  5,  6  and  7.  213;  Union  Bank  v.  Johnson,  9  Gill 

4  See  last  section,  notes  5,  6  and  7.  &  J.  297.    It  is  bound  by  an  injuncx 

21 


322  BANKS   AND    BANKING.  [§  190. 

§  190.  Insolvency  as  affecting  proceeds. —  As  we  have 
already  seen,  the  insolvency  of  a  bank  revokes  its  power  as 
to  a  collection.1  The  principle  applies  also  as  between  banks 
which  are  in  correspondence  as  to  a  collection  in  remitting 
the  proceeds.2  If  the  person  liable  upon  the  paper  has  paid 
the  collection  to  the  collecting  bank,  or  to  one  of  its  corre- 
spondents or  sub-correspondents,  the  owner  of  the  collection 
is  in  the  following  situation  in  a  case  of  insolvency :  If  it  be 
the  initial  bank  which  becomes  insolvent,  with  the  funds  of 
collection  having  reached  it,  he  is  a  general  creditor  or  a 
special  depositor,  as  his  contract  of  collection  or  course  of 
dealing  may  determine.3  If  the  proceeds  have  not  been 
received  by  the  initial  bank,  he  is  fully  protected  against 
any  payment  to  it  by  a  correspondent  bank; 4  for  if  the  cor- 
respondent bank  tries  to  remit  by  credit  to  the  insolvent 
bank,  the  credit  is  wholly  nugatory  as  to  the  owner,  whether 
the  correspondent  bank  had  notice  of  the  insolvency  or  not.5 
If  it  does  actually  remit  the  proceeds  in  the  form  of  money  or 
a  draft,  the  insolvent  bank  or  its  receiver  or  assignee  be- 
comes a  trustee  for  the  owner.6  But  the  owner  is  exposed 
to  the  danger,  if  his  indorsement  to  the  initial  bank  was  for 

tion  against  the  initial  bank  if  it  ondary  bank  credited  it,  even  after 

has  notica    Louisiana  Ice  Co.  v.  knowledge  of  the  fact.    The  opin- 

State  Nat.  Bank,  1  McGloin,  181.  ion  misses  this  point  and  is  other- 

1  See  §  174,  ante,  and  Evansville  wise  lamentably  feeble  and  incon- 
Bank  v.  Germ.  Am.  Bank,  155  U.  S.  elusive.  Branch  v.  U.  S.  Nat.  Bank, 
556.  70  N.  W.  R.  34,  is  correct  on  the 

2  See  the  last  case  cited.  principle. 

8  See  §  133,  ante.  8  Evansville  Bank  v.  Germ.  Am. 

4  Evansville  Bank  v.  Germ.  Am.  Bank,  155  U.  S.  556. 
Bank,  155  U.  S.  556;  Beal  v.  National  « In  re  Armstrong,  33  Fed.  R  405 ; 
Ex.  Bank,  55  Fed.  R  894,  5  U.  S.  Beal  v.  Somerville,  50  Fed.  R  647; 
App.  376;  National  Ex.  Bank  v.  Commercial  Nat.  Bank  v.  Arm- 
Beal,  50  Fed.  R.  355;  Bank  of  Clarke  strong,  148  U.  S.  50;  Fifth  Nat. 
Co.  v.  Gilman,152N.Y.  634;  Peck  v.  Bank  v  Armstrong,  40  Fed.  R  46. 
First  Nat  Bank,  43  Fed.  R  357.  The  The  case  of  First  Nat.  Bank  v.  Arm- 
case  of  Ayres  v.  Farmers'  Bank,  79  strong,  39  Fed.  R  231,  was  wrongly 
Mo.  421,  is  wrong  on  this  point;  and  decided.  Anheuser-Busch  Ass'n  v. 
Castle  v.  Corn  Ex.  Bank,  148  N.  Y.  Clayton,  56  Fed.  R  759,  recognizes 
122,  is  wrong  because  the  initial  the  rule.  The  insolvent  bank  hav- 
bank  was  insolvent  and  the  sec-  ing  received  the  proceeds  by  cred- 


§  190.]  COLLECTIONS.  323 

credit  or  general,  and  the  correspondent  had  no  other  no- 
tice, that  the  correspondent  bank  may  hold  the  proceeds  for 
the  initial  bank's  debt  to  it,  which  it  could  do  only  when  it 
had  given  credit  on  this  particular  paper  or  has  a  lien  by 
agreement  or  a  course  of  dealing.7  If  the  primary  bank 
does  obtain  the  benefit  of  the  proceeds  of  his  paper  by  a  law- 
ful retention  thereof  by  a  correspondent  bank,  the  owner  has 
either  a  claim  as  general  depositor,8  or  as  special  depositor, 
dependent  upon  the  terms  of  his  agreement  for  collection 
or  the  course  of  dealing,9  or  dependent  upon  the  fact  that 
the  initial  bank  was  insolvent  when  it  took  the  deposit  for 
collection.10  But  in  those  states  which  consider  a  deposit  of 
paper  for  credit  a  transfer  to  the  initial  bank,  the  holder  is 
only  a  general  creditor,  with  a  deposit  such  as  any  other 
depositor  has.  If  it  is  the  secondary  bank  that  becomes  in- 
solvent with  the  right  to  retain  the  proceeds  as  against  the 
initial  bank,  the  holder  is  protected,  because  the  initial  bank 
has  received  the  proceeds.  If  the  secondary  bank  becomes 
insolvent  before  the  proceeds  of  the  collection  are  paid  to  it 
by  a  sub-correspondent  bank,  he  has  the  same  protection 
that  he  has  against  the  secondary  bank  with  the  initial  bank 
insolvent.  If  the  secondary  bank  becomes  insolvent  having 
the  proceeds  of  the  collection  in  its  hands,  the  holder  is 
fully  protected  in  those  jurisdictions  which  recognize  the 
responsibility  of  the  initial  bank  for  its  correspondent  bank's 
default.11  In  those  states  which  deny  this  responsibility,  he 
would  have  either  a  claim  as  general  creditor  or  as  special 
depositor,  dependent  upon  the  same  conditions  as  would 
make  him  a  special  depositor  in  the  initial  bank,12  except 

iting  the  depositor  cannot  make  money.    Germ.  Am.  Bank  v.  Third 

him  a  general  creditor.   Armstrong  Nat.  Bank,  Fed.  Caa  No.  5359. 

v.  National  Bank,  90  Ky.  431.  u  See  §  181,  ante.  But  the  primary 

7  See  §  188,  ante.  bank  would  generally  cause   the 

8  Anheuser-Busch  Ass'n  v.  Clay-  owner  of  the  collection  to  reclaim, 
ton,  56  Fed.  R.  759.  it  from   the    insolvent  secondary 

9  See  §  133,  ante.  bank.   It  is  liable  itself.   First  Nat. 

10  See  §  188,  ante.  The  owner  may  Bank  v.  First  Nat.  Bank,  75  N.  W. 
always  claim  the  thing  obtained  E.  843. 

by  the  collecting  bank  instead  of      12If  the  primary  bank  held  the 


324  BANKS   AND   BANKING.  [§100 

in  those  states  which  have  the  further  rule  that  a  deposit 
for  credit  is  a  transfer  of  the  paper  to  the  bank.  But  it 
would  seem  to  be  right  to  hold  that  if  the  secondary  bank 
becomes  insolvent  in  those  states  and  has  at  the  time  the 
proceeds  of  collections  in  its  hands,  the  real  owner  of  the 
collection  could  claim  that  he  was  a  special  depositor  in  the 
secondary  bank,  whenever  the  initial  bank  can  claim  a  spe- 
cial deposit  owing  to  the  form  of  the  indorsements  on  the 
paper  or  other  notice.13  The  difficulty  that  arises  in  such 
cases  shows  the  absurdity  of  the  rule  that  the  initial  bank  is 
not  responsible  for  the  correspondent  bank's  default.  As 
between  banks,  if  the  primary  bank  becomes  insolvent  owing 
the  secondary  bank,  this  latter  bank  with  the  proceeds  of 
collection  in  its  hands  can  hold  them  as  against  the  initial 
bank,14  but  the  real  owner  can  compel  payment  to  himself 
unless  the  secondary  bank  can  show  itself  to  be  a  lona  fide 
claimant  of  the  proceeds.15  If  it  cannot  show  itself  to  be  a 
bonafide  claimant,  the  owner  of  the  collection  will,  of  course, 
force  it  to  make  payment  to  him  rather  than  trust  himself 
to  the  chances  of  recovering  from  an  insolvent  batik.16  If 
it  is  the  secondary  bank  that  becomes  insolvent  having  cred- 
ited the  proceeds  of  the  collection  to  the  primary  bank,  the 
latter  bank  has  only  the  claim  of  a  general  depositor.17  If  it 

paper  for  collection,  the  so-called  This  is  not  a  case  of  an  illegal  pref- 

agent  could  get  no  better  or  higher  erence,  because  the  collecting  bank 

right,  except  as  a  bona  fide  claim-  has  a  lien  upon  the  proceeds.    In 

ant  for  its  own  claims.  this  case  the  secondary  bank  simply 

13  There  seems  to  be  no  case  ex-  credited  the  initial  bank  on  what 
cept  Bury  v.  Woods,  17  Mo.  App.  the  latter  owed  to  it. 

243  (see  also  Foster  v.  Rincker,  4  15See  §  188,  ante. 

Wyo.  484),  which  recognizes  the  rule.  16  Such  cases  are  Evansville  Bank 

One  case  goes  so  far  as  to  hold  that  v.  Germ.  Am.  Bank,  155  U.  S.  556; 

crediting  another  bank  is  not  pay-  Imp.  &  Trad.  Bank  v.  Peters,  123 

ing  it   Boyken  v.  Bank  of  Fayette-  N.  Y.  272. 

ville,  118  N.  C.  566.    The  decision  is  "Continental  National  Bank  v. 

correct,  no  doubt,  upon  the  whole  Weems.69Tex.489.  That  it  has  been 

question  involved.    This  particular  credited  to  the  original  depositor 

language  is  opposed  to  First  Nat.  by  the  primary  bank  can  make  no 

Bank  v.  Davis,  114  N.  C.  343.  difference.    It  has  become  respon- 

14  In  re  Armstrong,  41  Fed.  R  381.  sible  to  him  by  having  received  the 


§  190.]  COLLECTIONS.  325 

can  show,  however,  that  the  proceeds  of  the  collection  were 
to  be  held  by  the  secondary  bank  as  a  special  deposit  for  it, 
the  initial  bank  may  claim  to  be  a  special  depositor,18  or  if  it 
can  show  that  the  secondary  bank  was  insolvent  when  it 
took  the  deposit,  the  reason  of  the  rule  requires  that  the 
initial  bank  should  be  considered  a  special  depositor.19  But 
there  are  some  jurisdictions  which  hold  the  untenable  rule, 
as  we  shall  hereafter  see,  that  although  the  owner  of  a  col- 
lection can  claim  a  trust  by  reason  of  the  character  in  which 
a  bank  holds  the  proceeds  of  a  collection,  nevertheless  if  the 
trustee  so  called  or  bailee  has  been  quick  enough  to  mingle 
the  trust  fund  with  his  own  property  the  priority  is  lost. 
The  doctrine  needs  but  to  be  stated  to  show  its  essential  un- 
soundness.20 

proceeds.    The  same  principle  gov-  Weems,  69  Tex.  489;  Hunt  v.  Town- 

erns  the  relation  of  the  secondary  send,  26  S.  W.  R.  310. 

bank  to  the  primary  that  governs  19  See  §  188,  ante,  as  to  this  rule 

that  of  the  primary  bank  to  the  between    depositor    and   primary 

holder  of  the  paper.  bank.    It  would  also  apply  as  be- 

18  Continental  National  Bank  v.  tween  banks. 

20  See  §§343,  844,  post. 


CHAPTER  IX. 
LOANS  AND  DISCOUNTS. 

§  191.  Talidity  of  loan. —  Unless  something  in  the  law 
or  the  charter  forbids  it,  a  bank  may  loan  either  upon  per- 
sonal1 or  real-estate  security.2  There  have  been  in  certain 
states  banking  schemes  which  compelled  the  bank  to  make 
loans  to  its  stockholders,3  either  upon  real-estate  security  or 
upon  the  security  of  the  stock  in  the  bank.4  Such  loans 
were  a  preferential  lien  Upon  the  property  mortgaged.8  Such 
schemes  are  now  considered  unsafe  banking,  and  are  rarely 
heard  of,  except  in  times  of  commercial  depression,  when 
crude  visionaries  revive  them  as  if  they  were  new  devices.6 
"Where  the  statute  forbids  certain  loans,  either  by  implica- 
tion or  by  positive  enactment,  the  legal  result  must  be  ascer- 
tained in  accordance  with  principles  already  pointed  out.7 
Some  of  these  statutes  are  considered  as  existing  for  the  pro- 

1  Biscoe  v.  Tucker.  11  Ark.  145.  nostrums  may  be  found  in  Louisi- 

2  Bank  of  Martinez  v.  Hemme  Co.,  ana,  Florida  and  Arkansas.     See 
105  CaL  876.  But  where  a  bank  was  Dawson  v.  Real  Estate  Bank,  5  Ark. 
permitted  to   loan  to   a  planter,  283,  and  the  cases  in  the  next  two 
farmer,   miner,    manufacturer  or  notes. 

other  person,  a  merchant  on  the  *  Real-estate  security:    Citizens' 

principle  of  noscitur  a  sociis  was  Bank  v.  Nicolas,  3  La.  Ann.  112; 

held  not  to  be  included.  Hanover  v.  Mitchell  v.  Logan,  34  La.  Ann.  998; 

Williams,  79  N.  C.  129.    This  is  a  Union  Bank  v.  Parkhill,  2  Fla.  660. 

curious  appearance  of  the  vulgar  Stock  of  the  bank:  Nuttv.  Citizens' 

superstition  that  only  those  classes  Bank,  22  La.  Ann.  346;  Mitchell  v. 

which  put  labor  upon  a  thing  by  Logan,  34  La.  Ann.  998. 

producing  it  are  producers.     Of  6  Haynes  v.  Courtney,  15  La.  Ann. 

course,  labor  in  getting  a  thing  to  a  630;  Nutt  v.  Citizens'  Bank,  22  La. 

proper  market  and  in  place  for  a  Ann.  346. 

sale  is  just  as  productive.  6  Government  banks  to  lend  to 

3  Instances  that  may  be  profitably  farmers  are  excellent  specimens, 
studied  by  the  vendors  of  populist  7See  §§  32  and  33,  ante. 


§  192.]  LOANS   AND   DISCOUNTS.  327 

tection  of  the  bank,8  and  others  for  the  protection  of  bor- 
rowers from  the  bank.9  Where  the  statute  is  made  for  the 
protection  of  the  loaning  bank,  there  is  no  difficulty  in  per- 
mitting a  recovery  of  the  loan  by  the  bank,  even  though  the 
note  be  void.10  But  there  is  a  case  which  is  under  a  statute 
making  the  loan  void,  and  another  case  which  cannot  be 
reconciled  with  well-understood  principles.11  The  statutes 
which  are  made  for  the  protection  of  borrowers  as  against 
the  bank  will  be  considered  under  the  head  of  usury.12  But  in 
order  that  a  loan  may  be  enforced  against  either  the  surety 
or  the  maker  of  the  note,  it  must  appear  that  the  note  was 
actually  transferred  to  the  bank.13 

§  192.  Collaterals. —  "Whether  a  note  taken  for  a  loan  be 
legal  or  illegal,  the  loan  itself  being  a  good  ground  of  re- 
covery the  collaterals  therefor  may  be  enforced.1  It  makes 
little  difference  in  the  result  upon  what  principle  this  relief 
is  granted.  A  consistent  ground  would  be  to  say  that  the 
depositor  of  the  collaterals  cannot  object  so  long  as  he  does 
not  perform  his  legal  and  moral  duty  by  paying  the  loan. 

8  Statutes  which  forbids  loans  to  which  is  correct  upon  the  law,  con- 
directors,  or  to  individuals,  or  upon  tained  an  interesting  dictum  that 
certain  security.  the  Scriptures  are  not  always  good 

9  Statutes  against  usury.  law — a  statement  that  would  have 

10  Nielsville   Bank   v.    Tuthill,    4    been  exceedingly  shocking  to  Lord 
Dak.  295;  Bond  v.  Central  Bank,  2    Ellesmere. 

Kelly,  92;    St.  Joseph  Ins.  Co.  v.  12  §  196  et  seq.,  post. 

Hauck,  71  Mo.  465 ;  Van  Atta  v.  State  "  St.  Louis  Nat  Bank  v.  Flanagan, 

Bank,  9  Ohio  St.  27;  Smith  v.  First  129  Mo.  178. 

Nat  Bank,  45  Neb.  444;  Rome  Sav.  l  Real-estate   mortgages   by  na- 

Bank  v.  Kramer,  102  N.  Y.  331;  tional  banks  are  instances.     The 

Richmond  Bank  v.   Robinson.   42  same  result  is  arrived  at  by  deny- 

Me.  589;  and  see  §  33,  ante.  -ing  the  debtor  relief.    Elder  v.  Ot- 

11  Mills  v.  Rice,  6  Gray,  458;  Work-  tawa  First  Nat.  Bank,  12  Kan.  238. 
ingmen's  Banking  Co.  v.  Rauten-  But  the  court  in  this  opinion  does 
berg,  103  111.  460.    This  last  case  is  not  see  the  distinction  between  a 
wrong.    The  note  was  a  claim  pre-  provision  which  is  for  the  benefit 
sented  to  the  probate  court    The  of  the  bank   and  a  provision  in 
loan,  at  least,  was  good,  and  the  usury  laws  which  is  for  the  proteo- 
bank's  claim  was  not  forfeited.  The  tion  of  the  borrower, 
dissenting  opinion  by  Judge  Dickey, 


328 


BANKS   AND   BANKING. 


[§  192. 


The  power  to  take  collateral  security  is  one  incidental  to  the 
banking  business.2  The  nature  of  what  may  be  taken  as 
collateral  has  been  already  discussed.3  But  the  fact  that 
deposits  may  be  made  collateral  security  for  a  loan  is  now 
settled  by  competent  authority.4  A  common  form  of  col- 
lateral is  a  guaranty  of  the  loan.  Such  a  guaranty  requires 
not  only  a  consideration  to  the  party  primarily  liable,  but  a 
consideration  to  the  guarantor  as  well.5  Whether  the  guar- 
anty is  a  continuing  one  or  not  often  causes  difficult  ques- 
tions to  arise.6  No  species  of  collateral  requires  a  closer 
scrutiny  upon  the  part  of  the  banker.7  Bills  of  lading  ac- 
companying a  draft  give  the  bank  a  lien  upon  the  property 
to  the  amount  of  its  advance,8  even  though  the  bill  of  lading 
be  not  indorsed.9  This  lien  has  been  called  the  legal  title  to 
the  goods  mentioned  in  the  bill  of  lading.10  The  duty  of  the 
bank  collecting  the  draft  has  been  noticed.11  A  bank  which 
holds  collaterals  may  deal  with  them  as  it  is  permitted  to 
do  by  law,12  but  the  fact  that  the  debtor  is  the  president  of 


2  Comm.  Bank  v.  Nolan,  7  How. 
(Miss.)  508. 

»  See  §)5  113,  114,  115,  116,  ante. 

4  Fisher  v.  Continental  Nat.  Bank, 
64  Fed.  R  707,  26  U.  S.  App.  382.  In 
those  states  which  do  not  recognize 
the  banker's  lien,  and  some  have 
denied  it,  the  bank  can  protect  it- 
self in  this  way  as  to  a  deposit  in 
its  own  bank.  It  is  difficult  to  see 
how  such  a  lien  can  be  made  use- 
ful upon  a  deposit  in  another  bank, 
without  a  notice  and  appropriation 
of  the  deposit. 

o  Cutter  v.  Everett,  33  Ma  201; 
Deseret  Nat.  Bank  v.  Dinwoodey,  53 
Pac.  R.  215.  And  see  6  Am.  &  Eng. 
Encyc.  (2d  ed.),  692,  note  3,  691, 
note  1.  If  the  guaranty  is  for  a 
loan  contemporaneous  with  the 
making  of  the  guaranty  and  for  a 
future  indebtedness,  there  is  a  con- 
sideration to  the  guarantor. 

•Agawam  Bank  v.  Steever,  18 


N.  Y.  502;  Deseret  Nat.  Bank  v. 
Dinwoodey,  53  Pac.  R.  215. 

7  It  should  be  specifically  drawn 
to  cover  past  advances  and  obliga- 
tions (see  Deseret  Nat.  Bank  v.  Din- 
woodey, 53  Pac.  R  215),  and  must 
show  a  consideration. 

8  Commercial  Bank  v.   Pfeiffer, 
108  N.  Y.  242;  In  re  Watch  Co.,  89 
Hun,  196.    This  lien  it  may  assert 
against     an     attaching    creditor, 
though  it  have  the  right  to  charge 
the  draft  back  to  the  holder.    Am. 
T.  &  S.  Bank  v.  Austin,  55  N.  Y. 
Supp.  561. 

9  Moss  v.  Chicago,  etc.  Ry.  Co.,  73 
Iowa,  226.  See  Addendum. 

win  re  Watch  Co..  89  Hun,  196. 

»  See  §3  176, 177,  ante 

12  The  general  rules  as  to  collateral 
securities  or  pledges  govern  banks. 
They  are  not  considered  germane 
to  this  work. 


§§  193,  194]  LOANS   AND   DISCOUNTS.  329 

the  bank  gives  no  implied  power  of  sale  without  notice  to 
the  bank.13  The  bank  is  liable  as  bailee  for  ordinary  care 
in  the  custody  of  the  collaterals,14  and  the  giving  of  a  receipt 
for  the  return  of  the  collateral  upon  payment  of  the  loan 
does  not  vary  the  relation  of  the  parties.15  If  collaterals  are 
lost  by  the  bank,  the  giving  of  a  new  note  for  the  whole 
amount,  without  any  claim  for  deduction  on  account  of  the 
collaterals,  known  to  the  debtor  to  be  lost,  has  been  held  to 
be  a  waiver  of  any  claim  therefor.16 

§  193.  Bank's  general  lien  upon  collaterals. —  A  bank 
has  a  general  lien  upon  all  collaterals  deposited  with  it,  un- 
less they  are  taken  under  an  express  agreement;1  yet  the 
deposit  for  a  special  purpose  or  upon  a  particular  loan  rebuts 
any  claim  for  a  general  lien.2  And  where  a  bank  refuses  to 
discount  a  note  sent  to  it  for  that  purpose,  it  cannot  hold  the 
note  as  security  for  an  overdraft.3  Where  a  deed  is  deposited 
as  collateral  security  for  a  certain  debt,  an  equitable  lien  for 
another  debt,  even  in  those  states  or  jurisdictions  which  rec- 
ognize such  a  lien,  will  not  be  created,  unless  that  other  debt 
was  created  or  the  money  loaned  upon  the  credit  of  the 
deed.4 

§194.  Charging  of  interest. —  In  the  absence  of  other 
statutory  provisions,  banks  are  governed  by  the  laws  as  to 

13  Appeal  of  Conyngham,  57  Pa.  358;  Miller  v.   Farmers'  Bank,  30 
474.  Md.  392. 

14  Fleming  v.  Northampton  Bank,  2  Armstrong   v.    Chemical   Nat. 
Fed.  Cas.  No.  4862a;  Ouderkirk  v.  Bank,  41  Fed.  R.  234;  Masonic  Sav. 
Central  Nat.  Bank,  119  N.  Y.  263;  Bank  v.  Bangs,  84  Ky.  135;  Teu- 
As  to  evidence  of  want  of  care,  see  tonia  Nat.  Bank  v.  Loeb,  27  La. 
Erie  Bank  v.  Smith,  3  Brewst.  9.  Ann.   110;  Neponset  Bank  v.   Le- 

lft  Jenkins  v.  Nat.  Village  Bank,  58  land,  5  Met  259;  Duncan  v.  Bren- 

Me.  275.  nan,  83  N.  Y.  487.    A  bank  may 

16Girard  Bank  v.  Richards,  4  Phila.  assert  both  a  general  lien  and  one 

250.  by  special  contract.     Cockrell  v. 

1  Bank  of  Metropolis  v.  New  Eng-  Joyce,  62  Ark.  216. 

land  Bank,  1  How.  234;  Kelly  v.  3  Bank  of  Montreal  v.  White,  154 

Phelan,  5  Dill.  228;  Baltimore,  etc.  U.  S.  660. 

Ry.  Co.  v.  Wheeler,  18  Md.  372;  « Biebinger  v.  Continental  Bank, 

Wood  v.  Boylston  Bank,  129  Mass.  99  U.  S.  14a 


330  BANKS   AND   BANKING.  [§  195. 

the  charging  of  interest  which  are  applicable  to  individuals.1' 
But  a  different  rate  may  be  fixed  by  the  charter  of  the  bank,2 
and  banks  may  be  granted,  by  special  charter,  the  right  to 
take  more  than  the  legal  rate  of  interest,  and  such  legisla- 
tion would  not  be  special.3  Yet  where  the  charter  permits 
a  rate  as  agreed  upon,  it  is  not  permissible  for  the  bank  to 
charge  more  than  the  legal  rate.4  Where  the  charter  pro- 
hibits the  charging  of  more  than  a  certain  rate,  the  reserva- 
tion of  a  greater  rate  is  unlawful.5  But  the  passing  of  a 
general  law  upon  the  subject  of  interest  does  not  repeal  the 
rate  fixed  for  the  bank  by  the  charter  under  which  it  is  or- 
ganized.6 A  repeal  of  a  higher  rate  necessarily  applies  only 
to  contracts  thereafter  made.7 

§  195.  What  law  governs. —  The  law  which  governs  the 
performance  of  the  contract  determines  the  lawfulness  of 
the  rate.1  Thus,  a  note  made  payable  in  Illinois,  though 
signed  in  Tennessee,  is  an  Illinois  contract  where  it  was  to- 
be  used  in  Illinois.2  The  rule  is  carried  so  far  in  some  cases 
that  where  the  charter  of  the  bank  forbids  the  charging  of 
more  than  a  certain  rate  of  interest,  yet  upon  a  loan  made 
in  another  state  allowing  a  higher  rate  the  bank  may  charge 
it.8  It  would  follow  that  a  rate  of  interest  lawful  where 

!Bank  of  Alexandria  v.  Mande-  &  Bank  of  United  States  v.  Owens^ 

ville,  1  Cranch,  C.  C.  552;  Durkie  v.  2  Pet  527:  Webster  v.  State  Bank, 

City  Bank,  13  Wis.  216;  Billingsley  4  Ark  423. 

v.  State  Bank,  3  Md.  375;  Lumber-  6Bank  of  Louisiana  v.  Stansbury, 

men's  Bank  v.  Bearce,  41  Me.  505:  8  La.  257;  Ex.  &  Bkg.  Co.  v.  Boycer 

Ritenour  v.  Harrison,  57  Mo.  502,  3  Rob.  (La.)  307. 

and  the  next  case  thereto.  7  Pearce  v.  Bank  of  Mobile,  33  Ala. 

2  Rock  River  Bank  v.  Sherwood,  693. 

10  Wis.  230;  Grand  Gulf  Bank  v.  J  Buchanan  v.  Drovers'  Bank,  5S 

Archer,  8  Smedes  &  M.  151;  Strib-  Fed.  R.  223,  6  U.  S.  App.  566. 

bling  v.  Bank  of  Valley,  5  Rand.  132.  2See  last  case  cited. 

3  Hazen  v.  Union  Bank,  1  Sneed,  '  Hitchcock    v.    United    States 
115.    This  case  is  of  doubtful  au-  Bank,  7  Ala.  386;  Knox  v.  Bank  of 
thority.  U.  S.,  26  Miss.  655;  Frazier  v.  Wil- 

<  Tishimongo   Sav.    Inst  v.    Bu-    cox,  4  Rob.  (La.)  517. 
chanan,  60  Miss.  496;  Simonton  v. 
Lanier,  71  N.  C.  498. 


§   196.]  LOANS   AND   DISCOUNTS.  331 

the  contract  was  to  be  performed  was  lawful  everywhere, 
but  some  states  refuse  to  enforce  contracts  that  are  usurious 
under  their  own  laws,  although  such  contracts  might  be 
lawful  where  made.4 

§  196.  What  constitutes  usury. —  Sometimes  the  statutes 
against  usury  apply  only  to  discounts  of  the  bank l  and  some- 
times the  statute  applies  to  loans  of  money.2  In  either  case, 
however  the  transaction  is  disguised,  if  it  amounts  to  a  loan 
or  a  discount  and  an  intentional  reservation  of  a  greater 
rate  of  interest  than  is  allowed  by  law,  the  transaction  i& 
usurious.  Thus  the  discounting  of  a  note  at  the  bank,  and 
the  reception  of  depreciated  post-notes  therefor,  is  usury 
where  the  bank  obtains  more  than  the  lawful  rate  of  inter- 
est.3 So  is  the  taking  of  a  note  payable  in  gold  for  depre- 
ciated bank-notes.4  But  in  either  case  the  intention  to  charge- 
the  greater  rate  must  be  an  ingredient  of  the  transaction.* 
"Where  a  bank  lends  its  own  bills  upon  a  note,  together  with 
bills  of  other  banks  slightly  depreciated,  and  deducts  the 

<  E wing  v.  Toledo  Sav.  Bank,  43  III  627,  47  111.  App.  630;  Gid  dings 

Ohio   St.    81;    Farmers'    Bank    v.  v.  McCumber,  51  111.  App.  373,  sem- 

Burchard,  33  Vt.  346.     See  as  to  Hie;  Roundtree  v.  Baker,  52  111.  241. 

the  principle  involved,  §  29,  ante.  It  seems  never  to  have  been  ap- 

The  foregoing  cases  are  exceptional,  plied,  though  on  the  statute  book 

In  Illinois  there  is  a  peculiar  stat-  since  1857.    The  statute  is  noticed 

ute  (2  Starr  &  Curtis,  ch.  74,  sec.  8),  without  comment  in  Fowler  v.Equi- 

which  provides  that  upon  any  writ-  table  Trust  Co.,  141  U.  S.  384. 

ten  contract,  wherever  payable,  if  1  See  Planters'  Bank  v.  Goetter, 

made  in  the  state,  or  between  citi-  108  Ala.  408. 

zens  or  corporations  of  the  state,  or  2  Farmers'  Bank  v.  Burchard,  3£ 

a  citizen  or  a  corporation  of  the  Vt.  346.    The  national  bank  act  ap- 

state  and  a  citizen  or  corporation  plies  to  discounts,  loans  and  pur- 

of  any    other    state,  territory  or  chases.    See  sections  5197  and  5198 

country,  any  rate  above  seven  per  of   the   Revised    Statutes   of  the 

cent,  shall  be  usurious.    This  is  an  United  States, 

attempt  to  project  the  laws  of  the  3  Gaither  v.  Farmers'  Bank,  1  Pet. 

state  over  other  states  as  to  foreign  44. 

contracts.    Other  states  would  re-  4  Bank  v.  Owens,  2  Pet  527. 

fuse  to  follow  it.    It  could  not  af-  5  Bank  of  U.  S.  v.  Waggener,  9 

feet  national  banks.    It  has  been  Pet.  378,  which  explains  the  preced- 

ignored  in  Morris  v.  Wibaux,  159  ing  cases. 


532  BANKS    AND   BANKING.  [§  196. 

legal  rate,  upon  the  agreement  that,  if  any  of  the  bills  are 
returned  during  the  continuance  of  the  loan,  such  bills  were 
to  be  paid  in  specie,  the  contract  was  held  not  to  be  usurious.8 
Since  a  bank  is  bound  to  redeem  its  own  bills,  the  lending 
of  them  at  their  face  value,  though  depreciated,  is  not  usu- 
rious, although  the  legal  rate  of  interest  is  charged.7  But 
the  opposite  rule  would  apply  to  bills  of  other  banks.8  The 
retention  of  a  commission  by  the  agent  of  the  borrower 
under  some  circumstances  may  be  usurious.9  Under  stat- 
utes which  forbid  usurious  discounts,  a  note  in  payment  of  a 
pre-existing  debt  is  not  a  discount ; 10  nor,  it  seems,  is  a  trans- 
action where  a  note  is  taken  for  both  the  principal  and  in- 
terest.11 But  contracts  whereby  banks  tried  to  keep  their 
notes  in  circulation  have  been  held  to  be  discounts,12  as  also 
have  purchases  of  bank-bills  payable  at  a  distant  place,13  and 
promissory  notes,14-  where  purchased  at  a  discount.  The 
charging  of  interest  at  the  highest  legal  rate  by  bank  dis- 
count has  been  held  to  be  usurious,  upon  notes  running  for 
a  longer  period  than  a  year,  as,  for  instance,  by  deducting 
from  a  note  the  interest  for  one  year  multiplied  by  the  num- 
ber of  years  the  note  has  to  run ; 15  but  the  charging  of  in- 

6  Northampton  Bank  v.  Allen,  10  10  Lime  Rock  Bank  v.  Hewett,  53 

Mass.  284.    To  the  same  effect  is  Me.  531.    It  is  not  a  usury  case. 

Bank  of  Orleans  v.  Curtis,  11  Met  n  Planters'  Bank  v.  Goetter,  108 

359.    Compare  Bank  of  Chenango  Ala.  408.    But  if  the  note  is  actually 

v.  Curtis,  19  Johns.  326;  Farmers'  for  usurious  interest  and  consid- 

Bank  v.  Burchard,  33  Vt.  346.  ered  payment  thereof,  it  is  difficult 

7Maury  v.  Ingraham,  28   Miss,  to  see  how  this  case  can  be  cor- 

171;  State  Bank  v.  Ford,  5  Ired.  rectly  decided.      See   note  19  to 

692.    These  were  notes  payable  on  §  198,  post. 

demand,  not  post  notes.  lz  Compare  last  two  cases  cited  in 

8  See  last  two  cases  cited.    But  if  note  6  to  this  section. 

the  tacit  understanding  was  to  re-  13  People  v.  Metropolitan  Bank,  7 

turn  for  the  loan  like  depreciated  How.  Pr.  144. 

notes,  a  different  rule  would  apply.  14  Atlantic  State  Bank  v.  Savery, 

Curtis  v.  Leavitt,  17  Barb.  309.  82  N.  Y.  291. 

9  Olmstead  v.  New  England  Mort.  ls  Branch   Bank  v.   Strothers,  15 
Co.,  11  Neb.  487.    Compare  Union  Ala.  51.    See  next  note  as  to  the 
Nat.  Bank  v.  Louisville,  etc.  R.  Co.,  proper  rule. 

145 11L  208.  See  Clark  on  Contracts, 
403. 


§  198.]_ 


LOANS   AND  DISCOUNTS. 


333 


terest  by  bank  discount  is  not  usually  considered  to  be 
usurious.16  The  discounting  of  a  note  to  pay  a  note  which 
is  not  yet  due,  but  has  been  previously  discounted,  is  not 
usurious.17  A  charge  made  for  exchange  in  addition  to  the 
legal  rate  is  not  usurious18  unless  it  be  a  mere  device  to- 
avoid  the  statute.19  The  charging  of  a  higher  rate  of  inter- 
est after  maturity  is  not  usurious,20  nor  is  the  insertion  of 
certain  penalties  for  non-payment  of  the  note,21  such  as  attor- 
ney's fees  for  collection  by  suit.22  National  banks  are  per- 
mitted to  charge  the  rate  fixed  by  the  laws  of  the  state  for 
natural  persons 23  unless  a  higher  rate  is  allowed  to  banks  of 
issue,  in  which  case  they  may  charge  the  latter  rate.2* 
Where  no  rate  is  fixed  by  the  laws  of  the  state,  national 
banks  may  charge  seven  per  centum.25  Where  the  laws  of 
the  state  permit  any  rate  to  be  fixed  by  agreement,  it  is 
doubtful  whether  a  national  bank  may  charge  more  than 
seven  per  centum,  unless  state  banks  of  issue  in  the  particu- 


16  Clark  on  Contracts,  402.    Bank 
discount,  that  is  to  say,  payment 
of  interest  in  advance,  is  not  usury. 
Fowler  v.  Trust  Co.,  141  U.  S.  384. 
But  it  undoubtedly  is,  as  a  matter 
of  fact,  paying  interest  upon  inter- 
est.    See  Bank  of  Alexandria  v. 
Mandeville,  1   Cranch,  C.   C.  552; 
Maine  Bank  v.  Butts,  9  Mass.  49. 

17  Maine  Bank  v.  Butts,  9  Mass.  49. 
See  Carolina  Bank  v.  Parrot,  30  S.  C. 
61.    But  charging  interest  on  over- 
drafts, while    crediting  drafts  as 
cash,  is  not  usurious.    Timberlake 
v.  First  Nat.  Bank,  43  Fed.  R.  231. 

18  Planters'  Bank  v.  Bivingsville 
Cotton  Co.,  11  Rich.  Law,  677;  Mer- 
chants' Bank  v.  Sassie,  33  Mo.  350; 
Farmers'  Bank  v.  Garten,  34  Mo. 
119;  Marvine  v.  Hymers,  12  N.  Y. 
223;  Southern  Bank  v.  Brashears, 
1  Disn.  207.    National  banks  are 
permitted  by  statute  to  make  such 
a  charge. 


is  Central  Bank  v.  St  John,  17 
Wis.  157.  But  compare  Farmers' 
Bank  v.  Parker,  37  N.  Y.  148,  and 
International  Bank  v.  Bradley,  19 
N.  Y.  245,  where  the  transaction 
was  no  more  than. an. evasion,  but 
was  held  not  usurious. 

20  Chambliss  v.  Robertson,  23  Miss. 
302. 

21  Clark  on  Contracts,  401.    But 
see  a  curious  decision  holding  a 
stipulation  for  attorneys'  fees  void. 
Merchants'  Nat  Bank  v.  Sevier,  14 
Fed.  R.  662. 

22  They  are  universally  allowed. 
Whether  they  destroy  the  negotia- 
bility of  a  note  is  a  much-discussed 
question,  both  under  statutes  and 
at  common  law. 

23  See  Rev.  Stat.,  sees.  5197,  5198. 

24  See  last  section. 

25  See  last  note. 


334: 


BANKS   AND   BANKING. 


[§  196. 


lar  state  are  permitted  to  charge  such  a  rate.26  This  statute 
applies  to  discounts  or  purchases  of  commercial  paper  at  the 
bank  as  well  as  to  loans; 2T  but  whether  or  not  a  note  is  void 
for  usury  in  the  hands  of  a  bonafide  holder  where  the  note 
itself  stipulates  for  legal  interest  must  depend  upon  the  stat- 
ute.28 Under  state  statutes  a  discount  of  commercial  paper 
is  sometimes  usurious  and  sometimes  it  is  not.29  But  a  bank 
does  not  make  itself  liable  for  collecting  usurious  interest 
where  it  acted  simply  as  agent,  although  it  transferred  the 
note.30  A  bank  may  charge  a  certain  rate  for  lending  its 
credit  by  indorsement,  where  it  does  not  discount  the  note, 
without  making  itself  liable  for  a  usurious  transaction.  Re- 
newal notes  are  held  to  be  within  the  statutes  of  usury.31 
If  the  last  note  contained  usurious  interest,  and  each  re- 
newal also  contained  it,  each  note  will  be  held  to  be  usurious, 
and  only  the  original  principal  can  be  recovered.32 


26  If  state  banks  of  issue  are  per- 
mitted to  charge  any  agreed  rate, 
a  national  bank  may  charge  it. 
First  Nat.  Bank  v.  Duncan,  Fed. 
Cas.  No.  4804;  Tiffany  v.  State 
Bank,  18  Wall  409.  But  where  the 
law  permits  to  private  persons  any 
rate,  and  there  are  no  banks  of 
issue,  as  there  are  not  in  some 
states,  it  would  seem  to  follow  that, 
no  rate  being  fixed,  the  statute  as 
to  seven  per  cent,  governs.  So 
National  Bank  v.  Johnson,  104  U.  S. 
271,  expressly  states,  and  says  of 
Tiffany  v.  State  Bank,  supra:  "  It 
is  not  intimated  or  implied  "  that 
that  case  establishes  any  other 
rula  And  so  is  Crocker  v.  First 
Nat  Bank,  4  Dili  358.  But  contra 
are  Hines  v.  Marmolejo,  60  CaL  229, 
a,  state  where  banks  of  issue  are 
prohibited  by  the  constitution; 
Wolverton  v.  Exch.  Nat.  Bank,  11 
Wash.  94;  Guild  v.  First  Nat.  Bank, 
4  S.  D.  566;  National  Bank  v.  Bruher, 


64  Tex.  571;  Rockwell  v.  Farmers' 
Bank.  4  Cola  App.  562;  California 
Bank  v.  Ginty,  108  CaL  148.  The 
difficulty  is  that  the  statute  is 
wrongly  worded,  and  these  courts 
are  doing  some  amending  to  make 
the  law  read  correctly. 

27  National  Bank  v.  Johnson,  104 
U.  S.  271 ;  Johnson  v.  National  Bank, 
74  N.  Y.  329;  Danforth  v.  Nat.  State 
Bank,  48  Fed.  R  271,  semble. 

28  Second  Nat.  Bank  v.  Morgan, 
165  Pa.  199. 

29  Dunkle  v.  Renick,  6  Ohio  St.  527. 
Compare  Nash  v.  White's  Bank,  68 
N.  Y.  396;  Atlantic  State  Bank  v. 
Savery,  82  N.  Y.  29L 

30  First  Nat  Bank  v.  Miltonberger, 
33  Neb.  847. 

81Winterset  Nat  Bank  v.  Eyre, 
52  Iowa,  114;  Farmers'  Bank  v. 
Hoagland,  7  Fed.  R  159;  Snyder  v. 
Mt.  Sterling  Bank,  94  Ky.  231. 

82  Peoples  v.  First  Nat  Bank,  15 
Ky.  Law  R  748.  See  also  Moniteau 


§§  197,  198.]  LOANS    AND   DISCOUNTS.  335 

§  197.  Effect  of  usury. —  The  transaction  which  is  usuri- 
ous is  necessarily  an  illegal  agreement.  If  the  illegal  agree- 
ment has  been  consummated  and  the  parties  are  in  pari 
•delicto,  no  recovery  of  the  usurious  interest  paid  would  be 
permitted  at  common  law.  But  most  courts  have  held  that 
the  statute  being  for  the  protection  of  the  borrower,  he  is 
not  in  pari  delicto  with  the  lender.  The  same  result  fol- 
lows where  a  penalty  is  imposed  upon  the  lender.  Other 
statutes  give  the  right  to  recover  the  illegal  interest  paid, 
and  such  is  the  case  with  the  national  bank  act.  In  some 
states  the  loan  is  declared  void,1  in  others  the  interest  is  for- 
feited,2 in  others  the  excess  of  interest  over  the  legal  rate  is 
forfeited.3  The  subject  is  one  which  cannot  properly  be 
considered  as  belonging  to  a  treatise  of  this  nature.4 

§  198.  Effect  of  usury  under  the  national  bank  act. — 

The  national  bank  act  is  exclusive  in  its  terms.  It  declares 
tbe  whole  interest  void  *  if  it  be  not  paid,  and  it  allows  a  re- 
covery of  twice  the  excess  or  the  whole  interest2  paid  where 

Nat.  Bank  v.  Miller,  73  Mo.   187;  note  or  bill  void  (Orr  v.  Lacey,  2 

Cake  v.  Lebanon  Nat.  Bank,  86  Pa.  Doug.  230;  Brower  v.  Haight,   18 

303.  Wis.   102);  but  to  leave  the  loan 

1  Mills  v.  Bice,  6  Gray,  458;  Bank  good  (Rock  River  Bank  v.  Sher- 
of  U.  S.  v.  Owens,  2  Pet.  527,  ap-  wood,  10  Wis.  230;   Van  Atta  v. 
plies  such  a  ruling  to  a  case  where  State  Bank,  8  Ohio  St.  27).  See  §201, 
there  was  no  statute,  but  on  that  post. 

point  the  case  is  not  sound.  *  See  note  5,  post. 

2  Grand  Gulf  Bank  v.  Archer,  8  2  The  rule  differs.  Johnson  v.  Na- 
Smedes    &    M.    151;    Hawley    v.  tional  Bank,  74  N.  Y.  329;  affirmed 
Kountze,  38  N.  Y.  Supp.  327.  in  National  Bank  v.  Johnson,  104 

3  Chafin  v.  Lincoln  Sav.  Bank,  7  U.  S.  271,  without  the  point  being 
Heisk.  499;    Darby    v.   Boatmen's  raised,  and  other  New  York  cases 
Sav.  Inst,  1  Dill.  141 ;  Veazie  Bank  and  Bobo  v.  People's  Nat  Bank,  92 
v.  Paulk,  40  Me.  109;  Lumbermen's  Tenn.  444,  say  the  recovery  is  twice 
Bank  v.  Bearce,  41  Me.  505.  the   excess.     But    Wiley    v.  Star- 

4  The  effect  of  these  statutes  upon  buck,  44  Ind.  298;  Crocker  v.  First 
the  contract  is  to  forfeit  the  debt  Nat.  Bank,  4  Dill.  358;  Markham  v. 
(Mills  v.  Rice,  6  Gray,  458);  to  for-  First  Nat.  Bank,  Fed.  Cas.  No.  9097; 
feit  the  debt  only  as  between  bor-  National  Bank  v.  Johnson,  91  Ky. 
rower  and  lender,  but  not  to  annul  181;   Lucas    v.   Government   Nat. 
the   contract  (Farmers'    Bank    v.  Bank,  78  Pa.  228,  say  twice   the 
Parker,  37  N.  Y.  148);  to  render  the  whole  interest 


336 


BANKS   AND   BANKING. 


[§  198. 


the  transaction  is  complete.  This  statute  governs  national 
banks  to  the  exclusion  of  state  legislation,3  and.  state  penal- 
ties for  usury  do  not  apply.4  Where  the  interest  has  not 
been  paid,  the  interest  is  simply  declared  void  and  the  bank 
can  recover  only  the  principal  of  the  note.5  The  statute  ap- 
plies to  overdrafts  as  well  as  other  loans,6  but  the  note  itself 
is  not  rendered  void 7  nor  the  deposit  of  collateral  security.8 
The  title  to  the  note  is  not  affected,9  nor  its  negotiability 
destroyed,  by  a  usurious  discount.10  A  state  statute  cannot 
forfeit  the  debt,11  but  a  state  statute  may  make  the  act  of 
the  officers  of  a  national  bank  in  taking  usury  an  offense 
against  the  state.12  The  two  years'  limitation  in  the  statute 
applies  to  the  suit  to  recover,  but  does  not.apply  to  the  for- 
feiture of  the  usurious  interest  reserved,13  and  the  forfeiture 
may  be  set  up  at  any  time  in  defense  of  the  note.14  The 
action  provided  for  the  recovery  of  usurious  interest  paid 


'Fanners'  Bank  v.  Bearing,  91 
U.  S.  29. 

4  First  Nat.  Bank  v.  Lamb,  57 
Barb.  429  (wrongly  reversed);  Cen- 
tral Nat  Bank  v.  Pratt,  115  Mass. 
539;  Imp.  &  Trad.  Bank  v.  Littell, 
40  N.  J.  Law,  506. 

8  Farmers'  Nat.  Bank  v.  Bearing, 
91  U.  S.  29;  Peterborough  Nat. 
Bank  v.  Childs,  130  Mass.  519.  If 
part  is  paid,  the  rest  is  forfeited. 
It  forfeits  the  interest  which  would 
have  accrued  after  maturity  (First 
Nat.  Bank  v.  Stauffer,  1  Fed.  R.  187; 
Shunk  v.  First  Nat  Bank,  22  Ohio 
St.  508),  even  though  lawful.  Shafer 
v.  First  Nat  Bank,  53  Kan.  614; 
Nat.  State  Bank  v.  Brainnrd,  61 
Hun,  339. 

« Third  Nat  Bank  v.  Miller,  90 
Pa.  241. 

'Nat  Ex. Bank  v.  Moore,  2 Bond, 
170;  Wiley  v.  Starbuck,  44  Ind. 
298. 

8  Gates  v.  Montgomery  Nat  Bank, 


100  U.  S.  239;  Allen  v.  First  Nat 
Bank,  23  Ohio  St.  97. 

» Newell  v.  First  Nat  Bank,  13 
Ky.  Law  R.  775;  First  Nat  Bank 
v.  Garlinghouse,  22  Ohio  St.  492; 
Hintermister  v.  First  Nat.  Bank,  64 
N.  Y.  212. 

10  Nicholson  v.  National  Bank,  92 
Ky.  251. 

11  Farmers'  Bank  v.  Bearing,  91 
U.  S.  29. 

12  State  v.  First  Nat  Bank,  2  S.  B. 
568. 

13  Peterborough     Nat    Bank    v. 
Childs,    130   Mass.   519;   Moniteau 
Nat   Bank  v.  Miller,  73  Mo.  187; 
Pickett  v.  Merchants'  Nat  Bank, 
32  Ark.  346. 

14  See  cases  in  last  note,  and  see, 
further,  Exeter  Nat.  Bank  v.  Or- 
chard, 39  Neb.  485,  holding  that  the 
making  of  a  new  note  to  the  bank, 
where  the  original  note  was  to  an- 
other person,  does  not  cut  off  the 
defense 


§ 


LOANS   AND   DISCOUNTS. 


permits  a  recovery  of  twice  the  excess  over  the  legal  rate,15 
or  twice  the  whole  interest  paid.16  This  remedy  is  exclusive 
and  cannot  be  supplemented.17  The  action  is  penal  in  its 
nature,  and  the  double  amount  of  the  interest  forfeited  can- 
not be  claimed  by  way  of  set-off  or  counter-claim.18  The 
two  years'  limitation  begins  to  run  either  from  the  date  of 
the  payment  of  the  usurious  interest,19  or  from  the  date  of 
the  transaction  according  to  some  insufficient  authority.20 
The  bank  cannot  set  off  against  the  penalty  sought  to  be 
recovered  any  claim  of  its  own.21  Payments  made  are  to 
be  considered  as  paid  on  the  face  of  the  debt,  not  upon  the 
interest.22 

§  199.  Who  may  set  up  usury. —  Generally  speaking  only 
the  parties  to  a  usurious  transaction  are  affected  by  it.  It 
is  not  a  defense  for  the  drawer  of  a  bill  of  exchange  against 


13  See  note  2,  ante. 

16  See  note  2,  ante.  But  the  pen- 
alty does  not  draw  interest  (Higley 
v.  First  Nat.  Bank,  26  Ohio  St.  75) 
until  judgment. 

"  Barnet  v.  National  Bank,  98  U.  S. 
555;  Wiley  v.  Starbuck,  44  Ind.  298; 
Oldham  v.  First  Nat.  Bank,  85  N.  C. 
240;  First  Nat.  Bank  v.  Gruber,  91 
Pa.  377;  Hill  v.  National  Bank,  56 
Vt.  582. 

18  Driesbach  v.  Wilkesbarre  Bank, 
104  U.  S.  52;  Danforth  v.  Nat.  State 
Bank,  48  Fed.  R.  271,  8  U.  S.  App.  7; 
Farmers'  Nat.  Bank  v.  Stover,  60 
Cal.  887;  Stephens  v.  Monongahela 
Bank,  111  U.  S.  197,  and  numerous 
other  cases.  One  case  says  the 
maker  of  the  note  may  plead  to  a 
suit  brought  upon  a  collateral 
mortgage  the  satisfaction  of  the 
debt  by  the  payment  of  usurious 
interest  on  renewals  before  debt 
came  into  the  possession  of  the 
bank.  Exeter  Nat  Bank  v.  Or- 
chard, 39  Neb.  485. 
22 


19  National  Bank  v.  Davis,  8  Biss. 
100;  Kinser  v.  Farmers'  Nat.  Bank, 
58  Iowa,  728;  Lynch  v.  Merchants' 
Nat.  Bank,  22  W.  Va.  554;  Carpen- 
ter v.  National  Bank,  50  N.  J.  Law, 
6;  First  Nat.   Bank  v.  Smith,  36 
Neb.  199.    Or  judgment.   Duncan  v. 
First  Nat.  Bank,  Fed.  Cas.  No.  4135. 
Giving  a  note  seems  to  be  payment. 
Lebanon  Nat.  Bank  v.  Karmany, 
98  Pa.  65;   but  see  Cadiz  Bank  v. 
Slemmons,   34  Ohio  St.   142.     See 
note  11  to  §  196,  ante. 

20  Henderson  Nat.  Bank  v.  Alves, 
91  Ky.  142. 

21  Morehouse  v.  National  Bank,  30 
Hun,  628;  Lebanon  Nat.   Bank  v. 
Karmany,  98  Pa.  65. 

22  Danforth  v.  Nat   State  Bank, 
48  Fed.  R.  271,  3  U.  S.  App.   7; 
Cadiz  Bank  v.  Slemmons,  34  Ohio 
St.  142.    But  where  renewal  notes 
are  given  after  crediting  payments, 
see  Kinser  v.  Farmers'  Bank,  58- 
Iowa,  72a 


338  BANKS   AND   BANKING.  [§  200. 

the  bank;1  but  under  the  national  banking  law  the  reserva- 
tion of  usurious  interest  destroys  the  interest-bearing  qual- 
ity of  the  instrument,  and  hence  the  acceptor  of  drafts  pur- 
chased without  an  indorsement  to  it  by  a  bank  at  usurious 
rates  may  defend  against  interest  upon  the  drafts.2  A  cor- 
poration forbidden  by  a  state  statute  to  set  up  the  defense 
of  usury  may  nevertheless  claim  the  defense  under  the  na- 
tional banking  law.3  A  director  of  a  bank  may  set  it  up 
against  the  bank  on  a  loan  to  himself.4  But  a  renewal 
note  which  was  given  for  an  accommodation  note  which 
had  an  indorser,  who  indorsed  the  accommodation  note  to 
the  bank  at  a  usurious  rate,  is  not  subject  to  the  defense 
of  usury  in  favor  of  an  indorser  upon  the  renewal  note.5 
Parties  who  may  sue  are  noticed  in  the  next  section. 

§  200.  Matters  of  pleading  and  procedure. —  The  charge 
of  usury  must  always  be  that  the  act  was  done  knowingly,1 
but  a  corrupt  intent  need  not  be  averred  in  the  answer  if 
facts  equivalent  thereto  are  pleaded.2  The  person  to  set  up 
the  usury  must  be  one  covered  by  the  statute.  Under  the 
statute  giving  the  right  to  legal  representatives,  the  execu- 
tor or  administrator  of  a  decedent  and  the  receiver  of  a  cor- 
poration 3  would  be  entitled,  as  well  as,  perhaps,  an  indorsee 
of  a  bill  of  exchange,4  an  assignee  for  creditors,8  but  not  a 

1  Oneida  Bank  v.  Ontario  Bank,  Bank,  4  S.  Dak.   566;   Morgan  v. 

21  N.  Y.  490.  First  Nat  Bank,  93  N.  C.  352. 

2Danforth  v.   Nat  State  Bank,  2  National    Bank    v.    Orcutt,  48 

48  Fed.  R  271,  3  U.  &  App.  7.    This  Barb.  256. 

rule  would  apply  to  any  person  not  8  Barbons  v.  Nat  Ex.  Bank,  45 

a  bona  fide  holder.  Ohio  St  133. 

3  Union  Nat  Bank  v.  Louisville  4  Barnett  v.  National  Bank,  Fed. 

R  Co.,  145  111.  208;  In  re  Weed,  11  Gas.  No.  1026,  is  wrong.    The  cor- 

Blatch.  243.  rect  rule  was  stated  in  National 

*  Cadiz  Bank  v.    Slemmons,    34  Bank  v.  Lewis,  75  N.Y.  516,  81  N.  Y. 

Ohio  St  142.  15,  and  Cake  v.  First  Nat  Bank,  86 

6  Ely  v.  Second  Nat  Bank,  79  Pa.  Pa.  303. 

453.  6Osborn  v.  First  Nat  Bank,  175 

1  Schuyler  Nat  Bank  v.  Bollong,  Pa.  494.    This  case  is  opposed  to  the 

24   Neb.    821.    For   sufficiency  of  weight  of  authority,  which  gives 

pleading,  see  Guild  v.  First  Nat  the  rule  stated  in  the  text  Wright 


§  201.]  LOANS   AND    DISCOUNTS.  339 

judgment  creditor.6  One  joint  maker  cannot  recover  the 
usurious  interest  where  it  was  paid  by  the  other  joint 
maker;7  but  if  the  plaintiff  be  the  actual  and  beneficial  owner, 
the  fact  that  the  joint  maker  is  suing  will  not  affect  the  re- 
covery.8 Suits  either  to  recover  usurious  interest  paid,  or 
where  the  reservation  of  usurious  interest  is  set  up  as  a  de- 
fense, must  be  entertained  by  the  state  courts,9  as  well  as 
by  the  courts  of  the  United  States,  if  they  have  jurisdiction; 
but  in  order  to  obtain  a  review  in  the  Supreme  Court  of  the 
United  States  of  a  case  in  the  state  courts,  the  right  of  the 
national  bank  under  the  statute  to  charge  a  certain  rate  of 
interest  must  be  specially  set  up  or  claimed  in  the  state 
courts.10 

§  201.  Bights  and  liabilities  of  bank  in  discounting. — 

If  a  bank  discounts  a  note,  where  the  discounting  was  in- 
duced by  fraud,  it  may  rescind  it; l  and  even  where  no  fraud 
appeared  it  was  held  that  a  discount  could  be  revoked, 
though  unpresented  checks  had  been  drawn  against  the  pro- 
ceeds.2 The  charging  up  of  a  note  as  paid  and  the  delivery 

v.  First  Nat.  Bank,  Fed.  Cas.  No.  defense.    Peterborough  Nat.  Bank 

18,078;  Crocker  v.  First  Nat.  Bank,  v.  Childs,  130  Mass.  519.    See  also 

Fed.  Cas.  No.  3397.    A  statutory  section  245  for  the  particular  state 

penalty  creates  a    gw<m-contraet  or  federal  court  which  has  juris- 

which  is  assignable.  diction.    Compare  Mo.  Tel.  Co.  v. 

6  Barrett    v.     Shelbyville     Nat.  First  Nat.  Bank,  74  111.  217,  for  a 
Bank,  85  Tenn.  426.  very  queer  states  rights  decision. 

7  Timberlake  v.  First  Nat.  Bank,  See  §  244,   post.    This    last    case 
43  Fed.  R.  231.  holds  the  remarkable  doctrine  that 

8  First  Nat.  Bank  v.  Gruber,  91  a  state  court  will  not  enforce  the 
Pa.  377.  usury  laws  of  the  United  States, 

'See  §  :!44, post,  for  the  statutes  because  congress  has  not  power  to 

applicable  to  suits  to  recover  pen-  give  the  state  courts  such  a  juris 

alties.    This  is  not  a  new  jurisdio  diction.    This  is  a  queer  freak,  and 

tion,  but  their  ordinary  jurisdic-  of  course  is  not  the  law,  even  in 

tion.    But  the  remedy  is  not  a  state  Illinois.    See    Ellis  v.   First   Nat. 

remedy.     Norfolk    Nat.    Bank    v.  Bank,  11  III  App.  275,  ignoring  it. 

Schwenk,  46  Neb.  381.    But  it  is  lo  Schuyler  Nat.  Bank  v.  Bollong, 

governed  as  to  form  of  procedure  150  U.  S.  85. 

by  the  local  law.    Osborn  v.  First  l  Bank  of  Antigo  v.  Union  Trust 

Nat.  Bank,  175  Pa.  494  State  courts  Co.,  50  111.  App.  434. 

have  jurisdiction  also  of  usury  as  a  2  Dougherty  v.  Central  Bank,  93 


340  BANKS   AND   BANKING.  [§  201. 

of  the  note  by  mistake  do  not  operate  as  payment  either  as 
to  the  maker  or  as  to  the  sureties.3  A  person  discounting 
paper  at  the  bank  warrants  the  genuineness  of  the  signatures 
of  the  maker  and  the  indorsers;4  and  where  the  president  of 
a  bank  discounted  with  another  bank  forged  paper  of  his 
bank,  depositing  as  security  therewith,  but  without  authority, 
certain  bonds  of  his  bank,  the  bank  granting  the  discount 
may  hold  the  bonds  as  security  against  the  first  bank.* 
"Where  the  maker  of  a  note  which  has  two  indorsements 
thereon,  the  first  forged  and  the  second  genuine,  discounts 
the  note  to  a  bank,  the  bank  may  hold  the  second  indorser.8 
But  the  bank  must  ascertain,  where  a  partner  attempts  to 
discount  for  his  private  business  a  note  indorsed  by  the  fira^ 
whether  the  note  was  so  indorsed  by  special  authority  from 
the  firm.7  The  bank  may  sue  in  the  payee's  name  for  its 
benefit  upon  a  transfer  to  itself  by  a  forged  indorsement  of 
the  payee's  name,  where  the  forgery  was  committed  by  one 
of  the  makers  who  made  the  transfer  to  the  bank.8  The  bank 
does  not  warrant  to  the  acceptor  of  a  draft  discounted  by 
it  the  genuineness  of  a  bill  of  lading  attached  to  the  draft,9 
and  if  the  consignee  pays  drafts  discounted  by  the  bank  in 
ignorance  of  the  fact  that  the  bills  of  lading  attached  to  the 
draft  were  forged,  he  cannot  recover  from  the  bank.10  Banks 
under  one  statutory  system  were  forbidden  to  assign  their 
loans,  and  the  objection  was  held  to  be  pleadable  only  in 
abatement.11  The  general  rule  as  to  loans  made  in  contra- 

Pa.   227.    See  also  Lancaster  Co.  533.    This  case  is  simply  one  of  the 

Bank  v.  Huver,  114  Pa.  216,  where  indorser's  contract.  But  state  courts 

there  was  a  failure  of  considera-  differ  as  to  the  meaning  of  an  ir- 

tion  or  fraud.  regular  indorsement. 

3Dewey  v.  Bowers,  4  Ired.  538;  7Lernoine  v.  Bank  of  North  Amer- 

Bank  v.  Rolston,  3  Phila.  328.  ica,  3  Dill.  44. 

4  Cabot  Bank  v.  Morton,  4  Gray,  8  York  Bank  v.  Asbury,  1  Biss.  230. 
156.  9  Goetz  v.  Bank  of  Kansas  City, 

5  Fifth  Ward  Sav.  Bank  v.  First  119  U.  S.  551. 

Nat.  Bank,  48  N.  J.  Law,  513.    This  10  Hoffman  v.  Bank  of  Milwaukee, 

was  simply  a  case  of  an  agent  act-  12  Wall  181. 

ing  within  the  apparent  scope  of  u  Planters'    Bank   v.    Sharp,    4 

his  authority.  Smedes  &  M.  17;  Lanier  v.  Tripp,  6 

6  State  Bank  v.  Fearing,  18  Pick.  Smedes    &    M.    641;    Commercial 


§  202.]  LOANS   AND    DISCOUNTS.  341 

vention  of  law  has  been  already  stated.12  One  case  held 
that,  where  a  note  was  made  payable  out  of  the  state,  the 
defense  of  unlawful  banking  by  the  issuance  for  the  loan  of 
illegal  bank-notes  by  private  persons  was  good.13  But  the 
loaning  contract  is  not  void  unless  declared  so  by  law.  The 
note  may  be  sued  on w  or  an  action  may  be  brought  for 
money  loaned,15  and  where  the  contract  is  declared  void 
some  cases  hold  that  no  action  at  all  lies.16  But  it  would 
seem  that  the  breach  of  duty  by  an  officer  in  taking  the  note 
cannot  be  set  up  against  the  note  by  one  liable  upon  it.17  It 
was  also  held  that  a  debtor  could  not  set  up  the  unconsti- 
tutionally of  the  act  incorporating  the  bank.13 

§  202.  Payment  of  loans. —  Where  all  kinds  of  money  are 
equally  good,  the  payment  of  a  loan  from  a  bank  is  a  simple 
matter  if  the  debtor  can  control  any  kind  of  money.  Whether 
the  bank-notes  of  national  banks,  or  treasury  notes  or  silver 
notes  or  gold  notes  are  used,  no  question  can  arise  as  to  their 
value.  The  legal  tender  moneys  are  always,  of  course,  a 
good  tender,  unless  the  loan  is  payable  in  gold  or  coin.  But 
if  those  moneys  vary  in  value,  all  sorts  of  difficulties  are 
likely  to  arise.  At  the  present  time  this  parity  is  maintained 
by  the  fact  that  silver  coin  can  be  readily  changed  into 
legal  tender  notes.  The  government's  faith  is  pledged  to 
pay  the  notes  in  coin,  just  as  the  treasury  notes  for  silver 
purchases  are  payable  in  coin.  The  government  chooses, 
in  order  to  maintain  the  parity,  to  pay  in  gold,  or  is  ready 
to  pay  in  gold,  which  keeps  all  the  token  money  on  a 

Bank  v.  Thompson,  7  Smedes  &  M.  statutes  of  some  states  are  the  only 

443.    If  the  assignment  was  illegal  instances  of  such  a  proceeding, 

it  would  confer  no   title.    These  17  Bruce  v.   Hawley,  31  Vt.  643. 

cases  are  as  anomalous  as  the  bank-  One  not  a  party  to  an  illegal  trans- 

in&  system.  action  has  no  right  to  set  up  the 

12  See  §§  32  and  33,  ante,  fact  of  illegality. 

11  Hamtramck  v.  Selden,  12  Grat.  ^Snyder  v.  State  Bank,  1  III  161. 

But  see  for  the  true  rule,  §  30,  ante. 

11  See  g§  33, 191,  ante,  and  note  4  The  court  overlooked  the  fact  that 

to  §  197,  ante.  a  de facto  corporation  can  exist  only 

ls  See  last  note.  where  a  dejure  organization  would 

16  It  is  thought  that  the  usury  be  possible. 


34:2  BANKS   AND   BANKING.  [§  202. 

parity  with  gold.  So  that  it  is  really  immaterial,  under 
the  present  condition,  whether  a  loan  is  payable  in  gold 
or  not.  But  the  least  change  in  the  policy  of  the  govern- 
ment would  at  once  precipitate  upon  us  the  evils  of  a  cur- 
rency where  every  kind  of  money  except  gold  coin  and 
gold  notes  would  be  at  an  enormous  discount.  Even  the 
national-bank  notes  would  join  in  the  crash,  because  the 
bonds  which  secure  them  are  payable  in  coin.  The  situation 
of  the  circulating  medium  in  the  halc}ron  days  of  "  wild  cat " 
and  "  red  dog  "  currency,  and  in  the  palmy  days  of  the  state 
banks  of  issue,  finds  expression  in  the  decisions  of  that  pe- 
riod. We  have  already  noticed  some  curious  instances  of 
the  payment  of  deposits1  and  discounts.2  Owing  to  the 
peculiar  nature  of  some  state  banks  it  was  possible  for  a 
debtor  to  the  bank  to  pay  his  debt,  in  one  instance  at  least, 
in  state  bonds  or  in  the  interest  due  thereon.3  The  debtor, 
however,  could  not  pay  his  debt  by  setting  off  the  stock  of 
the  bank.4  The  debtor  could  not  pay  in  uncurrent  bank-bills, 
nor  would  the  bank-bills  of  any  other  bank  but  the  one  suing 
or  owning  the  debt  be  a  discharge  of  or  set-off  against  the 
note.8  In  case  the  debtor  attempted  to  pay,  or,  what  amounts 
to  the  same  thing,  attempted  to  set  off  the  bills  of  the  bank 
holding  the  loan  or  the  debt,  the  curious  result  was  as  fol- 
lows: If  he  tendered  the  bills  of  the  bank  the  tender  was 
not  good  and  would  not  stop  the  running  of  interest.6  If  he 
attempted  to  set  off  the  bills  of  the  bank  suing  him,  his  right 

1  Note  2  to  §  17,  ante,  and  Fort  v.    son  Co.  Bank  v.  Chapman,  19  Johns. 
Bank  of  Cape  Fear,  61  N.  C.  417;    322. 

Bank  of  Kentucky  v.  Wister,  2  Pet  6  Hallowell  Bank  v.  Howard,  13 

318;  Gumbel  v.  Abrams,  20  La.  Ann.  Mass.  235;  Hevener  v.  Kerr,  4  N.  J. 

568.    For  collections,  see  note  1  to  Law,  58.    Compare   Northampton 

§  176,  ante.  Bank  v.  Balliet,  8  Watts  &  S.  311. 

2  Notes  6-8  to  §  196,  ante;  the  last  But  the  general  rule  is  that  bank- 
two  cases  in  note  6  to  §  196,  ante.  notes  are  so  far  money  that  a  ten- 

3  Fagan  v.  Stillwell,  19  Ark.  282.  der  of  bank-notes  must  be  expressly 

4  Harper    v.    Calhoun,    7    How.  objected  to  on  that  ground.    Phil- 
(Miss.)  20a  lips  v.  Blake,  1  Met.  156;  Thomas  v. 

5  Moise  v.  Chapman,  24  Ga  249.  Todd,  6  Hill,  340,  seem  to  suggest 
The  cases  in  this  section  all  recog-  the  rule. 

nize  this  principle.  See  also  Jeffer- 


§  202.]  LOANS    AND    DISCOUNTS.  54:3 

depended  upon  the  fact  whether  he  owned  the  bills  at  the 
time  the  suit  was  commenced  or  acquired  them  afterwards. 
In  the  former  case  he  could  set  them  off; 7  in  the  latter  case 
he  could  not.8  But  statutes  compelled  the  bank  to  take  its 
own  bills  in  payment  of  its  claims.9  In  such  case  the  bank 
could  get  rid  of  this  liability  by  assigning  the  debt,  in  which 
event  the  bank's  bills  were  not  a  good  set-off  if  the  assign- 
ment was  'bonafide?*  unless,  in  Pennsylvania,  the  debtor  held 
them  at  the  time  of  the  assignment,  if  he  was  informed  of 
it.11  Since  a  "  stock  note  "  might  be  either  a  note  given  for 
a  subscription  to  stock  or  a  note  given  for  stock  purchased 
from  the  bank,  where  nothing  more  appeared  than  that  the 
judgment  was  for  a  stock  note,  the  bank-bills  were  a  good 
payment.12  It  was  held  also  before  a  statute  compelling  the 
bank  to  take  its  own  bills  was  passed,  that  the  bank  was  not 
compelled  to  do  so  where  it  had  discounted  the  note  in  good 
money,  not  depreciated  paper.13  When  the  bank  became 
insolvent,  further  complications  were  introduced  which  will 
be  considered  under  a  later  section.14  To  the  present  gen- 
eration, who  have  had  little  experience  in  depreciated  cur- 
rency, and  none  in  currency  composed  of  bills  of  numberless 
banks  of  doubtful  or  no  value,  it  is  almost  impossible  to  con- 
ceive of  business  being  transacted  under  such  conditions.15 

7  Kelly  v.  Garrett,  6  III  649.    Un-  Pa.  394;  Northampton  Bank  v.  Bal- 
less  a  statute  provided  otherwise,  liet,  8  "Watts  &  S.  311.     See  also 
Bank  of  Pennsylvania  v.  Spangler,  Bank  of  Bennington  v.  Booth,  16  Vt. 
32  Pa.  474.  360. 

8  See  cases  in  last  note.  12  Dunlop  v.  Smith,  12  111.  399. 

9  Abbott  v.  Agricultural  Bank,  11  13  Commercial  Bank  v.  Atherton, 
Sraedes  &  M.  405:  Niagara  Bank  v.  1  Smedes  &  M.  641.    See  Riggs  v. 
Rosevelt,  9  Cow.  409.    The  method  Dyche,  2  Smedes  &  M.  603. 

in  one  state  was  obtaining  a  rule  to      14  See  §  224,  post. 
show  cause  why  bank  should  not       15  Although     the    national-bank 

take  its  own  notes.  Mann  v.  Blount,  notes  are  not  a  legal  tender,  the 

65  N.  C.  99  government  takes  them  for  all  de- 

10McDougal   v.   Holmes,  1  Ohio,  mands  due  it  except  duties,  and 

176;  Treble  v.  Bank  of  Grenada,  2  each  national  bank  must  take  every 

Smedes  &  M.  523;  Farmers'  Bank  other  national  bank's  notes.    Thus 

v.  Willis,  7  W.  Va.  31.  they  are  practically  legal  tender. 

11  Philips  v.  Bank  of  Lewiston,  18 


CHAPTER  X. 

EXCHANGES,  SECURITIES  AND  COLLECTIBLE  PAPER. 
ARTICLE  I. —  EXCHANGES  AND  SECURITIES. 

§  203.  Power  and  liabilities  as  to  exchanges  and  secu- 
rities.—  In  a  former  section l  we  have  noticed  the  general 
powers  of  a  bank  in  dealing  in  negotiable  paper  and  securi- 
ties. It  has  the  prima  facie  power  to  purchase  bills  of  ex- 
change2 at  the  place  where  it  is  authorized  to  do  business.3 
It  may  buy  and  sell  negotiable  bonds,4  or  make  exchanges 
of  government  bonds  for  customers.5  It  is  a  legitimate  fea- 
ture of  the  banking  business  for  one  bank  to  cash  checks  or 
drafts  upon  another  bank,6  and  it  may  act  as  agent  in  mak- 
ing loans  of  money  or  of  special  deposits  for  customers.7 
Exchange  purchases  when  made  by  one  bank  for  another 
bank  have  been  held  to  be  confined  to  drafts  upon  the  par- 
ticular bank  which  made  the  purchase.8  Letters  of  credit  are 
nothing  more  than  letters  of  guaranty  made  by  one  bank  to 
another.  The  rules  of  law  would  not  vary  as  between  the 
two  engagements.  This  matter  will  be  discussed  under  the 
head  of  "Acceptance."  When  the  bank  is  agent  to  loan 
moneys  it  is  not  liable  as  debtor,9  but  is  held  to  good  faith 10 
and  skill  as  a  banker.11 

1  See  §  1 13,  ante.  »  Yerkes  v.  National  Bank,  69  N.  Y. 

2  Bank  of  Louisville  v.  Ellery,  34    382. 

Barb.  630.  6  Murray  v.  Bull's  Head  Bank,  3 

3  Primarily  the  banking  business    Daly,  364 

must  be  carried  on  at  its  place  of       7Isham  v.  Post,  141  N.  Y.  100; 

business.    See  People  v.  Oakland  Wykoff  v.  Irvine,  6  Minn.  496. 
Bank,  1  Doug.  283.    And  see  £§  24,        «  Reynes  v.  Dumont,  130  U.  S.  354 
103,  ante.  9  Wykoff  v.  Irvine,  6  Minn.  496. 

4  Mt.  Vernon  Bank  v.  Porter,  52      10  See  last  case  cited. 

Mo.  App.  244  This  decision  is  really       » Isham  v.  Post,  141  N.  Y.  100. 
upon   a   statute,  but  the  statute 
would  not  add  anything. 


§  204.]  EXCHANGES,  SECURITIES,  ETC.  345 

§  204.  Forged  paper. —  In  a  former  section  referring  to 
deposits l  was  stated  the  rule  as  to  the  payment  of  forged 
paper  that  obtains  between  banks.  The  payment  of  ex- 
changes is  practically  governed  by  these  rules.  If  the  ac- 
ceptance be  forged  and  the  bank  pays  it,  the  party  whose 
name  is  forged  can  of  course  hold  the  bank,  if  he  gives  notice 
when  he  discovers  the  forgerv;2  and  if  the  drawer  returns 

o        •/    / 

the  draft  to  the  payee,  who  presents  it  and  is  refused  pay- 
ment, the  drawer  can  thereupon  sue  the  bank.3  But  the 
indorsement  of  a  fictitious  payee's  name,  the  fictitious  payee 
being  thought  to  be  an  existing  person,  is  none  the  less  a 
forgery.4  But  it  has  been  held  that  if  the  payee  who  in- 
dorses the  draft  is  the  person  intended,  his  indorsement  is 
not  a  forgery  and  no  recovery  can  be  had  against  the  bank 
by  the  drawer.5  The  negligence  of  the  drawer  of  the  draft 
has  usually  been  held  to  be  a  defense  against  him  where 
the  draft  was  raised,6  and  the  same  rule  applies  to  the 
acceptor  in  accepting  on  a  forged  signature;7  but  one  court 

1  See  §  155,  ante,  and  also  §  154,  *  Chesin  v.  First   Nat.  Bank,  96 
ante.  Tenn.  641 ;  and  see  8  151,  ante. 

2  First  Nat.  Bank  v.  Tappan,  6  6  Emporia  Nat.  Bank  v.  Shotwell, 
Kan.  456.    For  duty  as  to  examina-  35  Kan.  360;  Crippen  v.  American 
tion  to  detect  forgery,  see  §  154,  Nat.  Bank,  51  Mo.  App.  508.    Both 
ante.  these  cases  are  wrong.    They  were 

3  Citizens'  Nat  Bank  v.  Imp.  &  intended  to  decide  what  is  stated 
Trad.  Nat.  Bank,  119  N.  Y.  195.    The  in  the  text.    But  both  bank  and 
reason  of  the  rule  is  that  payment  drawer  were    deceived,  and  both 
upon  a  forged  signature  is  no  pay-  made  a  mistake  of  fact  in  thinking 
ment  at  all    Star  Fire  Ins.  Co.  v.  that  the  person  who  indorsed  was 
State  Nat.  Bank,  60  N.  H.  442.    As  another   individual    intended    by 
to  raised  drafts  and  forged  signa-  them.    It  was  a  clear  case  of  mut- 
tures,  see  §  154,  ante.    If  the  bank  ual  mistake.    If  they  had  intended 
agrees  to  repay  an  amount  charged  the  first  person  by  the  name  of  the 
on  a  forged  draft  it  will  be  held  payee,  as  the  text  above  indicates, 
none  the  less,  because  it  would  be  the  decisions  would  have  been  cor- 
held  without  the  agreement.  Nat.  rect.    See  note  23,  §  154. 

Bank  of  Commerce  v.  Manufact-  6  See  §  154,  ante. 

urers'   Bank,  122  N.  Y.  367.     If  a  '  Howard  v.    Mississippi  Valley 

bank  pays  a  raised  draft.it  may  re-  Bank,  28  La.  Ann.  727. 

cover. 


346  BANKS   AND   BANKING.  [§  204. 

became  entangled  in  a  metaphysical  subtlety  and  held  that 
where  a  clerk  in  a  bank  drew  a  draft  which  could  be  easily 
altered,  and  had  it  signed  by  the  cashier,  whereupon  the 
clerk  took  the  draft  from  the  confiding  cashier  and  altered 
it  and  discounted  it,  the  forgery  of  the  check  and  not  the 
negligence  of  the  cashier  was  the  proximate  cause  of  the 
loss.8  This  decision  is  simply  another  proof  of  how  prone 
even  able  courts  are  to  fall  into  palpable  error,  The  test  is, 
Could  the  forgery  have  been  committed  if  the  cashier  had 
not  been  negligent?  If  not,  then  the  .cashier's  negligence 
was  a  concurring  cause  of  loss,  and  the  bank  was  liable. 
This  case  would  overturn  a  principle  that  is  absolutely  set- 
tled as  to  the  drawer  of  a  check,  and  a  bank  draft  is  no  more 
than  a  check  by  one  bank  upon  another.  The  bank  could 
hold  the  cashier  liable  to  it  for  his  folly,  but  the  innocent 
holder  had  no  remedy  except  against  the  bank.  If  the  bank 
takes  money  from  a  person  upon  a  forged  signature,  it  will 
be  compelled  to  pay  it.9  If  it  pays  to  a  person  upon  a  forged 
signature  or  a  forged  draft  it  may  recover,10  -except  where 
the  signature  of  the  drawer  was  forged  and  it  paid  to  a  lona 
fide  holder.11  But  the  person  who  obtains  the  draft  from 
the  bank  and  sends  it  to  the  payee,  who  receives  upon  it 
more  than  the  amount  for  which  the  draft  was  drawn,  is  not 
liable  to  the  bank,  unless  he  received  the  money.12 

8  Exchange  Nat  Bank  v.  Bank  of       10  See  §  154,  ante. 

Little  Rock  58  Fed.  R  140,  19  U.  S.  «  National  Park  Bank  v.  Ninth 

App.  152.    This  case  was  not  one  Nat.  Bank,  46  N.  Y.  77.    Another 

of  proximate  cause  at  all.    The  in-  bank  has  been  held  to  be  within 

jury  arose   from  the  forgery  and  this  rule.    Northwestern  Nat.  Bank 

the  opportunity  therefor  given  by  v.  Bank  of  Commerce,  107  Mo.  402; 

the  cashier.    The  cashier's  negli-  but  see  §  155,  ante.    For  the  rule 

gence  concurred  in  affording  the  under  a  statute,  see  Tradesmen's 

opportunity  and  was  taken  advan-  Nat  Bank  v.  Third  Nat.  Bank,  66 

tage  of  by  the  clerk.    The  cases  Pa.  435. 

cited  by  the  court  do  not  justify  I2  City  Nat  Bank  v.  Stout,  61  Tex. 

the  decision.  567.    In  this  case  the  cashier  of  the 

9  Even  to  one  who  pays  supra  bank  assisted  in  deceiving  the  bank 
protest.     Goddard   v.    Merchants'  that  paid. 

Bank,  2  Sandf.  247. 


§§  205,  206.]  EXCHANGES,  SECURITIES,  ETC.  347 

AETICLE  II. —  ACCEPTANCE. 

§  205.  Collectible  paper. — In  former  sections  (179  etse<f.) 
was  discussed  the  liability  of  a  bank  or  banker  for  failure  to 
take  proper  steps  in  making  a  collection  intrusted  to  the 
bank.  It  is  the  purpose  of  the  author  now  to  discuss  the  rules 
of  law  applicable  to  the  presentation  of  paper  for  acceptance 
when  the  paper  requires  such  presentment,  and  the  necessity 
for  protest  and  notice  of  non-acceptance  as  well  as  the  rules 
as  to  demand  of  payment  and  protest  and  notice  of  non- 
payment. While  this  subject  is  not  peculiar  to  banking  law, 
and  belongs  within  the  scope  of  a  general  work  on  bills  and 
notes,  yet  the  subject  is  of  such  controlling  importance  in 
banking  business  that  no  excuse  is  needed  for  its  insertion 
here.  The  acceptance  of  checks  upon  the  particular  bank 
by  certifying  them  has  already  been  noticed,1  as  well  as  the 
acceptance  by  the  bank  of  paper  payable  at  the  bank,2  and 
that  discussion  will  not  be  repeated.  The  different  kinds  of 
paper  in  regard  to  which  these  questions  of  acceptance  and 
demand  of  payment  arise  may  roughly  be  classed  as  orders 
for  the  payment  of  money  (which  do  not  amount  to  bills  of 
exchange),  checks,  promissory  notes  (which  include  certifi- 
cates of  deposit,  hereinbefore  discussed)3  and  bills  of  ex- 
change. An  examination  will  first  be  made  to  indicate  what 
instruments  are  bills  of  exchange  requiring  a  presentment 
for  acceptance. 

§  206.  Paper  requiring  presentment  for  acceptance. — 

The  instruments  which  require  presentment  for  acceptance 
in  order  to  hold  certain  parties  upon  them  are  classed  under 
the  head  of  bills  of  exchange;  but  not  all  bills  of  exchange- 
need  presentment  for  acceptance  in  order  to  fix  the  liability 
of  parties  to  them.  First,  it  will  be  necessary  to  indicate 
what  instruments  are  bills  of  exchange,  and  then  it  will  be 
necessary  to  show  what  bills  of  exchange  need  presentment 
for  acceptance.  Checks  are  not  bills  of  exchange  unless 
they  are  made  payable  after  their  date.  A  check  is  an  order 

1  See  §  150,  ante.  «  See  §  150,  ante.  » See  §  161,  ante. 


348 


BANKS    AND    BANKING. 


[§  200. 


for  the  payment  of  money  drawn  upon  a  bank  or  banker.' 
It  is  of  the  essence  of  such  an  order  that  it  be  payable  upon 
demand.  It  is  needless  to  say  that  such  a  check  does  not 
need  to  be  presented  for  acceptance,  nor  is  it  entitled  to  days 
of  grace.2  A  draft  of  one  bank  upon  another  is  merely  a 
check,3  though  it  be  drawn  in  duplicate;4  even  if  it  be  pay- 
able upon  sight,  it  is  a  check,  not  a  bill  of  exchange.5  An 
order  upon  a  banker  for  the  payment  of  money  in  the  usual 
form,  whether  drawn  by  a  bank  or  other  person,  is  payable 
upon  demand,  and  is  not  an  inland  bill  of  exchange.6  But 
checks  are  sometimes  post-dated.  This  word  is  used  in  two 
senses.  A  check  in  the  ordinary  form,  signed  and  delivered 
before  its  date,  is  sometimes  called  a  post-dated  check,  but 
that  is  a  wrong  use  of  the  term.  The  only  effect  upon  such 
a  check  of  the  date  is  that  it  is  not  payable  until  its  date.7 
But  it  does  not  become  entitled  to  days  of  grace,  nor  is  there 
any  necessity  for  its  presentment.  It  is  simply  of  no  effect 


1  In  re  Brown,  2  Story,  502.    But 
Industrial  Bank  v.  Bowes,  165  I1L 
70,  holds  that  an  order  upon  an 
architect's  certificate  is  a  check, 
not  a  bUl  of  exchange.    The  order 
was  drawn  not  upon  a  banking 
house.    The  decision  should  have 
been  put  on  the  ground  that  the 
order  was  not  a  bill  of  exchange 
nor  a  check,  but  was  simply  the 
assignment  of  an  account. 

2  See  the  cases  in  note  8,  infra. 
In  re  Brown,  2  Story,  502;  Taylor  v. 
"Wilson,  11  Met.  44;  Way  v.  Towle, 
155  Mass.  374;  Hawley  v.  Jette,  10 
Oreg.  31;   McDonald  v.  Stokey,  1 
Mont.  388.    And  see  cases  cited  in 
note  6,  infra.    Otherwise  the  rules 
governing  checks  and  bills  of  ex- 
change are  practically  the  same,  ex- 
cept as  to  the  rights  of  the  drawer, 
who    can    claim  a  demand    only 
when  he  is  injured  by  the  delay. 
If  injured,  he  is  in  the  same  posi- 
tion as  the  drawer  of  a  bilL    The 


general  similarity  of  checks  and 
bills  of  exchange  is  noticed  in  Mer- 
chants' Bank  v.  State  Bank,  10 
Wall.  604;  Rogers  v.  Durant,  140 
U.  S.  298;  Henshaw  v.  Root,  60  Ind. 
220;  Wood  River  Bank  v.  First  Nat. 
Bank,  36  Neb.  744;  Laird  v.  State, 
61  Md.  309;  Smith  v.  Janes,  20 
Wend.  192. 

» Bull  v.  Kasson  Bank,  123  U.  a 
105;  First  Nat.  Bank  v.  Coates,  8 
Fed.  R.  540;  Merchants'  Nat.  Bank 
v.  Ritzinger,  118  III  484;  Harrison 
v.  Wright,  100  Ind.  515. 

4  Merchants'  Nat.  Bank  v.  Ritz- 
inger, 118  111.  484. 

5Grammel  v.  Carmer,  55  Mich. 
201. 

6  Merchants'  Bank  v.  State  Bank, 
10  Wall.  604;   Exchange  Bank  v. 
Sutton  Bank,  78  Md.  577;  Roberts 
v.  Austin,  26  Iowa,  315;  McDonald 
v.  Stokey,  1  Mont.  388;  Harrison  v. 
Wright,  100  Ind.  515. 

7  See  §  152,  ante,  note  3. 


§  207.]  EXCHANGES,  SECURITIES,  ETC. 

until  its  date,  when  it  becomes  an  ordinary  check.  But  a 
true  post-dated  check  is  one  that  shows  upon  its  face  that  it 
is  not  payable  until  a  day  later  than  its  date.  Such  a  check 
is  an  inland  bill  of  exchange,  and  as  such  is  entitled  to  days- 
of  grace.8  But  whether  it  is  necessary  to  present  it  for  ac- 
ceptance must  be  determined  by  the  rule  applicable  to  bills 
of  exchange.  That  rule  is  that  a  bill  of  exchange  payable 
upon  a  fixed  day  need  not  be  presented  for  acceptance ; 9  but 
if  the  bill  of  exchange  or  anything  that  falls  under  that 
classification  is  payable  so  many  days  after  sight  or  after 
demand 10  or  at  sight,11  presentment  for  acceptance  is  neces- 
sary in  order  to  hold  one  who  is  entitled  to  claim  a  present- 
ment for  acceptance.  Bills  payable  upon  demand  do  not 
require  presentation  for  acceptance  for  the  reason  that  they 
have  no  days  of  grace. 

§  207.  Paper  which  is  not  a  bill  of  exchange. —  As  be- 
fore stated,  checks  in  the  ordinary  form  payable  upon  de- 
mand are  not  bills  of  exchange,1  nor  are  orders  payable  out 
of  a  particular  fund,2  even  though  they  have  been  accepted;3 

8Minturn  v.   Fisher,  4  Cal.  35;  if  one-day  bill.    Craig  v.  Price,  23 

Cutler   v.    Reynolds,    64   111.  321;  Ark.  633. 

Georgia  Nat.  Bank  v.  Henderson,  ll  Hart  v.  Smith,  15  Ala.  807;  Com- 

46  Ga.  487;    Harrison  v.   Nicollet  mercial  Bank  v.  Perry,  supra.  Con- 

Nat.  Bank.  41  Minn.  488;  Ivory  v.  tra,  Forrest  v.  Rawlings,  35  Tex.  626, 

State  Bank,  36  Mo.  475;  Brown  v.  semble.  The  rule  that  the  sight  bill 

Lusk,  4  Yerg.  210.    Compare  An-  should  be  presented  is  correct,  be- 

drew  v.  Blachly,  11  Ohio  St.  89;  cause  it  is  entitled  to  days  of  grace, 

Morrison  v.  Bailey,  5  Ohio  St.  13.  and    acceptance    or   presentment 

Contra  are  the  first  three  cases  in  therefor  determines  the  day  from 

note  2,  supra.  which  the  days  of  grace  begin. 

9  Bank  of  Washington  v.  Triplett,  l  See  note  6  to  preceding  section. 
1  Pet.  25;  Townsley  v.  Sumrall,  2  2  Virginia  v.  Turner,  1   Cranch, 
Pet.  170;  Oxford  Bank  v.  Davis,  4  C.  C.  261;  Gillilan  v.  Myers,  31  III. 
Cush.  188;  Taylor  v.  Bank  of  Illi-  525;  Kelly  v.  Bron son,  26  Minn.  359; 
nois,  7  T.  B.  Mon.  576.  Owen  v.  Lavine,  14  Ark.  389;  Agnel 

10  See  cases  last  cited,  and  Austin  v.  Ellis,  1  McGloin,  57;  Mills  v.  Kuy- 
v.  Rodman,  8  N.  C.  194;  Commer-  kendall,  2  Blackf.  47;   Lanfear  v. 
cial  Bank  v.  Perry,  10  Rob.  (La.)  61.  Blossom,  1  La.  Ann.  148;  Harriman 
Must  be  presented  for  acceptance  v.  Sanborn,  43  N.  H.  128;  Ehrichs 

8  Owen  v.  Lavine,  14  Ark.  389;  Agnel  v.  Ellis,  1  McGloin,  57. 


350 


BANKS   AND   BANKING. 


[§  207. 


nor  are  orders  payable  upon  a  contingency,4  even  though 
the  contingency  has  ceased  to  be  a  contingency  by  the  hap- 
pening of  an  event,  and  even  though  the  bill  has  been  ac- 
cepted.5 But  the  mention  in  the  bill  of  a  particular  fund 
which  the  drawee  may  use  to  reimburse  himself,6  or  the 
mention  in  the  bill  of  the  consideration  for  it  or  of  the  ac- 
count to  which  the  bill  is  to  be  applied,7  does  not  affect  the 
character  of  the  instrument  as  a  bill  of  exchange,  if  it  is 
otherwise  a  good  bill,8  the  sole  requisite  being,  if  the  formal 
requisites  appear,  that  the  bill  be  issued  on  the  personal 
credit  of  the  drawer.  Municipal  orders  or  warrants  for  the 
payment  of  money  are  not  bills  of  exchange;9  they  are 
merely  evidences  of  indebtedness  of  the  municipal  organiza- 
tion.10 Some  courts  have  denied  to  them  the  qualities  of 
commercial  paper,11  but  the  better  rule  is  that  they  are  ne- 


v.  De  Mill,  75  N.  Y.  370;  Lindsay  v. 
Price.  33  Tex.  280;  Van  Vacter  v. 
Flack,  1  Smedes  &  M.  393.  Reeside 
v.  Knox,  2  Wheat.  253,  applies  this 
rule  to  an  order  upon  a  government 
officer  for  moneys  due  from  the 
government. 

4  Miller  v.  Excelsior  Stone  Co.,  1 
Bradw.  273;  Raignel  v.  Ayliff,  16 
Ark.  594;  Kingbury  v.  Wall,  68  111. 

an. 

&Cook  v.  Satterlee,  6  Cow.  108 
(contingency  and  accepted);  Miller 
v.  Excelsior  Stone  Co.,  1  Bradw. 
273  (contingency  had  happened). 

6  Early  v.  McCart,  2  Dana,  414; 
Redman    v.   Adams,   51    Me.  429; 
Wells  v.  Brigham,  6  Gush.  6;  Cour- 
sen  v.  Leadlie,  31  Pa.  506;  Corbett  v. 
Clark,  45  Wis.  403;  Adams  v.  Boyd, 
33  Ark.  33;  Spurgin  v.  McPheeters, 
42  Ind.  527. 

7  Lowery  v.  Steward,  3  Bosw.  505, 
25  N.  Y.  239;  Hillstrom  v.  Ander- 
son, 46  Minn.  382. 

8  That  is  to  say,  if  it  contains  the 
formal  elements  of  a  good  bill  The 


cases  in  the  last  two  notes  make 
this  matter  plain. 

9Bayerque  v.  City  of  San  Fran- 
cisco, Fed.  Gas.  No.  1137  (city  war- 
rant); Dana  v.  City  of  San  Fran- 
cisco, 19  Cal.  486  (city  wan-ant); 
Koch  v.  Branch,  44  Mo.  542  (United 
States  commissary  warrant) ;  War- 
ner v.  Commonwealth,  1  Pa.  154 
(county  warrant) ;  Jerome  v.  County 
Commissioners,  18  Fed.  R.  873 
(county  warrant);  Boardman  v. 
Hayne,  29  Iowa,  339  (school  order); 
Matthis  v.  Town  of  Cameron,  62  Mo. 
504;  First  Nat.  Bank  v.  Rush  School 
Dist.,  32  P.  F.  Smith,  307. 

10  Floyd  County  Comm'rs  v.  Day, 
19  Ind.  450;  Brownlee  v.  Madison 
Co.  Comm'rs,  81  Ind.  186  (county 
order  refunding  taxes) ;  Carnegie  v. 
Beattyville  Trustees,  13  Ky.  Law 
R.  431;  Clark  v.  City  of  Des  Moines, 
19  Iowa,  199;  Bull  v.  Simms,  23  N. 
Y.  570;  Read  v.  City  of  Buffalo,  67 
Barb.  526. 

11  Jerome  v.  County  Comm'rs,  18 
Fed.  R.  873;  Boardman  v.  Hayne, 


§  208.] 


EXCHANGES,  SECURITIES,  ETC. 


351 


gotiable  so  as  to  enable  the  transferee  to  sue  in  his  own 
name  at  law  if  they  are  made  so  by  their  terms.12 

§  208.  Paper  not  requiring  presentment  for  acceptance. 

Certain  forms  of  bills  of  exchange  are  considered  as  accepted 
by  the  form  of  them.  Thus,  a  bill  by  one  partner  upon  his 
firm  drawn  in  regard  to  a  partnership  transaction  is  the  ac- 
cepted bill  of  the- firm.1  The  reasons  for  so  holding  are  ob- 
vious. The  bill  of  an  agent  upon  his  principal,  where  the 
agent  is  authorized  to  draw,  or  where  the  principal  receives 
the  money  or  thing  of  value  upon  the  bill,  is  an  accepted  bill  or, 
what  amounts  to  the  same  thing,  a  promissory  note  of  the  prin- 
cipal,'2 and  the  same  rule  would  apply  to  orders  of  the  principal 
upon  his  agent.3  The  drafts  of  officers  of  corporations  upon 
the  corporation  or  upon  another  officer  of  the  corporation 
are  merely  one  phase  of  the  rule  as  to  principal  and  agent,4 
and  therefore  such  bills  or  drafts  or  orders  do  not  require 
acceptance.5  They  may  be  considered  either  promissory  notes 


29  Iowa,  339;  Matthis  v.  Town  of 
Cameron,  62  Mo.  504;  First  Nat. 
Bank  v.  Rush  School  Dist.,  32  P.  F. 
Smith,  307. 

l-  Varner  v.  Nobleborough,  2  Me. 
121.  But  they  cannot  be  negotiable 
in  the  sense  that  the  assignee  takes 
free  from  the  defense  of  want  of 
power. 

1  Dougal  v.  Cowles,  5  Day,  511. 

SBurnheisel  v.  Field,  17  Ind.  609; 
Clark  v.  Lake  Ave.  Ass'n,  20  N.  Y. 
Supp.  363,  hold  they  are  accepted 
bills.  But  it  is  said  they  are  not 
promissory  notes  which  pass  by  in- 
dorsement free  of  equities.  Ash- 
land Banking  Co.  y.  Centralia  Mut. 
Ass'n,  1  Kulp,  38;  but  the  case  is 
wrong.  The  defense  by  the  corpo- 
ration was  ultra  vires,  but  it  was 
estopped  because  it  had  received 
full  value.  They  are  promissory 
notes.  Indiana  R»  Co.  v.  Davis,  20 
Ind.  6;  Maux  Ferry  Co.  v.  Brane- 


gan, 40  Ind.  361;  Hasey  v.  White 
Pigeon  Co.,  1  Doug.  193;  Western 
Mfg.  Co.  v.  Toole,  11  Pac.  R.  (Ariz.) 
119;  and  these  last  cases  say  they 
are  also  bills  accepted.  The  follow- 
ing cases  hold  them  to  be  bills  of 
exchange:  Kaskaskia  Bridge  Co.  v. 
Shannon,  6  III  15  (a  demand  on  the 
drawee  is  necessary,  but  no  notice 
of  dishonor  is  required) ;  Wetumpka 
R.  Co.  v.  Bingham,  5  Ala.  657  (a  de- 
mand on  the  drawee  and  notice  of 
dishonor  are  both  necessary). 

3  They    are     promissory    notes. 
Hardy  v.  Pilcher,  57  Miss.  18;  Poy- 
dras  v.  Delamere,  13  La.  98. 

4  Hazard  v.  Cole,  1  Idaho,  276. 
And  see  cases  in  note  2,  supra. 

8  Baker  v.  Montgomery,  4  Mart. 
(O.  S.)  90;  Western  Mining  Co.  v.' 
Toole,  11  Pac.  R.  119;  Rio  Grande 
Ex.  Co.  v.  Coby,  7  Colo.  299;  Fair- 
child  v.  Ogdensburgh  Co.,  15  N.  Y. 
337;  Mob'ey  v.  Clark,  28  Barb.  390; 


352 


BANKS   AND    BANKING. 


[§208. 


or  accepted  bills;  the  sole  question  is  upon  the  authority  of 
the  agent.6  But  it  has  been  said  that  such  bills  may  be  con- 
sidered as  ordinary  bills  of  exchange,7  and  the  reasonable 
rule  would  be  that  the  holder  could  consider  the  instrument 
either  a  bill  of  exchange  or  a  promissory  note,  at  his  option, 
where  it  is  capable  of  two  constructions.8  Such  bills,  from 
another  standpoint,  may  be  considered  as  a  species  of  bill 
drawn  by  the  drawer  upon  himself.  All  bills  drawn  by  the 
drawer  upon  himself  are  promissory  notes  of  the  drawer 9  or 
accepted  bills,10  both  phrases  meaning  in  that  connection  the 
same  thing.  But  where  the  drawer  of  the  bill  and  the  payee 
are  the  same  person,  the  document,  when  indorsed,  is  a  bill 
of  exchange ; u  but  another  court  says  the  document  is  a 
promissory  note,12  especially  if  signed  across  its  face  by  the 
drawer  or  indorsed  by  the  drawer.13  A  bill  drawn  with  the 
drawer's  name  omitted  is  either  the  accepted  bill  or  the  prom- 
issory note  of  the  drawer; 14  but  if  the  bill  is  accepted  by 


McCormick  v.  Hickey,  24  Mo.  App. 
362.    But  see  note  2,  supra. 

6  See  the  cases  in  note  3,  supra, 
and  Raymond  v.  Mann;  45  Tex.  301 ; 
Bailey  v.  Southwestern  R  Bank, 
11  Fla.  266;  Stafford  v.  Bratcher,  4 
Ky.  Law  R  996,  holding  that  they 
are  of  course  open  to  defenses  in 
the  same  way  as  promissory  notes. 
If  the  agent  is  authorized  to  draw 
the  bill,  it  is  a  bill  drawn  by  the  cor- 
poration or  person  upon  himself. 
See  notes   11  and  12,  infra,  and 
note  5,  supra. 

7  See  cases  in  note  2,  supra. 

8  Brazelton  v.  McMurray,  44  Ala. 
323;  Bradley  v.  Mason,  6  Bush,  603. 
And  see  cases  in  note  2,  supra. 

9  Wardens  v.  Moore,  1  Ind.  289; 
Hasey  v.  White  Pigeon  Co.,  1  Doug. 
193;  McCandhsh  v.  Cruger,  2  Bay, 
877.    But  see  Randolph  v.  Parish,  9 
Port.  96. 

10  See  the  last  note,  and  Cunning- 


ham v.  Wardwell,  12  Me.  466.  But 
Kaskaslda  Bridge  Co.  v.  Shannon,  6 
I1L  15,  requires  demand,  and  We- 
tumpka  R.  Co.  v.  Bingham,  5  Ala. 
65,  requires  notice. 

»  Wildes  v.  Savage,  1  Story,  22; 
Bank  of  Brit.  North  Am.  v.  Barling, 
46  Fed.  R  357;  Hart  v.  Shorter,  46 
Ala.  453;  Rice  v.  Hogan,  8  Dana, 
133.  A  bill  drawn  by  a  partner 
payable  to  his  firm  is  not  negotia- 
ble except  by  the  firm's  indorse- 
ment. 

12  Lewis  v.  Harper,  73  Ga.  564. 
See  note  8,  supra, 

lapatillo  v.  Mayer,  70  Ga.  715;  De 
Vaugh  v.  Haughabook,  73  Ga.  809; 
Planters'  Bank  v.  Evans.  36  Tex. 
592. 

"Bradley  v.  Mason,  6  Bush,  602; 
Almy  v.  Winslow,  126  Mass.  342-, 
Petition  v.Lorden,86  111.  361 ;  Brooks 
v.  Brady,  53  111.  App.  155;  Bunting 
v.  Mick,  5  Ind.  App.  289.  See  Wat- 


§  209.]  EXCHANGES,  SECURITIES,  ETC.  353 

another  person  the  omission  is  immaterial,  since  the  accept- 
ance shows  the  person  intended.15 

§  209.  Waiver  of  acceptance. —  The  instances  specified 
in  the  foregoing  section  may  be  considered  as  cases  where 
an  acceptance  was  waived  as  to  the  drawer  by  act  of  the 
drawer.  There  are  other  instances  where  the  drawer  waives 
.  an  acceptance.  If  he  give  notice  to  the  drawee  not  to  pay 
the  draft,  his  direction  is  a  waiver  of  presentment  for  accept- 
ance as  to  himself,1  but  not,  it  would  seem,  as  to  an  indorser 
ignorant  of  the  direction.  A  direction  written  upon  the  bill 
waiving  an  acceptance  is  a  waiver  as  to  all  parties  to  the 
bill,2  because  all  parties  dealing  with  the  paper  have  full 
notice  thereof.  But  the  drawer  may  waive  a  presentation 
for  acceptance  by  parol,  and  such  a  waiver  would  be  good 
against  himself,3  but  ought  not  to  be  good  against  an  in- 
dorser ignorant  of  the  fact.  On  any  theory  of  an  indorser's 
liability  upon  a  bill  requiring  presentation  for  acceptance 
upon  its  face,  he  ought  to  be  held  liable  only  for  those  mat- 
ters in  connection  with  the  bill  of  which  he  has  notice.  His 
contract  does  not  contemplate  any  dealing  between  the 
holder  of  the  bill  and  the  drawer  to  his  prejudice.  If,  how 
ever,  the  acceptor  waives  presentment  for  acceptance  and 
acceptance,  the  bill  is  accepted  as  to  all  parties  to  it.4 

rous  v.  Halbrook,  39  Tex.  572.    If  it  3  The  same  rule  would  apply  to 

be  unsigned,  but  accepted,  it  may  any  indorser. 

be  shown  to  be  a  bill  by  proper  4  This  waiver  may  be  implied,  it 

averments.     Bliss  v.    Burnes,  Mo  will  be  seen  later,  from  a  promise 

Cahon,  91.    An  order  which  has  no  to  accept  made  beforehand.    But 

drawee,  and  is  payable  to  bearer,  whether   this   kind    of  a    waiver 

is  good  only  in  the  hands  of  a  bona  would  be  good  as  against  the  drawer 

fide  holder.    Ball  v.  Allen,  15  Mass,  and  indorser  does  not  seem  to  be 

433.     As  to   checks,  see  Ellis    v.  open  to  question.    There  ought  to 

Wheeler,  3  Pick.  18.  be    no    doubt  that   the    drawee's 

15  Wheeler    v.  Webster,   1  E.  D.  waiver  of  acceptance,  since  it  be- 

Smith,  1.     He  is  therefore  not  a  comes  an  acceptance,  is  just  the 

stranger.  same  as  if  the  drawer  had  written 

^eederer  v.   Barber,  Fed.  Gas.  his  acceptance  on  the  bill    The 

No.  10,079.  bill  has  not  been  dishonored,  and 

2  Webb  v.  Mears,  45  Pa.  222.  therefore  the  drawer  and  indorsers, 
23 


354 


BANKS    AND   BANKING. 


[§  210. 


§  210.  What  law  governs  acceptance. —  Since  the  rule  in 
different  jurisdictions  varies  under  statutory  enactments  as 
to  the  form  of  an  acceptance,  it  becomes  a  matter  of  some 
importance  to  ascertain  what  law  governs  the  contract  of 
acceptance.  The  general  rule  would  be  that  the  law  of  the 
place  where  the  acceptance  was  to  be  made  would  determine 
the  sufficiency  of  the  acceptance.1  This  would  be  the  place 
where  the  bill  is  made  payable.2  If  the  bill  be  accepted 
where  payable  the  contract  is  governed  by  the  law  of  that 
place; 3  but  if  a  bill  be  drawn  in  one  place  payable  at  another 
place  and  be  accepted  in  the  former  place,  it  has  been  held 
that  the  acceptance  is  governed  by  the  law  of  the  former 
place.4  This  ruling  seems  questionable  because  the  accept- 
ance made  the  bill  the  acceptor's  promissory  note  payable 
at  the  place  where  the  bill  was  payable.  If  it  is  a  promise 
to  accept  which  is  in  question,  and  the  agreement  is  to  ac- 
cept bills  at  a  certain  place,  the  law  governing  the  promise 
would  be  the  law  of  the  place  where  it  was  agreed  to  accept 


cannot  be  considered  in  any  way 
prejudiced  on  a'ny  theory  of  the 
nature  of  their  conditional  obliga- 
tion. 

!Hunt  v.  Standart,  15  Ind.  33; 
Frazier  v.  War-field,  9  Smedes  &  M. 
220;  Bright  v.  Judson,  47  Barb.  29; 
Garretson  v.  North  Atchison  Bank, 
47  Fed.  R.  867;  Lonsdale  y.  Lafay- 
ette Bank,  18  Ohio,  126.  What  the 
court  decides  in  this  case  is  right, 
but  its  reasons  are  wrong.  The 
point  was  made  that  the  contract 
was  governed  by  the  law  of  Louisi- 
ana, and  that  law  not  being  proven 
no  recovery  could  be  had.  The 
court  accepts  this  proposition  with 
childlike  confidence,  and  decides 
that  the  Ohio  law  governs.  It  ought 
to  have  said  that  the  foreign  law 
not  being  proven  it  would  be  pre- 
sumed to  be  the  same  as  the  law  of 
Ohio.  Mason  v.  Dousay,  35  III  424 


There  is  one  extraordinary  opinion 
by  Justice  Hunt  (Scudder  v.  Union 
Nat.  Bank,  91  U.  S.  406)  which  is  ab- 
solutely incomprehensible,  but  ap- 
parently it  contradicts  the  above 
rule.  The  opinion,  however,  con- 
tradicts itself. 

2  If  the  bill  were  not  expressly 
made  payable  somewhere  it  would 
be  the  address  of  the  drawee  if  the 
bill  gave  an  address;  otherwise  it 
would  be  his  actual  address.    Sup- 
pose, however,  the  drawee  had  a 
place  of  business  in  New  York,  but 
a  residence  in  New  Jersey.  It  would 
seem  that  the  place  of  actual  ac- 
ceptance would  govern.  Worcester 
Bank  v.  Wells,  8  Met.  107;  Kelly  v. 
Smith,  1  Met.  (Ky.)  313. 

3  See  cases  cited  in  note  1,  supra. 

4  Scudder  v.  Union  Nat  Bank,  91 
U.  S.406. 


§  211.]  EXCHANGES,  SECURITIES,  ETC.  355 

the  bills;5  but  if  the  agreement  to  accept  bills  to  be  drawn 
be  made  generally,  although  the  drafts  were  payable  in  an- 
other state  than  the  one  wherein  the  agreement  was  made, 
it  seems  that  the  law  of  the  state  wherein  the  agreement  was 
made  governs  the  transaction." 

§  211.  Sufficiency  of  presentment  for  acceptance. —  The 

bill  should  be  presented  by  the  holder  or  his  agent  to  the 
drawee  personally,  or  to  some  one  designated  by  him,  and  a 
diligent  attempt  should  be  made  to  find  him.1  But  a  pre- 
sentment at  the  place  of  business  or  counting-room  of  a  mer- 
chant to  one  of  the  clerks  where  the  merchant  was  not  in 
was  held  to  be  sufficient,2  and  the,  absence  of  the  drawee  from 
home  need  not  be  treated  as  a  refusal  to  accept.3  "While  the 
presentment  should  be  personal  or  at  the  drawee's  place  of 
business  or  residence,  the  inclosure  of  the  draft  in  a  letter 
to  the  drawee  with  the  receipt  of  an  answer  refusing  to  ac- 
cept is  sufficient.4  There  is  no  absolute  rule  as  to  exhibiting 
the  bill  by  the  person  presenting  it.  It  is  sufficient  that  the 
person  has  the  bill  ready  to  present  if  it  should  be  demanded.5 
Should  the  drawee  be  temporarily  absent  the  bill  may  be 
held  without  protesting  for  a  reasonable  time  to  await  his 
return.6  No  rule  can  be  given  for  the  time  within  which  a 
bill  must  be  presented  for  acceptance,  except  that  it  should 
be  presented  within  a  reasonable  time 7  and  before  maturity.8 

»Hall  v.  Cordell,  143  U.  S.  116;  » Bank  of  Washington  v.  Triplett, 

Coghlan  v.  So.  Car.  R  Co.,  142  U.  S.  1  Pet.  35.    Absence  from  his  place 

101;  Barney  v.  Newcomb,  9  Cush.  of  business  can  be  so  treated.  Wise- 

46.    Contra,  Russell  v.  Wiggan,  2  man  v.  Chiappela,  23  How.  368. 

Story,  213.  4Carmichael     v.     Pennsylvania 

6  Exchange  Bank  v.  Hubbard,  63  Bank,  4  How.  (Miss.)  567. 

Fed.  R  112,  26  U.  S.  App.  133 ;  Scott  5  First  Nat.  Bank  v.  Hatch,  78  Mo. 

v.  Pilkington,  15  Abb.  Pr.  280.    It  13;  Fisher  v.  Beckwith,  19  Vt.  81. 

seems  impossible  to  reconcile  these  6  Wiseman  v.  Chiappela,  23  How. 

cases  with  those  in  note  5,  supra.  368. 

1  Wiseman  v.  Chiappela,  23  How.  7  Fugett  v.  Nixon,  44  Mo.  295;  Sal- 
368;  Sharpe  v.  Drew,  9  Ind.  281.  isbury  v.  Renick,  44  Mo.  554;  Lin- 

2  Whaley  v.  Houston,  12  La.  Ann.  ville  v.  Welch,  29  Mo.  203. 

585;  Stainback  v.  Bank  of  Virginia,  8  Bachellor  v.  Priest,  12  Pick.  399. 
11  Gratt.  260.  Compare  Prescott  Bank  v.  Courly, 


356 


BANKS   AND   BANKING. 


[§  212. 


"What  is  a  reasonable  time  must  depend  wholly  upon  circum- 
stances.9 But  bills  payable  at  sight  or  after  sight  may  be 
negotiated  and  put  into  the  usual  channels  of  trade,  and  so 
long  as  they  are  not  held  by  any  holder  an  unreasonable 
length  of  time  the  drawers  will  not  be  released  where  the 
bill  is  protested  for  non-acceptance.10  The  sections  upon 
presentment  for  payment  should  be  compared  with  this. 

§  212.  Written  acceptances. —  Various  statutes  require 
acceptances  to  be  in  writing  and  unconditional.1  Accept- 
ances of  checks  are  held  to  be .  within  the  terms  of  these 
statutes.2  Under  these  statutes,  and  a,  fortiori  where  there 
is  no  such  statute,  blank  acceptances  by  the  acceptor,  con- 
sisting merely  of  signing  the  acceptor's  name3  or  writing 
the  name  on  the  face  of  the  bill,4  are  sufficient.  The  words 
"  except " 5  or  "  accepted  "  or  "  presented  "  or  "  seen  " 6  are 


7  Gray,  217;  Robinson  v.  Ames,  20 
Johns.  146;  Jordan  v.  Wheeler,  20 
Tex.  698;  Aymer  v.  Biers,  7  Cow. 
705;  Depau  v.  Brown,  Harp.  251. 

9Linville  v.  Welch,  29  Mo.  20a 
The  holder  is  not  responsible  for  a 
delay  in  the  mail  Walsh  v.  Blatch- 
ley,  6  Wis.  422. 

10  Wallace  v.  Agry,  4  Mason,  336. 
In  this  case,  which  is  a  charge  to 
the  jury,  Judge  Story  shows  his 
tendency  to  be  inaccurate.  He 
said  bills  payable  so  many  days 
after  date  must  be  presented  be- 
fore maturity,  while  bills  payable 
so  many  days  after  sight  might  be 
negotiated.  The  two  things  are  es- 
sentially different.  The  one  class 
of  bills  need  not  be  presented  for 
acceptance  at  all;  the  other  class 
must  be.  For  other  illustrations 
see  cases  in  note  7,  supra. 

!New  York  Bank  v.  Gibson,  5 
Duer,  574 

2Garretson  v.  North  Atchison 
Bank,  47  Fed.  R  867;  Duncan  v. 


Berlin,  60  N.  Y.  151;  First  Nat  Bank 
v.  Nelson,  105  Ala.  180.  Other  stat- 
utes are  noticed  in  Wheatly  v. 
Strobe,  12  Cal.  92;  Flato  v.  Mulhall, 
72  Mo.  522:  Hall  v.  Flanders,  83  Me. 
242;  Upham  v.  Clute,  105  Mich.  350. 

SMoiese  v.  Knapp,  30  Ga.  942. 
This  was  a  blank  acceptance  de- 
livered before  the  draft  was  filled 
out.  Fowler  v.  Gate  City  Nat  Bank, 
88  Ga.  29;  Wheeler  v.  Webster,  1 
E.  D.  Smith,  1  (under  statute);  Me- 
chanics' Bank  v.  Yager,  62  Miss.  529 
(under  statute);  Kaufman  v.  Bar- 
ringer,  20  La.  Ann.  419  (under  stat- 
ute); Haines  v.  Nance,  52  111.  App. 
403  (this  was  a  case  of  name  in- 
dorsed on  back  of  the  bill). 

<  Spear  v.  Pratt,  2  Hill,  582;  Walt- 
ers v.  Galveston  R  Co.,  1  White  & 
W.,  §  757. 

5  Miller  v.  Butler,  1  Cranch,  C.  C. 
470;    Vanstrum  v.  Liljengren,  37 
Minn.  191;  Cortelyou  v.  Maben.  22 
Neb.  697. 

6  Spear  v.  Pratt,  2  Hill,  582.    A 


§  212.]  EXCHANGES,  SECURITIES,  ETC.  357 

sufficient,  or  the  words  "I  will  see  the  within  paid  eventu- 
ally "  are  a  good  acceptance  when  written  on  the  bill.7  But 
an  oral  promise  to  pay  the  bill  is  not  sufficient  under  the 
statute s  although  accompanied  by  an  acknowledgment  of 
the  possession  of  funds.9  If  the  acceptor  refuses  to  ac- 
cept, but  writes  something  upon  the  bill  which  may  fairly 
be  construed  as  an  acceptance,  he  will  be  bound  to  a  lona 
fide  holder.10  A  written  promise  to  pay  the  bill  would 
be  an  acceptance  under  this  statute,11  and  on  principle  any 
writing  which  would  be  good  proof  of  a  written  acceptance 
without  the  statute  ought  to  be  held  a  sufficient  acceptance 
under  the  statute.12  Since  the  words  "  I  take  notice  of  the 
above  "  are  not  an  acceptance  without  the  statute,  even  when 
written,13  they  ought  not  to  be  so  considered  under  the  stat- 
ute. So  of  a  part  payment  of  the  bill,14  or  of  words  evidenc- 
ing an  intent  not  to  accept,  though  signed  by  the  acceptor.15 
But  a  blank  indorsement  would  probably  be  considered  a 
good  written  acceptance  whether  under  the  statute  or  at 
common  law.16  But  the  fact  that  the  acceptance  is  oral  when 
it  is  required  to  be  in  writing  can  be  made  as  an  objection, 
it  is  held  on  the  analogy  of  the  statute  of  frauds,  only  by  the 
acceptor ; n  and  although  the  written  or  oral  order  may  not 
be  enforceable  as  an  acceptance  for  want  of  a  written  ac- 
ceptance, it  may  yet  be  good  as  an  assignment  of  a  sum 
due,18  provided  it  be  in  proper  form. 

guaranty  is   sufficient.     Block  v.  The  acknowledgment  in  writing 

Wilkerson,  42  Ark.  253.  of  the  receipt  of  the  bill  is  not  an 

7  Brannin  v.  Henderson,  12  B.  Mon.  acceptance  (Smith  v.  Milton,  133 
61.  Mass.  369);  but  if  accompanied  by  a 

8  See  cases  in  note  2.  promise  to  pay,  it  is.   Pope  v.  Huth, 
»Pope  v.  Luff,  7  Hill,  577.    See    14  Cal.  403. 

De  Liquero  v.  Munson,  11  Heisk.  15.       16  See  Haines  v.  Nance,  52  111.  App. 

w  Gallagher  v.  Black,  44  Me.  99.  406. 

11 0'Donnelv.  Smith,  2  E.D.  Smith,  "Finch  v.  Hower,  156  Pa.  414, 

124  semble;  Moeser  v.  Schneider,  158  Pa. 

12  There  are  no  cases  which  so  412.  Contra,  Erickson  v.  Inman 

state.  Poulson  Co.,  54  Pac.  R.  949. 

ls  Cook  v.  Baldwin,  120  Mass.  317.       18  Trumbower  v.  Ivey,.2  Pa.  Co.  Ct. 

14  Cook  v.  Baldwin,  120  Mass.  317.  R.  470;  Ulrinh  v.  Hower,  156  Pa.  414 

15  Norton  v.  Knapp,  64  Iowa,  112.  And  see  Luff  v.  Pope,  5  Hill,  413. 


358  BANKS   AND   BANKING.  [§  213. 

§  213.  Oral  acceptances. — "Where  no  statute  requires  an 
acceptance  to  be  in  writing  it  is  well  settled  that  an  oral  ac- 
ceptance is  sufficient.1  Such  an  acceptance  may  be  considered 
as  made  by  words  or  by  conduct.  Acceptances  by  conduct 
will  be  considered  in  the  next  section  as  implied  acceptances. 
But  the  general  principle  applicable  to  all  acceptances  at 
common  law  is  that  an  acceptance  will  be  evidenced  by  any 
act  clearly  expressing  an  intention  to  honor  the  document.2 
"Written  acceptances  good  at  common  law  are  noticed  in  the 
last  section.  Oral  acceptances  are  good  at  common  law 
whether  they  be  of  a  bill  of  exchange,3  a  check 4  or  a  non- 
negotiable  order  for  the  payment  of  money,5  except  that 
even  an  absolute  acceptance  of  a  non-negotiable  order,  some 
authority  holds,  must  be  supported  by  a  consideration,6  while 
the  acceptance  of  a  bill  of  exchange  or  check  absolutely  im- 
ports a  consideration.7  The  words  from  which  an  accept- 
ance is  inferred  should  not  be  equivocal.8  Thus,  a  promise 
to  pay  accompanied  by  a  refusal  to  accept  ought  not  to  be 
considered  an  acceptance.9  But  a  promise  to  pay  at  a  future 
day  or  generally 10  is  an  acceptance.  The  statements  that 

1  Leonard  v.  Mason,  1  Wend.  522;  6  Walton  v.  Mandeville,  56  Iowa, 
White  v.  Dienger,  25  S.  W.  R.  666  597.    The  court  in  this  case  did  not 
(Tex.);  Barnet  v.  Smith,  30  N.  H.  see  the  difference  between  an  ac- 
256;  Williams  v.  Winans,  14  N.  J.  ceptance  and  a  promise  to  accept. 
Law,  339;  Pierce  v.  Kittridge,  115  Contra,  Green  v.  Duncan,  37  S.  C. 
Mass.  374;  Arnold  v.  Sprague,  34  239.    The  latter  case  is  right,  for  an 
Vt.  402;  Spalding  v.  Andrews,  48  acceptance  is  not  within  the  statute 
Pa.  411.  of  frauds;  and  since  it  is  a  promise 

2  Andressen  v.  First  Nat.  Bank,  2  to  perform  one's  own  obligation  it 
Fed.  R.  122;  Norton  v.  Knapp,  64  is  binding  without  a  consideration. 
Iowa,  112.    Compare  Peck  v.  Coch-  See  Kelly  v.  Greenough,  9  Wash, 
ran,  7  Pick.  34;  Bobbins  v.  Lambeth,  659. 

2  Rob.  (La.)  304*  7See  cases  cited  in  preceding 

3Jarvis  v.  Wilson,  46  Conn.  90;  notes,  and  for  checks  see  §  150,  ante. 

Heilschmidt  v.  McAlpine,  59  111.  8  Walker  v.  Lide,  1  Rich.  Law, 

App.  231;  Spurgeon  v.  Swain,  13  249;  McEwen  v.  Scott,  49  Vt.  376. 

Ind.  App.  18a  »Luff  v.  Pope,  5  Hill,  4ia  The 

4  See  §  150,  ante.  statement  in  the  opinion  is  dictum 

8  Bird  v.  McElvine,  10  Ind.  40;  because  the  want  of  a  writing  was 

Dull  v.  Briefer,  76  Pa.  255;  Miller  fatal 

v.  Neihaus,  51  Ind.  401.  10  In    re    Goddard,    66   Vt    415; 


§  214.]  EXCHANGES,  SECURITIES,  ETC.  359 

the  document  is  correct  and  ought  to  be  paid,11  or  that  the 
acceptor  "  cannot  pay  now,  but  will  later," 12  or  "  it  is  all 
right,  and  I  have  told  (the  payee)  that  I  will  pay  it  in  thirty 
or  sixty  days," 13  are  acceptances.  But  such  a  promise  must 
be  received  as  an  acceptance,14  and  such  a  promise  accepted 
as  an  acceptance  inures  to  all  the  holders  of  the  bill.18  If 
"the  draft  is  addressed  generally  to  the  drawee,  it  may  be 
accepted  by  him  payable  at  a  particular  place.16 

§214.  Implied  acceptances. —  Where  conduct  of  the 
drawee  is  relied  upon  as  an  acceptance,  it  must  be  in  a  ju- 
risdiction where  oral  acceptances  are  valid.1  The  acts  of 
the  acceptor  may  be  proven  just  as  his  words  may  be  proven.2 
Mere  retention  of  the  instrument,  it  is  said,  is  not  sufficient,3 
but  a  retention  which  injures  the  holder  may  become  an  ac- 
ceptance,4 just  as  retention  of  a  check  may  amount  to  an 
acceptance.5  It  has  been  held  that  a  retention  of  an  order, 
even  when  the  drawee  writes  his  name  upon  it,  is  not  an 
acceptance  where  the  fact  of  writing  the  name  is  not  com- 
municated to  the  holder.6  At  any  rate  the  drawee  is  entitled 

Hatcher  v.  Stall  worth,  25  Miss.  376 :  16  See  §  229,  post. 

Edson  v.  Fuller,  22  N.  H.  183;  Me-  iThis  may  be  modified  by  the 

Pherson  v.  Walton,  42  N.  J.  Eq.  282;  statement  that  a  man  may  by  his 

Short  v.  Blount,  99  N.  C.  49;  Fisher  conduct  estop  himself  from  insist- 

v.  Beckwith,  19  Vt.  31.  ing   upon   a   written   acceptance. 

11  Ward  v.  Allen,  2  Met  53.  See  the  cases  cited  in  note  1,  §  213, 

12  St.  Louis  Nat.  Stock  Yards  v.  upon  the  general  principle. 
O'Reilly,  85  111.  546.  2  Bruner  v.  Nisbet,  31  111.  App.  517; 

13  Mason  v.  Dousay,  35  111.  424.  McCutchen  v.  Rice,  56  Miss.  455. 

14  Vermont  Marble  Co.  v.  Mann,  36  3  Colorado  Nat.  Bank  v.  Boettcher, 
Vt,  697.  5  Colo.  185;  Hall  v.  Steel,  68  III  231 ; 

ls  Spalding  v.  Andrews,  48  Pa.  411.  Holbrook  v.  Payne,  151  Mass.  383; 

This  promise,  however,  should  be  Briggs  v.  Sizer,  30  N.  Y.  647.  Under 

made  to  or  at  least  known  to  the  a  statute,  see  Dickenson  v.  Marsh, 

holder.    Martin  v.  Bacon,  2  Const.  57  Mo.  App.  566;  Matteson  v.  Moul- 

R.  132;  Exchange  Bank  v.  Rice,  107  ton,  11  Hun,  268,  79  N.  Y.  627. 

Mass.  37;   Rogers  v.  Union  Stone  4Taggart  v.  First  Nat.  Bank,  12 

Co.,  130  Mass.  581;  Clement  v.  Erie,  Wash.  538.    See  also  Dunavan  v. 

130  Mass.  585.    See  §§  299,  302,  post,  Flynn,  118  Mass.  537. 

as  to  such  promises  on  part  of  in-  ft  See  §  146,  ante. 

dorser.  e  Dunavan  v.  Flynn,  118  Mass.  537. 


360  BANKS   AND   BANKING.  [§  215. 

to  a  reasonable  time  in  which  to  examine  his  accounts  to 
ascertain  whether  he  will  accept  or  not;7  and  a  retention 
from  Saturday  until  the  following  Monday  is  not  an  accept- 
ance.8 But  if  a  drawer  retains  the  bill  and  discounts  it,  his 
conduct  amounts  to  an  acceptance.9  There  is  considerable 
authority  for  saying  that  the  receipt  and  disposal  of  prop- 
erty with  knowledge  that  a  draft  has  been  drawn  against  it 
is  an  acceptance  of  the  draft,10  but  this  is  denied.11  If  a  letter 
of  advice  accompanies  the  shipment,  and  the  direction  is 
known  to  the  holder  of  the  draft,  it  is  held  that  the  drawee 
is  bound  to  apply  the  proceeds  as  indicated  in  the  letter.12 
And  if  the  drawee  settles  with  the  drawer,  reserving  enough 
to  pay  the  draft,  the  drawee,  it  has  been  held,  must  pay  the 
draft,  though  it  be  not  accepted; l3  yet  if  the  drawee  inter- 
pleads  the  payee  and  attaching  creditors  of  the  drawer,  his 
act  will  not  be  an  acceptance  where  the  drawer  has  re- 
covered the  fund  from  him.14 

§  215.  Promises  to  accept  and  letters  of  credit. —  Prom- 
ises to  accept  a  bill  or  order  or  check  before  it  is  drawn  may 
arise  either  from  an  actual  promise,  oral  or  written,  or  from 
an  authority  given  to  draw  the  bill.  Each  instance  may  be 
considered  as  an  offer  on  the  part  of  the  drawee,  and  an  ac- 

Here  there  was  no  delivery.    A  de-  Johnson  v.  Clark,  50  N.  E.  R.  762. 

livery  was  necessary.  The  order  may  be  an  assignment  if 

7  See  the  case  cited  in  the  next  in  proper  form.  See  §  224,  note  7. 
note.  i2Cowperthwaite  v.   Sheffield,   1 

8  Sands  v.  Matthews,  27  Ala,  399.  Sandf.  416,  3  N.  Y.  243. 

» Rutland  Bank  v.  Woodruff,  84  is  Miltenberger    v.    Attwood,    18 

Vt.  89.  How.  Pr.  330.    But  for  checks  see 

i°  Hall  v.  First  Nat.  Bank,  133  111.  §  150,  ante. 

234    The  court  in  this  case  seems  14  Missouri  Pac.  Ry.  Co.  v.  Wright, 

not  to  have  had  the  slightest  knowl-  38  Mo.  App.  141.  This  opinion  seems 

edge  that  there  was  any  dispute  to  be  wrong.     The  drawee  elected 

about  the  legal  question  involved,  to  treat  himself  as  having  accepted. 

McCausland  v.  Wheeler  Sav.  Bank,  He  could  not  thereafter  change  his 

43  III  App.  381 ;  Mitting  v.  Sloan,  57  position.    If  he  had  not  accepted 

Ga.  392.  he  had  no  right  to  intorplead  the 

11  Clements  v.  Yeates,  69  Mo.  623;  payee. 
Relf  v.  Mobile  Bank,  20  Pa.  435; 


§  215.]  EXCHANGES,  SECURITIES,  ETC.  361 

ceptance  of  the  offer  on  the  part  of  the  person  who  takes 
the  bill.  Wherever  the  common  law  has  not  been  changed 
by  statute,  an  oral  promise,  whether  made  as  a  promise  or 
by  granting  authority  to  draw  a  bill,  made  before  a  bill  is 
drawn  by  the  drawee  agreeing  to  accept  it,  is  certainly  bind- 
ing as  a  promise  to  any  one  who  took  the  bill  upon  the 
strength  of  the  promise,1  and  such  a  promise  is  not  within 
the  statute  of  frauds.2  Even  under  a  statute  requiring  a 
written  acceptance  there  is  usually  a  saving  of  the  right  to 
rely  upon  an  oral  promise  to  accept  to  one  who  drew  a  bill 
or  negotiated  a  bill  upon  the  strength  of  the  promise,  but 
the  statute  does  not  cover  one  to  whom  a  bill  was  negotiated.3 
The  promise  is  usually  held  to  inure  only  to  one  who  loaned 
or  gave  credit  to  the  bill  upon  the  strength  of  the  promise,4 
and  only  to  an  indorsee  who  took  the  bill  upon  the  strength 
of  the  promise.5  But  other  cases  which  are  not  entitled  to 
the  slightest  weight,  because  they  are  either  palpable  blun- 
ders or  bold  specimens  of  judicial  effrontery,  hold  that  the 
promise  inures  to  any  indorsee6  or  to  any  holder  of  the  bill 
whether  he  knew  of  it  or  not.7  But  in  the  case  of  banks  it 
must  be  remembered  that  the  promise  to  accept  may  be 
rendered  invalid  by  the  fact  that  the  promise  is  ultra  vires, 

1  Havens  v.  Griffin,  N.  Chip.  23;  29  Ga.  648;  Woodward  v.  Commis- 

Scudder  v.  Union  Nat.   Bank,  91  sion  Co.,  43  Minn.   260;  Lewis  v. 

U.  S.  406;  Hall  v.  Cordell,  142  U.  S.  Kramer,  3  Md.  265;  Lowery  v.  Stew- 

116  (following  common  law  in  Illi-  ard,  25    N.   Y.    239;    Kennedy    v. 

nois);  Ontario  Bank  v.  Worthing-  Geddes,  8  Port.  263;  Ontario  Bank 

ton,  12  Wend.  593;  Howlandv.  Car-  v.    Worthington,    12    Wend.    593; 

son,  15  Pa.  453;  Martin  v.  Bacon,  2  Howland    v.   Carson,   15  Pa.   453; 

Const,  R.  132;  Crowell  v.  Van  Bib-  Martin  v.  Bacon,  2  Const.  R.  132. 
ber,  18  La.  Ann.  637.  5  See  last  four  cases  in  preceding 

2Kelley  v.  Greenough,  9  Wash.  note. 
659.  6  Springfield    Marine     Bank    v. 

3  Hall  v.  Cordell,  142  U.S.  116,  and  Mitchell,  48  III  App.  486,  semble; 
cases  cited  therein.  Jones  v.  Iowa  Bank,  34  111.  313; 

4  Exchange  Bank  v.  Hubbard,  62  Read  v.  Marsh,  5  B.  Mon.  8.   Second 
Fed.  R.  112;  Union  Bank  v.  Coster,  Nat.  Bank  v.  Dieferidorf,  90  111.  396, 
8  N.  Y.  203;  Russell  v.  Wiggin,  2  really  overrules  the  Illinois  cases. 
Story,  214;  Franklin  Bank  v.  Lynch,        7  See  cases  in  last  nota 

52  Md.  270;  Leegrue  v.  Woodruff, 


3G2  BANKS    AND   BANKING.  [§  215. 

and  therefore  worthless  as  an  obligation  of  the  bank.8  Writ- 
ten promises  to  accept  bills  arise  in  various  ways.  Author- 
ity may  be  given  to  purchase  something  and  draw  drafts 
for  the  price.  Such  authority,  when  acted  upon,  necessitates 
the  writer's  acceptance  of  the  draft.9  Such  a  letter  is  prac- 
tically a  letter  of  credit,  and  any  person  who  advances 
money  upon  the  letter  may  rely  upon  it,  if  unrevoked,  as  an 
authority  for  the  addressee  of  the  letter  to  create  the  debt.10 
It  is  said  that  such  an  authority  is  not  an  acceptance,  where 
it  is  general  and  does  not  describe  the  bill,  but  that  it  is 
good  as  an  authority  and  as  a  contract.11  It  renders  the 
promisor  liable  for  the  face  of  the  draft  as  a  general  rule, 
but  in  some  instances  he  may  be  liable  only  for  inconven- 
ience and  loss.12  The  letter  of  credit  may  be  safely  acted 
upon,  if  unrevoked,  by  any  other  person  than  the  one  to 
whom  it  is  directed,  and  no  notice  to  the  writer  is  required 
of  the  fact  that  the  offer  in  the  letter  is  accepted  and  that 
bills  have  been  drawn  under  it.13  Practically  the  letter  is 
an  acceptance  in  advance,14  although  at  common  law  it  would 
hardly  be  safe  to  declare  upon  it  as  an  acceptance.  But  a 
letter  written  within  a  reasonable  time  before  or  after  the 
date  of  a  bill,  intelligibly  describing  it,  and  promising  to  ac- 
cept it,  is,  if  shown  to  one  who  takes  the  bill  upon  the  credit 
of  the  letter,  an  acceptance  binding  upon  the  promisor.15 

8  See  §  126,  ante,  notes  1-4  Valle  v.  Cerre,  36  Mo.  575;  Ulster 

9  Johnson  v.  Blakemore,  28  La.  Co.  Bank  v.  McFarlan,  3  Denio,  553 ; 
Ann.   140;    Burke    v.    Utah    Nat.  First  Nat.  Bank  v.  Clark,  61  Md. 
Bank,  47  Neb.  247;  Nelson  v.  First  400;  Kennedy  v.  Geddes,  3  Ala.  581; 
Nat.  Bank,  48  111.  36  (in  this  case  the  Ulster  Co.  Bank  v.  McFarlan,  5  Hill, 
promise  was  ultra  vires) ;  Riggs  v.  433.   And  see  Bell  v.  Moss,  5  Whart. 
Lindsay,  7  Cranch,  500;  Saulsbury  189. 

v.  Blandys,  65  Ga.  45;  Sturges  v.  12  Ilsley  v.  Jones,  12  Gray,  260. 

Fourth  Nat.  Bank,  75  111.  595.  13  See  notes  4  and  5,  ante,  and 

10Storer   v.   Logan,  9    Mass.  55;  Lonsdale   v.  Lafayette    Bank,   18 

Lienow  v.  Pitcairn,  Fed.  Gas.  No.  Ohio,  126. 

8341.  14  See  the  cases  cited  in  the  three 

nBoyce  v.  Edwards,  4  Pet.  Ill;  notes  preceding. 

Cassel  v.  Dows,  1  Blatchf.  335;  Car-  15  Coolidge  v.  Payson,  2  Wheat.  66; 

rollton  Bank  v.  Tayleur,  16  La.  490;  Lanusse  v.  Barker,  3  Wheat  101; 

Von  Phul  v.  Sloan,  2  Rob.  (La.)  148;  Schimmelspenich  v.  Bayard,  1  Pet 


§  216.]  EXCHANGES,  SECURITIES,  ETC.  363 

The  same  statement  may  be  made  of  an  authority  to  draw 
a  bill  or  bills,  if  the  bill  be  in  conformity  with  the  letter.18 
It  is  a  good  acceptance  under  a  statute  requiring  a  writing,17 
and  may  be  declared  upon  as  an  acceptance  at  common 
law.18  An  exception  that  has  little  reason  in  it  is  made  in 
some  cases,  that  if  the  draft  is  payable  after  sight  the  prom- 
ise or  authority  is  not  an  acceptance,  because  it  presupposes 
presentment  and  sight  as  a  condition.19  The  exception  is  triv- 
ial and  valueless.20  To  insist  upon  such  a  promise  as  an  ac- 
ceptance, it  is  said  that  it  should  appear  that  the  bill  was 
taken  for  a  valuable  consideration.21 

§216.  Sufficiency  of  authority  or  promise. —  The  ex- 
istence of  the  promise  or  authority  will  be  a  matter  to  be- 
proven  by  evidence  and  inference  from  circumstances,1  and 
may  be  proven  by  any  competent  evidence,  such  as  an  ad- 
mission of  the  party 2  or  by  correspondence.3  If  the  promise 
or  authority  is  in  writing  it  constitutes  the  sole  evidence,, 
and  the  person  acting  upon  it  will  not  be  affected  by  any  ar- 
rangement or  equities  or  understanding  between  the  drawee 

264;  Townsley  v.  Sumrall,  2  Pet.  19  Wildes  v.  Savage,  1  Story,  22; 

170;  Boyce  v.  Edwards,  4  Pet.  Ill;  Brown  v.  Ambler,  66  Md.  391. 

Kennedy  v.  Geddes,  8  Port.  263;  2<>See  cases  to  notes  8  and  9,  §217r 

Storer  v.  Logan,  9  Mass.  55;  Greele  post,  which  do  not  seem  to  recog- 

v.  Parker,  5  Wend.  414    The  letter  nize  the  distinction, 

may  be  pleaded  as  an  acceptance  21  Woodard  v.  Commission  Co.,  43 

(Ontario  Bank  v.  Worthington,  12  Minn.  260.    Practically  the  detri- 

Wend.  593) ;  so  of  an  authority  to  ment  to  the  holder,  who  acts  upon 

draw  against  shipments  (Burke  v.  the  authority,  is  always  a  consider- 

Utah  Nat.  Bank,  47  Neb.  247);  but  ation.    See  Carnegie  v.  Morrison,  2 

the  authority  is  conditional  upon  Met.  381,  where  no  consideration 

the  shipment.  Germania  Nat.  Bank  seems  to  have  existed. 

v.  Tooke,  101  N.  Y.  442.  l  See  the  cases  cited  in  next  twa 

16Mayhew  v.  Prince,  11  Mass.  55;  notes. 

Vance  v.  Ward,  2  Dana,  95;  Beach  2  Crumb   v.  Phettiplace,   53  III. 

v.  State  Bank,  2  Ind.  488.  App.  337. 

17  Ulster  Co.  Bank  v.  McFarlan,  3  Union  Bank  v.  Shea,  57  Minn. 
5  Hill,  432;  O'Donnel  v.  Smith,  2  180;  Berckhead  v.  Brown,  5  Hill, 
E.  D.  Smith,  124,  634, 

18  Ontario  Bank  v.  Worthington, 
12  Wend.  593.   But  see  note  11,  ante. 


364:  BANKS   AND   BANKING.  [§  216. 

and  the  drawer,4  unless  such  arrangements  were  known  to 
the  payee  either  from  actual  knowledge  5  or  through  knowl- 
edge imputed  to  him  from  customary  methods  of  business.6 
In  both  the  latter  instances  he  will  be  bound  by  his  knowl- 
edge. The  construction  of  the  writing  determines  the  prom- 
ise or  authority.  A  written  authority  to  draw 7  or  letter  of 
credit 8  is  sufficient.  A  telegram  in  answer  to  one  describ- 
ing a  certain  check,  which  says:  "T.  is  good,  send  on  your 
paper,"  is  sufficient.9  A  telegram  promising  to  pay  a  certain 
draft  is  an  acceptance,  both  at  common  law 10  and  under  the 
statute  requiring  a  writing.11  But  a  written  statement  that 
"  we  expect  to  take  care  of  them  and  pay  drafts  as  hereto- 
fore "  is  said  to  be  not  sufficient,12  and  though  the  writer 
says  he  will  accept,  the  phrase  may  be  controlled  by  other 
language  in  the  letter.13  A  letter  agreeing  to  carry  the 
maker  of  a  promissory  note  is  no  authority  to  draw  a  draft 
for  the  amount  of  the  note.14  A  written  promise  to  pay  a 
bill  when  corrected  is  good  as  to  the  bill  when  corrected.15 
If  the  authority  to  draw  is  countermanded,  it  cannot  after- 
wards protect  any  one.16 

<Naglee  v.  Lyman.  14  CaL  450;  retson,  51  Fed.  R  168,  4  U.  a  App. 

Oarrollton  Bank  v.  Tayleur,  16  La.  557. 

490.  10  In  re  Armstrong,  41  Fed.  R  381. 

8  See  last  case  and  Storer  v.  Logan,  uMolson's  Bank  v.   Howard,  40 

9  Mass.  55.  N.  Y.  Super.  Ct  15.    And  see,  as  to 

6  Compare  for  the  principle,  First  checks,  §  150,  ante. 

Nat.  Bank  v.  Fiske,  133  Pa.  241.  12  State  Nat  Bank  v.  Young,  14 

7  Smith  v.  Ledyard,  49  Ala.  279;  Fed.  R  889.    This  case  is  wrong. 
Pollock  v.  Helm,  54  Miss.  1;  Adoue  Any  ordinary  business  man  would 
v.  Fox,  30  Mo.  App.  98  (under  stat-  have  acted  upon  the  letter.    The 
ute    requiring   writing):    Rinz   v.  court's  remarks  are  simply  foolish. 
Renauld,  100  N.  Y.  256;  Gates  v.  i»Musgrove  v.   Hudson,  2  Stew. 
Parker,  43  Me.  544;  Michigan  Bank  (Ala.)  464. 

v.  Ely,  17  Wend.  508.  14  Atlanta  Nat  Bank  v.  Fertilizing 

8  Monroe  v.  Pilkinton,  14  How.  Co.,  83  Ga,  356.    This  decision  is  an 
Pr.  250;  Merch.  Ex.  Nat  Bank  v.  egregious   error.    The    letter  was 
Cardago,  35  N.  Y.  Super.  Ct  162;  clearly  sufficient 

Bussell  v.  Wiggin,  2  Story,  213.  And       u  Harrison  v.  Sternan,  4  Phila.  315. 
see  cases  cited  in  note  11,  supra.  18  First  Nat  Bank  v.  Clark,  61  Md. 

9  North  Atchison  Bank  v.  Gar-    400. 


§  217.]  EXCHANGES,  SECURITIES,  ETC.  365 

§217.  Construction  of  the  promise  or  authority. —  A 

promise  to  accept  drafts  drawn  against  shipments  is  nec- 
essarily conditional  upon  the  shipment  or  bill  of  lading  ac- 
companying the  draft;1  but  such  a  promise  is  an  acceptance 
of  drafts  accompanied  by  bills  of  lading,2  even  though  the 
bill  of  lading  be  not  genuine,  if  that  fact  is  not  known  to 
the  payee.3  If  the  authority  requires  the  bill  of  lading  to 
be  attached,  it  is  sufficient  that  it  be  delivered  with  the  draft 
though  not  actually  attached.4  A  promise  to  accept  a  bill 
cannot  be  construed  to  cover  a  bill  for  a  debt  not  contem- 
plated by  the  letter  itself.5  Subsequent  letters,  however, 
may  be  construed  in  accordance  with  the  terms  of  former 
letters.6  The  word  "draft"  may  include  more  than  one 
draft.7  A  letter  authorizing  a  draft  at  so  many  days  may 
be  construed  to  cover  a  draft  so  many  days  after  date  as 
well  as  so  many  days  after  sight,8  but  other  cases  hold  that 
it  means  only  so  many  days  after  sight.9  In  such  a  case,  evi- 
dence as  to  the  meaning  of  the  term  ought  to  be  admitted 
as  controlling  the  meaning.  The  letter,  when  it  contem- 
plates a  continuous  drawing,  makes  a  separate  contract  with 
each  person  that  acts  upon  it.10  It  is  needless  to  say  that  the 
controlling  authority  is  that  any  one  to  claim  the  benefit  of 
such  a  letter,  whether  of  authority  or  credit,  or  of  promise 
to  accept  or  to  pay  the  draft,  must  have  acted  upon  the  let- 
ter,11 and  parted  with  a  valuable  consideration.  And  it  should 
be  remembered  that,  in  the  case  of  such  promises,  whether 

1  First  Nat.  Bank  v.  Bensley,  2       '  Hall  v.  First  Nat.  Bank,  35  III 
Fed.  R  609;  Craig  v.  Marx,  65  Tex.    App.  116. 

649.     It   is   immaterial   that   the  8Burnesv.  Rowland,  40  Barb.  368; 

drawee  who   authorized   actually  Barney  v.  Newcomb,  9  Cash.  46. 

received  the  goods,  as  these  cases  9  Ulster  Co.  Bank  v.  McFarlan,  5 

show.    See  §  220,  note  14  Hill,  433,  holds  it  means  after  sight 

2  Young  v.  Lehman,  63  Ala.  519.  not  after  date.    Allentown  Bank  v. 

3  Craig  v.  Libbett,  15  Pa.  238.  Kirmes,  4  Wkly.  Notes  Cas.  401, 

4  Foreman  v.  Walker,  4  La.  Ann.  holds  it  to  mean  after  date. 

409.    Compare  Murdock  v.  Mills,  11  10  Union  Bank  v.  Coster,  3  N.  Y. 

Met.  5.  203. 

.  5  Hodges  v.  Iowa  Barb  Wire  Co.,  nSee  g  215,  ante,  notes  4  and  5, 

80  Iowa,  65.  and  note  21  to  the  same  section. 
6  Berckhead  v.  Brown,  5  Hill,  634. 


3G6  BANKS   AND   BANKING.  [§  218. 

oral  or  written,  emanating  from  banks,  a  bank  has  no  power 
to  lend  its  credit  for  accommodation,  and  such  promises  may 
be  nugatory.12'  A  promise  of  acceptance  by  more  than  one 
person  is  a  joint  and  several  promise  as  to  each  promisor.13 

§  218.  Promise  as  to  existing  bill. —  A  promise  to  ac- 
cept an  existing  bill  is  a  collateral  promise  as  to  any  one  who 
has  already  taken  the  bill,  and  should  be  founded  upon  a 
new  consideration.1  To  any  one  who  upon  the  faith  of  the 
promise  then  takes  the  bill,  the  promise  is  original  and  not 
within  the  statute  of  frauds,2  and  if  it  intelligibly  describes 
the  bill  is  sufficient,3  under  the  limitation  that  it  be  acted 
upon  within  a  reasonable  time,  as  will  be  pointed  out  in  the 
next  section.  A  written  promise  to  pay  an  existing  bill  is 
said  to  be  an  acceptance4  under  all  circumstances,  but  a 
promise  to  accept  an  existing  bill  or  order  for  money,  whether 
oral  or  written,  unless  founded  upon  some  new  considera- 
tion, would  not  seem  to  have  any  efficacy.  But  the  rule  is 
stated  by  the  highest  authority  generally  that  a  promise  to 
accept  a  bill,  whether  oral  or  written,  is  an  acceptance,  and 
no  qualification  is  placed  upon  the  rule  whatever.5  It  seems 
to  be  good  if  in  writing,6  and  certainly  would  be  good  if  not 
in  writing,  provided  the  promisor  was  under  any  obligation 
to  accept  the  bill,  arising  from  the  possession  of  funds  or  of 
the  proceeds  of  the  property  represented  by  the  bill,  or  of 

12  See  §  146,  ante.  Cook  v.  Miltenberger,  23  La.  Ann. 

13  Michigan  State  Bank  v.  Pecks,    377.  Contra  thereto,  First  Nat  Bank 
28  Vt.  200.  v.  Clark,  61  Md.  400. 

1  Barnett  v.  Boone  Lumber  Co.,  5  Scudder  v.  Union  Nat.  Bank,  91 

43  W.  Va.  441,  so  holds  as  to  a  ver-  U.  S.  406,  citing  a  number  of  cases, 

bal  promise  to  accept.    Strohecker  some  of  which  are  in  point,  to  wit: 

v.  Cohen,  1  Spears,  349,  holds  all  the  Illinois  cases,  and  Spaulding  v. 

verbal  promises  to  accept  binding  Andrews,  48  Pa.  411. 

as  to  bills  of  exchanga  6  It  would  not  be  within  the  stat- 

2Kelley  v.  Greenough,  9  Wash,  ute  of  frauds,  but  the  objection 

659;  Townsley  v.  Sumrall,  2  Pet.  170.  would  still  remain  that  it  had  no 

3  See  note  15  to  §  215,  ante.  consideration.    See    the   cases   in 

4  Jones  v.  Iowa  Bank,  34  111.  313.  note  4,  supra. 
See  notes  5  and  6  to  §  215,  ante,  and 


§§219,220.]  EXCHANGES,  SECUKITIESj  ETC.  367 

something  obtained  by  the  proceeds.7  Sometimes  a  statute 
requires  the  promise  to  be  made  before  the  drawing  of  the 
bill.8 

§  219.  Reasonable  time  for  acting  upon  promise  or  au- 
thority.—  As  has  been  already  stated,  the  promise  or  the 
authority  must  be  acted  upon  within  a  reasonable  time.1 
The  failure  to  act  upon  the  authority  for  two  years  has  been 
held  to  be  an  unreasonable  delay;2  but  a  delay  of  fifteen 
days  has  been  considered  reasonable  where  no  injury  to  the 
promisor  was  shown.3  What  is  a  reasonable  time  must  de- 
pend wholly  upon  circumstances,  and  the  customs  of  the  par- 
ticular business  must  be  taken  into  account.4  But  a  delay 
in  getting  a  corrected  draft  was  not  unreasonable  where  the 
promisor  was  notified  of  the  fact  and  made  no  reply.5 

§  220.  Conformity  of  bill  to  promise  or  authority, — 

Promises  to  accept  drafts  or  orders  are  considered  some- 
what in  the  light  of  contracts  of  guaranty,  and  the  promise 
or  the  authority  must  be  strictly  followed.1  Any  material 
departure  from  the  terms  of  the  authority  or  promise  can- 
not be  enforced  against  the  promisor.2  A  draft  larger  than 
the  one  authorized  or  promised  to  be  accepted  will  be  a  ma- 
terial departure.3  A  draft  authorized  to  be  drawn  in  a  par- 
ticular partnership  name  is  not  fulfilled  by  a  draft  in  another 

7  See  §  214,  ante,  and  Barnett  v.        3  Nimocks  v.  Woodey,  97  N.  C.  1. 
Boone  Lumber  Co.,  43  W.  Va.  441.        «  First  Nat.  Bank  v.  Fiske,  133  Pa. 

8  La.  Nat.  Bank  v.  Schuchhardt,    241. 

15  Hun.  405.    The  bill  if  altered  in  5  Johnson  v.  Clark,  89  N.  Y.  216. 

any  way  is  newly  issued  from  that  l  Sherwin  v.  Brigham,  39  Ohio  St. 

time,  if  alteration  was  suggested  137;  Saulsbury  v.  Blandy,  53  Ga. 

by  the  drawee.  665;  Lienow  v.  Pitcairn,  Fed.  Cas. 

1  Wilson  v.  Clements,  3  Mass.  1 ;  No.    8341.     Compare    Coffman   v. 
Lanusse  v.  Barker,  10  Johns.  312;  Clarinda  Bank,  83  111.  App.  641. 
Posey  v.  Denver  Nat.  Bank,  7  Colo.  2  See  the  cases  in  the  preceding 
App.  108.  note. 

2  Wilson  v.  Clements,  3  Mass.  1 :  * Brinkman  v.  Hunter,  73  Mo.  172. 
Lanusse  v.  Barker,  10  Johns.  312;  The  promise  is  not  good  as  a  partial 
reversed,  3  Wheat.  101.    See   the  acceptance. 

next  note  for  case  stating  the  gen- 
eral principle 


3G8  BANKS   AND   BANKING.  [§  220. 

name,  though  the  same  partnership  used  that  other  name 
interchangeably  with  the  one  authorized.4  A  draft  drawn 
upon  one  of  three  drawees  will  not  conform  to  an  authority 
authorizing  a  draft  upon  the  three.5  With  such  strictness  is 
the  rule  held  as  to  names.  A  general  authority  to  draw,  or 
a  general  promise  to  pay,  drafts  will  be  confined  to  drafts 
drawn  upon  the  promisor  at  his  place  of  business.6  Exchange 
added  to  a  draft  will  destroy  the  efficacy  of  the  draft  where 
exchange  was  not  authorized ; 7  but  the  addition  of  exchange 
to  a  draft  which  could  not  draw  exchange  will  be  an  imma- 
terial departure.8  If  consignments  are  required  to  accom- 
pany the  drafts  and  do  not,  the  draft  will  not  conform  to  the 
authority,  although  the  drawee  received  the  consignments ; 9 

v  *  o  o  * 

but  this  ruling  seems  exceedingly  strained,  and  the  -court 
seems  to  have  had  its  sense  of  justice  poorly  developed.  But 
the  better  rule  is  that  a  reasonable  compliance  is  all  that  is 
required,  as  instances  cited  in  the  note  below  lo  show.  If  no 
place  is  named  where  the  draft  should  be  drawn,  the  drawer 
is  confined  to  no  particular  place.11  A  stipulation  that  bills 
of  lading  be  attached  is  satisfied  by  delivering  the  bill  of 
lading  with  the  draft,12  or,  if  the  attached  bill  of  lading  is 
forged,  but  that  fact  is  unknown  to  the  payee,  the  payee 
may  enforce  the  promise.13  If  the  drawee  retains  the  pro- 
ceeds of  the  shipment,  with  notice  of  the  violation  of  the 
authority,  he  will  be  bound.14 

<  First  Nat  Bank  v.  Benstey,  2  Geddes,  3  Ala.  581 ;  Lathrop  v.  Har- 

Fed.  R  609.  low,  23  Mo.  209. 

8  Glover  v.  Tuck,  1  Hill,  66.  "  Posey  v.  Denver  Nat.  Bank,  7 

6  Michigan  State  Bank  v.  Leaven-  Colo.  App.  108. 

worth,  28  Vt  209.  12  Foreman  v.  Walker,  4  La.  Ann. 

'Lindley  v.  First  Nat.  Bank,  76  409. 

Iowa,  629.  "Craig  v.  Sibbett,  15  Pa.  23a 

8  North  Atchison  Bank  v.  Garret-  u  Lewis  v.  Kramer,  3  Md.  265.    If 
son,  51  Fed.  R  168.  the  drawee  got  the  proceeds  of  the 

9  First  Nat.  Bank  v.  Bensley,  2  draft,  no  acceptance  at  all  was  nee- 
Fed.  R  609.    See  note  14,  infra,  essary.    Barney  v.  Worthington,  37 

10  North  Atchison  Bank  v.  Garret-    N.  Y.  112;  Merchants'  Bank  v.  Gris- 
son,  51  Fed.  R  168;   Kennedy   v.    wold,  9  Hun,  561.  See  §  222,  note  8. 


§|  221,  222.]  EXCHANGES,  SECURITIES,  ETC.  3G9 

§221.  Revocation  of  authority  or  promise. —  The  au- 
thority may  be  considered  as  revoked  by  a  failure  to  act 
upon  it  within  a  reasonable  time,  or  by  a  failure  to  conform 
to  the  terms  of  the  authority.  It  may  be  considered  revoked 
by  a  refusal  to  act  upon  it  and  the  proposal  of  other  terms 
not  accepted  by  the  drawee,1  as  well  as  by  a  statement  of  the 
person  authorized  to  both  drawee  and  payee  that  he  would 
not  act  upon  the  authority.2  The  authority  when  once  acted 
upon  to  the  extent  of  the  power  granted  is  exhausted,3  and 
the  authority  may  be  revoked  whether  the  payee  knows  that 
fact  or  not.4  He  takes  the  risk  of  the  power  being  no  longer 
in  existence,  just  as  he  does  when  an  authority  is  granted  by 
a  telegram,  but  another  telegram  has  been  sent  revoking  the 
authority,  and  he  takes  the  draft  in  ignorance  of  the  revoca- 
tion.5 But  a  continuing  authority  exists  until  notice  of  revo- 
cation to  the  person  authorized.6  The  authority  may  be 
revoked  at  any  time,  as  in  the  case  of  a  permission  to  over- 
draw.7 JBut  where  the  continuous  authority  has  been  ad- 
dressed to  a  particular  person  to  grant  credit  to  the  drawer, 
it  would  seem  that  in  justice  the  revocation  ought  to  be  ad- 
dressed to  that  person. 

§  222.  Defenses  to  promise  to  accept. —  The  situation  of 
the  accounts  between  the  drawer  and  drawee,1  or  an  abuse 
of  the  confidence  of  the  drawee,2  or  a  failure  on  the  part  of 
the  drawer  to  carry  out  his  contract  with  the  drawee,3  or  a 

1  There  was  never  any  acceptance    133  III  234.    Death  revokes  the  au- 
of  the  offer  by  the  offeree.  thority.    Michigan  State  Bank  v. 

2  Lienow  v.  Pitcairn,  2  Paine,  C.    Leavenworth,  28  Vt.  209. 

C.  517.  7  Ballard  v.  Fuller,  32  Barb.  68.    It 

3  Ranger  v.  Sargent,  36  Tex.  26.  may  be  revoked  as  a  promise  to 

4  See  the  case  cited  in  the  next  accept,  except  as  to  some  one  who 
note  and  Michigan  State  Bank  v.  has  acted  upon  it.   Robbins  v.  Lam- 
Leavenworth,  28  Vt.  209.    But  com-  beth,  2  Rob.  (La.)  304. 

pare  Ilsley  v.  Jones,  12  Gray,  260.  .        » Palmer  v.  Rice,  36  Neb.  844. 

6  First  Nat.  Bank  v.  Clark,  61  Md.        2  Gray  v.  Kentucky  Bank,  29  Pa. 

400.  365. 

6  De  Tastell  v.  Cronsillat,  2  Wash.        3  Central  Sav.  Bank  v.  Richards^ 

C.  C.  132;  Hall  v.  First  Nat.  Bank,  109  Mass.  413. 
24 


370  BANKS   AND   BANKING.  [§  223. 

closing  of  the  accounts  between  the  drawer  and  drawee,?  or 
any  other  dealings  between  the  drawer  and  the  promisor,8 
will  not  affect  the  person  who  has  acted  upon  the  authority 
in  conformity  with  it,  unless  the  fact  is  known  to  the  payee 
and  is  of  such  a  character  that  he  is  able  to  infer  that  the 
authority  would  no  longer  continue,  or  such  that  his  acting 
upon  the  authority  would  be  a  fraud  upon  the  promisor.6 
Nor  will  a  delay  in  presenting  the  draft  for  acceptance  be  a 
defense  for  the  promisor  where  the  holder  parted  with  value,7 
unless  his  conduct  amount  to  an  estoppel ;  nor  can  he  de- 
fend on  the  ground  of  delay  where  the  drafts  are  drawn 
against  the  proceeds  of  shipments  which  he  has  received.8 
The  defenses  of  failure  to  act  upon  the  power  or  promise 
within  a  reasonable  time,  of  revocation  of  the  authority,  and 
of  failure  to  conform  to  the  authority  granted,  have  already 
been  considered  in  the  preceding  sections.9 

§  223.  Revocation  of  acceptance  made. —  An  acceptance 
once  made  in  writing  cannot  be  revoked  after  delivery  of 
the  acceptance  to  the  holder,  unless  the  holder  was  in  some 
way  a  party  to  an  imposition  upon  the  acceptor.1  It  would 
seem  to  follow  that  any  other  kind  of  acceptance  recognized 
as  valid  in  the  particular  jurisdiction  could  not  be  revoked ; 
but  it  has  been  held  that  a  promise  to  accept  a  draft  made 
to  the  holder  of  the  draft  could  be  revoked  where  no  third 
person  was  affected.2  There  is  reason  in  holding  that  a 

<Miltenberger  v.  Cooke,  18  Wall  ter,  Rice  &  Co.,  152  Mass.  34;  An- 

421.  Drawee  knew  draft  was  drawn,  dressen  v.  First  Nat.  Bank,  2  Fed. 

5  Carrollton  Bank  v.  Tayleur,  16  R.  122.    It  cannot  be  revoked  as  to 
La.  490.  the  drawer  by  an  agreement  be- 

6  See  Sherwin  v.  Brigham,  1  Cleve.  tween  the  payee  and  acceptor  to 
Law  R.  22,  39  Ohio  St.  137.  revoke  it.    Trent  Tile  Co.  v.  Fort 

7  Starr  v.  Murchison,  1  City  Ct.  R.  Dearborn  Nat  Bank,  54  N.  J.  Law, 
413.    The  acceptance    becomes  a  83, 599. 

promissory  note.  . 2  Robbing  v.  Lambeth,  2  Rob.  (La.) 

8  Miltenberger  v.  Cooke,  18  WalL  304.    A  promise  to  accept  may  be 
421.  considered  as  an  offer.    This  offer 

9  See  §  221,  ante,  and  g§  219  and  is  made  to  any  one  who  chooses  to 
220,  ante.  act  upon  it.    Until  it  is  acted  upon 

1  Fort  Dearborn  Nat.  Bank  v.  Car-    it  is  no  more  than  an  offer  and  may 


§  224]  EXCHANGES,  SECURITIES,  ETC.  371 

promise  to  accept,  made  before  the  draft  is  drawn,  could  be 
revoked  at  any  time  before  the  promise  is  acted  upon,  for 
such  a  promise  is  nothing  more  than  a  letter  of  credit,  which 
gains  no  efficacy  until  acted  upon.  This  is  as  far  as  the  rule 
should  go.  A  uniform  rule  ought  to  be  applied  to  all  valid 
acceptances,  whatever'their  nature,  and  an  acceptance  once 
complete  ought  to  be  revocable  only  for  fraud 3  or  mistake. 
A  mistake  as  to  the  signature  of  the  drawer,  or  as  to  the 
possession  of  funds,  ought  to  be  excepted  from  the  right  of 
revocation,  because  the  drawee  is  bound  to  know  the  signa- 
ture of  the  drawer  and  the  state  of  the  accounts.  As  to  a 
bona  fide  transferee  after  acceptance,  or  as  to  a  ~bonafide  ac- 
ceptee  who  has  altered  his  position  on  the  strength  of  the 
acceptance,  the  acceptance  as  well  as  the  promise  to  accept 
before  or  after  the  drawing  of  the  bill  must  be  considered 
irrevocable.4  This  statement  presupposes  that  the  bill  is  a 
genuine  bill,  not  forged  as  to  an  indorser's  name  or  as  to  the 
amount. 

§  224.  Necessity  of  acceptance  as  to  drawee. —  Until  a 
bill  of  exchange  is  accepted  by  the  drawee,  no  obligation  to 
pay  it  as  a  party  to  the  bill  exists  upon  the  drawee's  part,1 
unless  the  acceptor  waives  acceptance,  which  he  may  do  by 
parol;2  nor  if  the  bill  of  exchange  is  drawn  generally,  and 
is  not  payable  out  of  a  particular  fund,  can  it  be  considered ; 
nor  can  it  operate  as  an  assignment  of  any  funds  of  the  drawer 
in  the  hands  of  the  drawee.3  The  rule  in  regard  to  checks  has 

be  withdrawn.   If  it  be  withdrawn,  v.  McMichael,  106  Pa.  460;  Kimball 

a  person  acting  upon  it,  as  we  have  v.  Donald,  20  Mo.  597;  Hankin  v. 

seen  in  the  last  section,  must  take  Squires,  5  Biss.  186. 
the  risk  of  tb.3  authority  being  still       2  Wintermute  v.   Post,  24  N.  J. 

in  existenca  Law,  420,  semble.    Promises  to  ac- 

3  New  York  Stock  Bank  v.  Gib-  cept  may  be  considered  as  waivers 
son,  5  Duer,  574.    This  must  be  tho  also;  so  may  authority  to  draw, 
fraud  of  the  holder.  8  Kimball  v.  Donald,  20  Mo.  597; 

4  As  to  checks,  see  §  150,  ante.         Mo.  Pac.  Ry.  Co.  v.  Wright,  88  Mo. 
1  Dickey  v.  Harmon,  1  Cranch,    App.  141:  Brill  v.  Tuttle,  81  N.  Y 

C.  C.  201;  Colorado  Bank  v.  Boett-  457;  Holbrook  v.  Payne,  151  Mass, 
cher,  5  Colo.  185;  Reilly  v.  Daly,  383;  Bush  v.  Foote,  58  Miss.  5; 
159  Pa.  605;  Northumberland  Bank  Marysville  Bank  v.  Brewing  Co.,  50 


372 


BANKS   AND   BANKING. 


[§ 


been  heretofore  stated  and  need  not  be  repeated  here.4  The 
same  is  true  of  an  order  drawn  generally  and  not  payable  out 
of  a  particular  fund.5  The  exceptions  to  the  above  statement 
are  (1)  in  the  case  of  checks  which  have  been  treated  by  the 
parties  and  are  understood  between  them  to  be  assignments 
of  a  particular  fund  or  a  portion  thereof,  they  will  be  con- 
sidered as  total  from  a  legal,  or  partial  assignments  from  an 
equitable,  point  of  view;6  and  this  rule  would  be  applied  to 
drafts ;  (2)  orders  or  bills  of  exchange,  so  called,  payable  out 
of  a  particular  fund,  or  describing  the  fund  out  of  which 
they  are  payable,  will  be  considered  assignments  of  the  fund 
pro  tanto,1  with  the  proviso  that  if  they  take  a  part  of  the 
fund  only  they  are  partial  assignments,  not  good  at  law  but 
in  equity ; 8  (3)  a  promise  to  accept  on  the  part  of  the  drawer, 
or,  as  we  have  seen,  previous  authority  to  draw  the  draft  or 
a  letter  of  credit,  may  dispense  with  the  necessity  for  accept- 


Ohio  St.  151;  Hopkins  v.  Beebe,  26 
Pa.  85;  Randolph  v.  Canby,  Fed. 
Cas.  11,559;  Winter  v.  Drury,  5  N.  Y. 
525.  Even  where  the  draft  is  for 
the  exact  amount  of  the  fund  it  is 
not  an  assignment.  Shand  v.  Du 
Buisson,  L.  R.  18  Eq.  283;  Bush  v. 
Foote,  58  Miss.  5.  Contra,  Wheatley 
v.  Strobe,  12  CaL  97.  (See  Cushman 
v.  Harrison,  90  CaL  297.)  Nimocks 
v.  Woodey,  97  N.  C.  1.  The  desig- 
nation of  the  fund  or  particular  ac- 
count for  reimbursement  does  not 
make  the  bill  of  exchange  an  as- 
signment. Whitney  v.  Eliot  Nat. 
Bank,  137  Mass.  354;  Schmittler  v. 
Simon,  101  N.  Y.  554 

<  See  §  146,  ante,  notes  15, 16,  17, 
and  §  147,  ante. 

*  Shaver  v.  West.  Union  TeL  Co., 
57  N.  Y.  459;  Woodruff  v.  Hensel, 
5  Colo.  App.  103.  Order  out  of  par- 
ticular fund.  Indiana  Mfg.  Co.  v. 
Porter,  75  Ind.  42a 

6  See  §  146,  ante,  note  17,  and 
Throop  Grain  Co.  v.  Smith  110  N.  Y. 


83  (a  draft).  The  case  of  North  v. 
Campbell,  72  111.  380,  has  a  mislead- 
ing head-nota  The  decision  really 
holds,  however,  that  a  draft  drawn 
generally  was  an  assignment  of 
the  fund  prepared  to  meet  it.  The 
case  should  have  been  decided  on 
the  ground  that  the  draft  was 
drawn  by  an  agent  .against  the 
principal,  who  was  in  fact  drawee, 
and  the  draft  was  accepted  by  the 
manner  in  which  it  was  drawn. 

7  Such  orders  are  not  bills  of  ex- 
change, they  are  assignments.    See 
§  207,  ante.    Implied  acceptances 
might  be  classed  under  this  head 
as  assignments.    See  Hall  v.  First 
Nat.  Bank,  133  III  234;  Milling  v. 
Sloan,  57  Ga.  392;  Cowperthwaite 
v.  Sheffield,  1  Sandf.  416;  Lowery  v. 
Steward,  25  N.  Y.  239;  Miltenberger 
v.  Attwood,  18  How.  Pr.  330.    But 
see  Exchange  Bank  v.  Rice,  107 
Mass.  37. 

8  Gurnee  v.  Hatton,  63  Hun,  197; 
Hopkins  v.  Nash  Co.,  77  N.  W.  R.  53. 


§  224.]  EXCHANGES,  SECURITIES,  ETO.  373 

ance;9  (4)  there  are  some  peculiar  cases  where  the  transac- 
tion amounts  to  the  creation  of  a  trust,10  or  it  may  be  an 
implied  acceptance,11  or  what  may  be  termed  an  estoppel.12 
Thus  it  has  been  held  that  where  one  man  induced  another 
to  draw  a  bill  in  which  the  second  man  had  no  interest,  the 
bill  being  drawn  against  funds  prepared  by  the  first  man  to 
meet  the  draft,  and  the  latter  induced  the  payee  not  to  pre- 
sent the  draft  and  then  appropriated  the  fund  for  other  pur- 
poses, the  draft  would  be  considered  as  having  been  accepted 
by  the  drawee  as  agent  of  the  person  who  caused  the  draft 
to  be  drawn,  and  the  latter  would  be  held  to  have  appropri- 
ated the  money  of  the  payee  and  as  liable  for  money  had 
and  received ; 13  (5)  though  the  drawee  may  be  dead,  his  per- 
sonal representative  may  accept  the  bill  or  order  both  before 
and  after  maturity;14  (6)  the  acceptance  maybe  waived,15 
either  because  the  document  is  considered  as  accepted  or  by 
express  waiver.  But  if  the  bill  or  check  or  order  be  not 
accepted  the  payee  has  his  recourse  upon  the  drawer  or  in- 
dorsers,  and  every  one  responsible  to  him  upon  the  document, 
provided  he  protect  his  rights  as  hereinafter  stated,16  or  if 
he  has  seasonably  protected  his  rights  may  sue  the  drawer 
upon  his  original  claim.17  But  if  the  drawer  drew  as  agent 
the  agent  is  not  personally  responsible,18  except  for  the  truth 
of  his  implied  representation  of  his  authority  as  agent.19  In 
a  peculiar  case  the  holder  was  refused  a  remedy  against  the 
drawer  or  one  whom  he  had  the  right  to  consider  the  drawer.-0 

9  See  §§  215  to  222,  ante.  14  This  must  be  in  writing  under 

10  See  Halsey  v.  Warden,  25  Kan.    the  statute  of  frauds.     See  Debesse 
128;  Michigan  State  Bank  v.  Gard-    v.  Napier,  1  McCord,  106. 

ner,  15  Gray,  362.  i»  See  g§  208  and  209,  ante. 

11  See  §  214,  ante,  and  note  7,  supra,  '6  See  Brown  v.  Jackson,  1  Wash, 
and  Halsey  v.  Warden,  25  Kan.  128.  C.  C.  512,  for  a  non-negotiable  or- 
But  see  Calhoun  v.  Manuf.  Bank,  der,  and  see  §  225,pos£,  note  3. 

36  Ga.  410,  and  Ware  v.  Macon  City  17  See  §  225,  post. 

Bank,  59  Ga.  840.  iSHall  v.  Conk,  17  S.  W.  R  1022. 

12  See  §  214,  ante.  19  This  would  not  be  a  suit  on  the 

13  North  v.  Campbell,  72  111.  380.  paper,  but  for  damages. 

See  for  an  explanation  of  this  case  2°  Parsons  v.  Armor,  8  Pet.  413. 
note  6,  supra.  This  decision  is  undoubtedly  wrong. 


374  BANKS   AND   BANKING.  [§  225. 

§  225.  Effect  of  non-acceptance. —  If  acceptance  of  a  bill 
of  exchange  be  refused,  whether  it  should  be  protested  or 
not  depends  at  common  law  on  whether  it  is  an  inland  or  a 
foreign  bill.  This  subject  will  be  discussed  under  a  later 
section.1  Statutes  may  require  protest  or  dispense  with  it. 
But  at  any  rate  notice  of  non-acceptance  must  be  immedi- 
ately given  to  the  drawer  and  indorsers  or  they  will  escape 
liability,2  unless  the  notice  be  excused  for  some  of  the  rea- 
sons hereinbefore  stated.3  This  notice  must  be  given  by  a 
party  to  the  bill  or  by  his  agent.4  It  cannot  be  given  by  a 
stranger.5  It  will  not  avail  to  excuse  the  failure  to  give  notice 
of  non-acceptance  that  the  bill  was  one  which  did  not  re- 
quire acceptance.  Notice  must  nevertheless  be  given.6  So 
a  conditional  acceptance  must  be  notified  to  the  drawer  and 
indorsers.7  And  if  notice  of  non-acceptance  be  not  given 
when  acceptance  is  refused,  a  subsequent  acceptance  will 
not  restore  the  holder's  rights  against  the  drawer  and  in- 
dorsers.8 Acceptance,  of  course,  proves  a  due  presentation,9 
unless  it  be  an  acceptance  after  a  refusal  to  accept.  The 
foregoing  rule  as  to  the  necessity  of  notice  to  drawer  is  not 
held  with  the  same  strictness  as  to  checks,  although  a  refusal 
to  accept  a  check  is  a  refusal  to  pay  it,  as  we  shall  herein- 

1  See  §  246,  post  *  See  §  208,  ante,  and  §  241,  post. 

2  Glasgow  v.  Copeland,  8  Mo.  268;        4  Chanoine  v.  Fowler,3  Wend.  173. 
Linden berger  v.  Wilson,  1  Cranch,        5  See  last  case  cited. 

d  C.  340;  Phillips  v.  McCurdy,  1  6  See  note  2,  supra,  and  Mitchell 

Harr.  &  J.  187;  Warder  v.  Tucker,  v.  Degrand,  1  Mason,  176. 

7  Mass.  449;  Stanton  v.  Blossom,  14  7  Scattergood  v.  Finley,  20  Ga.  423. 

Mass.   116.    Notice  must  be  of  the  The  opinion  in  this  case  is  a  curious 

first  dishonor.    Thompson  v.  Cum-  and  absurd  performance  by  Lump- 

mings,  2  Leigh,  321.    This  is  true  kin,  J.    The  ground  of  the  court's 

though  the  bill  did  not  need  pres-  decision  is  foolish.  The  true  ground 

entation  for  acceptance.    Pendle-  is  the  one  given  above  in  the  text 

ton  v.  Knickerbocker  Life  Ins.  Co.,  If  the  notice  be  given  of  the  quali- 

6  Fed.  R.  238;  Landrum  v.  Trow-  fied  acceptance,  the  prior  parties 

bridge,  2   Met  (Ky.)   281;  Carmi-  are  held  as  a  matter  of  necessity, 

chael  v.  Pennsylvania  Bank,  4  How.  Howe  v.  Young,  2  Bligh,  891. 

(Miss.)  567.    But  this  rule  was  ig-  8  Mitchell  v.  Degrand,  1  Mason, 

nored  in  House  v.  Adams,  48  Pa.  176. 

261.  «  Edson  v.  Fuller,  22  N.  H.  183. 


§  226.]  EXCHANGES,  SECURITIES,  ETC.  375 

after  see.10    As  to  non-negotiable  orders  the  rule  will  be 
hereinafter  stated  in  connection  with  refusal  of  payment.11 

§  226.  Effect  of  acceptance. —  The  absolute  acceptance 
of  the  draft  or  order  renders  the  acceptor  the  principal 
debtor  upon  the  instrument l  and  obligates  the  acceptor  to 
pay  the  amount  according  to  the  tenor  and  effect  of  the  in- 
strument, or,  if  the  acceptance  is  special,  according  to  the 
tenor  of  the  acceptance.2  The  presence  or  absence  of  funds 
in  the  acceptor's  hands  is  immaterial.3  An  absolute  accept- 
ance cannot  be  shown  to  be  conditional,4  nor  can  it  be  shown 
as  against  the  holder  that  it  was  modified  by  agreement  be- 
tween the  drawer  and  drawee.5  It  includes  a  stipulation  for 
attorney's  fees  in  the  bill.6  But  a  mistake  as  to  the  amount 
between  the  drawer  and  the  drawee  may  be  set  up  where 
the  drawer  is  the  holder;7  while  an  agreement  between  the 
holder  and  drawer  not  to  press  the  acceptor  is  not  available 
to  the  acceptor.8  JSTor  can  the  acceptor  set  up  that  the 
drawer  was  incompetent  to  contract,9  nor  that  he  signed  the 
bill  not  with  his  true  name.10  The  acceptance  is  in  effect  the 
acceptor's  promissory  note  to  the  holder,11  the  drawer  be- 
comes prima facie  a  secondary  debtor  to  the  acceptor,12  and 

10  See  §  237,  post.  572.   Nor  can  a  written  acceptance 

11  See  §  269,  post  be  varied  by  paroL  Mason  v.  Graff, 

1  Parmalee  v.  Williams,  72  Ga.  42;    35  Pa,  448. 

Diversey  v.  Moor,  22  III  331;  Blair  5  Fisher  v.  Beckwith,  19  Vt.  31; 

v.  Tennessee  Bank,  11  Humph.  84;  Flournoy  v.  First  Nat.  Bank,  79  Ga. 

Capital  City  Ins.  Co.  v.  Quinn,  73  810. 

Ala.  558.  6  Smith  v.  Muncie  Nat.  Bank,  29 

2  Cox  v.  National  Bank,  100  U.  S.  Ind.  158. 

712;  Swope  v.  Ross,  40 Pa,  186.  'Thomas  v.  Thomas,  7  Wis.  476. 

3  See  next  section,  and  Raborg  v.        8  Van  Alstyne  v.  Sorley,  32  Tex. 
Peyton,  2  Wheat.  385.  An  accepted    518. 

order  drawn  on  its  face  against  cer-  9  Cowlon  v  Mecliersham,  54  Pa. 

tain  funds  is  enforceable  in  equity  302,  dictum. 

against    funds    in  the    drawee's  10  Claflin  v.  Griffin,  8  Bosw.  689. 

hands..    Michigan  State  Bank  v.  "Sylvester  v.  Staples,  44  Me.  496; 

Gardner,  15  Gray,  362.  McKirdy  v.  Hare,  7  Atl.  R.  172. 

4  Haines  v.   Nance,  52  HL  App.  ™  North  Am,  Coal  Co.  v.  Dyett,  7 
406;  Heavener  v.  Donnell,  7  Smedes  Paige,  9. 

&  M.  244;  Cowan  v.  Hallock,  9  Colo. 


376  BANKS   AND   BANKING.  [§  227. 

the  acceptor  and  drawer  are prima  facie  principal  debtors 
as  to  the  indorsers.13  Though  the  acceptor  be  a  mere  accom- 
modation acceptor  to  the  knowledge  of  the  holder  he  is  none 
the  less  bound.14  The  holder,  it  has  been  said,  may  strike 
out  the  drawer's  name  after  acceptance.15  Yet  as  between 
the  acceptor  and  the  drawer  the  acceptor  may  show  himself 
to  be  a  surety,  just  as  he  or  the  drawer  may  show  the  same 
fact  as  to  an  indorser  as  against  that  indorser.16  Non-nego- 
tiable orders  accepted  absolutely  ought  to  be  binding  upon 
the  acceptor  though  he  have  no  funds  of  the  drawer.17  A 
payee  upon  such  an  order,  or  an  indorsee  to  whom  the  ac- 
ceptance was  given,  may  at  common  law  maintain  an  action 
upon  the  acceptance  in  his  own  name,18  but  it  is  said  an  in- 
dorsee after  acceptance  of  a  non-negotiable  order  cannot.19 
But  this  rule  would  have  no  application  where  an  assignee 
or  the  real  party  in  interest  can  sue. 

§  227.  Admissions  by  acceptance. —  The  acceptance  of 
the  drawee  is,  nothing  further  appearing,  an  admission  that 
the  drawee  has  funds  of  the  drawer  to  the  amount  of  the 
bill.1  As  to  the  holder  this  presumption  from  the  admission 

13  Diversey  v.  Moor,  22  111.  331.  contrary.  See  also  Bradford  v.  Hub- 

"  In  re  Babcock,  3  Story,  393;  Wil-  bard,  8  Pick.  155. 

son  v.  Isbell,  45  Ala.  142;  Anderson  i6  Canadian  Bank  v.  Coumbe,  47 

v.  Anderson,  4  Dana,  352;  Cronise  Mich.  358;  Child  v.  Eureka  Powder 

v.  Kellogg,  20  III  11;  Nowak  v.  Ex-  Works,  44  N.  H.  354. 

celsior  Stone  Co.,  78  111.  307.  n  Greene  v.  Duncan,  37  S.  C.  239; 

18  Ashton  v.  Reeves,  3  Phila.  339.  but  see  Richardson  v.  Carpenter,  46 

This  does  not  affect  the  rights  of  N.  Y.  660,  and  Kemble  v.  Lull,  3 

the  acceptor  as  against  the  drawer,  McLean,  272,  which  says  the  ac- 

but  the  drawer  is  never  responsible  ceptance  of  an  order  conditional 

to  the  acceptor  in  the  capacity  of  upon  the  presence  of  funds  is  an 

acceptor.    The    case  of  Canadian  admission  of  funds. 

Bank    v.  Coumbe,    47    Mich.   358,  is  Bacon  v.  Bates,  53  Vt.  30;  Grant 

without   any  apparent    reflection  v.  Wood,  12  Gray,  220. 

holds  that  if  the  holder  knows  the  19  Gerard  v.  La  Coste,  1  Dall.  194 

drawer  to  be  a  surety  he  must  act  1  Gillilan  v.  Myers,  31  111.  525;  Ra- 

accordingly,  but  the  cases  in  the  borg  v.  Peyton,  2  Wheat.  385.    The 

preceding  note  expressly  rule  the  same  is  true  of  an  order.    See  note 

17  to  last  section. 


§  227.]  EXCHANGES,  SECUKITIES,  ETC.  377 

is  absolute.2  And  as  between  the  acceptor  and  drawer  and 
indorsers,  the  natural  presumption  from  the  drawing  of  a 
bill  of  exchange  or  order  for  money  is  that  the  drawee  is 
indebted  to  the  drawer,3  and  if  the  bill  or  order  is  accepted 
the  presumption  is  that  the  drawee  or  acceptor  has  funds  of 
the  drawer,4  and  if  the  bill  or  order  is  paid  the  inference  is 
that  it  was  paid  by  the  drawee  or  acceptor  out  of  his  in- 
debtedness to  the  drawer.5  But  as  between  the  drawer  and 
acceptor  and  indorsers  the  fact  may  be  shown  to  rebut  the 
presumption,6  and  thus  it  may  be  made  to  appear  that  the 
acceptor  was  in  fact  an  accommodation  acceptor  as  to  the 
drawer 7  or  as  to  an  indorser,  or  that  the  drawer  was  an  ac- 
commodation drawer  for  an  indorser,  or  that  one  indorser 
was  an  accommodation  indorser  as  to  another  indorser.8 

The  acceptance  of  a  bill  or  order  admits  the  genuineness 
of  the  signature  of  the  drawer,  but  it  does  not  admit  the 
genuineness  of  any  other  signature  upon  the  bill  or  of  the 
contents  of  the  instrument.9  The  rule  as  to  the  acceptance 
or  payment  of  checks  is  the  same.10  If  the  bill  be  payable 
to  the  drawer's  own  order  the  rule  is  the  same.11  Hence  if 
the  acceptor  pays  to  an  innocent  indorsee  the  bill  upon  a 
forged  indorsement  he  will  be  liable  to  the  true  owner  of  the 
bill,12  and  he  may  compel  the  person  to  whom,  he  paid  to 

2  See  note  1  to  last  section.  Bank,  64    N.  Y.  316;    First   Nat. 

"Bradley  v.  McClellan,  3  Yerg.  Bank  v.  Ricker,  71  111.  439;  and  see 

301;  Adams  v.  Darby,  28  Mo.  162;  §  154,  ante,  as  to  forgeries  in  checks. 

Alvord  v.  Baker,  9  Wend.  323.  But   a   bank   is    bound  to    know 

4  Byrd  v.  Bertrand,  7  Ark.  321 ;  whether  its  own  bills  have  been 

Parks  v.   Nichols,  20  Bradw.  143;  fraudulently  raised.   United  States 

Byrne  v.  Schwing,  6  B.  Mon.  199;  Bank  v.  Bank  of  Georgia,  10  Wheat. 

First  Nat.  Bank  v.  Moss,  41  La.  Ann.  333.    In  this  case  Story,  J.,  does 

not  seem  to  understand  that  there 

5Healy  v.  Oilman,  1  Bosw.  235;  is  a  difference  between  alteration 

and  see  the  cases  in  the  last  nota  of  the  amount  and  forgery  of  the 

6  Alvord  v.  Baker,  9  Wend.  323.  bank's  signature. 

7Trego  v.   Lowry,  8    Neb.  238;  1°  See  §  154,  ante. 

Thurman  v.  Van  Brunt,  19  Barb.  »  Williams  v.  Drexel,  14  Md.  566. 

409.  12  Dick  v.  Leverich,  11  La.  573; 

8  See  note  16  to  last  section.  Jackson  v.   Commercial    Bank,    2 

•  White     v.     Continental     Nat  Rob.  (La.)  128. 


378  BANKS   AND   BANKING.  [§  228. 

repay  the  amount  to  him ;  but  otherwise,  if  he  pay  to  the 
lawful  holder  of  the  bill,  he  cannot  compel  repayment  un- 
less the  holder  was  a  party  to  some  fraud  or  was  guilty  of 
negligence  amounting  to  fraud.13  The  same  rule  applies  to- 
the  acceptor  supra  protest^  But  it  is  conceivable  that  the 
acceptor  of  the  bill  may  mislead  a  person  by  his  acceptance. 
Suppose  a  bill  were  presented  to  the  drawee,  and  the  drawee 
had  within  his  knowledge  an  easy  means  of  ascertaining  the 
forgery  of  an  indorser's  name  or  an  alteration  in  the  amount 
of  the  bill,  and  should  still  negligently  accept  the  bill,  and 
upon  the  strength  of  the  acceptance  some  third  party,  a 
bank,  for  example,  should  without  negligence  take  the  bill 
for  value,  would  the  acceptor  be  liable  to  such  party,  or  if 
he  paid  such  party  would  he  be  estopped  from  claiming  the 
money  back?  A  court  of  high  authority  has  held  that  if 
the  acceptor  is  a  bank  it  would  be  held  for  its  negligence, 
and  there  is  no  reason  why  the  rule  should  not  be  applied 
to  any  other  acceptor.15 

§  228.  Liabilities  and  rights  of  acceptor. —  Since,  as  we 
have  seen,  the  acceptor  becomes  the  principal  debtor,  the 
presumption  is  that  the  acceptor  had  funds  of  the  drawer,1 
and  if  the  accepted  bill  be  protested  for  non-payment  the 
drawer  may  recover  from  the  acceptor  without  showing 
payment  of  the  bill,3  or  without  showing  title  under  the 
payee; 3  yet  other  courts  hold  that  the  drawer  must  show,  in 
order  to  recover  from  the  acceptor,  that  he  was  compelled 
to  pay  the  bill  on  account  of  the  acceptor's  default.4  If  the 

13  Bank  of  Commerce  v.   Union  'Cooper  v.  Jones,  79    Ga.    379; 
Bank,  3  N.  Y.  230;  Ellis  v.  Ohio  Kingman  v.   Hotaling,   25  Wend. 
Life  Ins.  Co.,  1  Handy,  119.  423;  Zebiey  v   Voisin,  7  Pa.  527; 

14  Goddard  v.  Merchants'  Bank,  4  Coursin  v.  Leadlie,  31  Pa.  506  (non- 
N.  Y.  147;  negotiable  order).    But  of  course  if 

15  See  §  154,  ante.  it  appear  that  it  was  an  accommo- 

1  See  note  1  to  last-  section.  dation  acceptance  the  drawer  must 

2  Kingman  v.  Hotaling,  25  Wend,  show  that  he  put  the  drawee  in 
423.     Contra,  Quinn  v.  Hanley,  5  funds.   Parker  v.  Lewis,  39  Tex.  394 
Bradw.  51;  Pilkington  v.   Woods,  4See  last  two  cases  in  note  2, 
10  Ind.  432,  semble.  supra. 


§  228.] 


EXCHANGES,  SECURITIES.  ETC. 


379 


acceptor,  however,  was  an  accommodation  acceptor,  in  order 
to  recover  from  him  the  drawer  must  show  that  he  put  the 
acceptor  in  funds.5  And  an  accommodation  acceptor  is  en- 
titled in  equity  to  be  subrogated  to  the  position  of  the  holder 
of  the  bill.6  As  we  have  said,  the  fact  that  the  acceptor  is 
an  accommodation  acceptor  does  not  vary  his  responsibility 
to  the  holder,7  whether  the  holder  knew  he  was  an  accom- 
modation acceptor  or  not,8  and  whether  the  holder  took  by 
indorsement  before 9  or  after  acceptance.10  The  fraudulent 
diversion  of  the  bill  itself  is  no  defense  in  favor  of  the  ac- 
ceptor as  against  a  fiona  fide  holder  whether  he  took  the  bill 
before  or  after  acceptance;11  nor  is  a  diversion  of  the  pro- 
ceeds of  goods  against  which  the  draft  was  drawn;12  but  it 
would  be  a  defense  in  favor  of  the  accommodation  drawer 
as  against  the  acceptor  who  had  diverted  the  proceeds  of  the 
shipment  which  he  had  agreed  to  apply  upon  the  bill.13  The 
acceptor,  by  his  acceptance,  obtains  a  lien  upon  the  funds  of 


6  Parker  v.  Lewis,  39  Tex.  394 

6  Toronto  Bank  v.  Hunter,  4  Bosw. 
646. 

7  See  notes  14  and  15,  §  226.    An 
acceptance  is  good  after  maturity 
(Stockwell  v.  Bramble,  3  Ind.  428), 
and  it  is  good  after  protest. 

6  See  notes  14  and  15,  §226,  and 
First  Nat  Bank  v.  Schuyler,  39 
N.  Y.  Super.  Ct.  440.  The  holder  is 
under  no  obligation  to  realize  on 
the  drawer's  securities.  Fowler  v. 
Gate  City  Nat  Bank,  88  Ga.  29. 
Contra,  Bradford  v.  Hub  bard,  8 
Pick.  155. 

9  Credit  Co.  v.  Howe  Machine  Co., 
54  Conn.  357;  Arpin  v.  Owens,  140 
Mass.  144;  Huertematte  v.  Morris, 
101  N.  Y.  63. 

10  An  indorsee  after  acceptance 
takes  the  acceptance  as  the  promis- 
sory note  of  the  acceptor    Mechan- 
ics' Bank  v.  Livingston,  33  Barb. 

4sa 

11  Fort  Dearborn   Nat    Bank   v. 


Carter,  Rice  &  Co.,  152  Mass.  34; 
Mechanics'  Bank  v.  Livingston,  33 
Barb.  458;  Louisville  Bank  v.  El- 
lery,  34  Barb.  630;  Iselin  v.  Chem- 
ical Nat.  Bank,  40  N.  Y.  Supp. 
388.  And  see  Gray  v.  Kentucky 
Bank,  29  Pa.  365,  as  to  a  diversion  of 
proceeds  of  the  draft.  But  indorsee 
before  acceptance  cannot  enforce 
an  ultra  vires  acceptance  of  a  cor- 
poration, since  he  gave  credit  to 
drawer  or  indorser.  Farmers'  Bank 
v.  Empire  Stone  Co.,  5  Bosw.  275. 

12  Brander  v.  Phillips,  16  Pet  181. 

Grander  v.  Phillips,  16  Pet.  121. 
Accommodation  indorsers  may  re- 
cover against  prior  accommodation 
acceptor,  though  the  proceeds  of 
the  bill  were  applied  to  the  pay- 
ment of  a  claim  upon  which  one  of 
the  accommodation  indorsers  was 
an  indorser.  Gillespie  v.  Campbell, 
39  Fed.  R.  724.  See  Leslie  v.  Bas- 
sett,  59  N.  Y.  Super.  Ct  403. 


380  BANKS   AND   BANKING.  [§  229. 

the  drawer  in  his  hands.14  He  can  charge  a  commission  for 
accepting  only  by  agreement  or  by  a  customary  mode  of 
dealing.15  The  liability  of  the  acceptor  is  for  the  face  of  the 
bill  and  interest,16  and,  if  protested,  for  the  notarial  fees;17 
but  he  is  not  liable  for  damages  unless  made  so  liable  by 
statute.  The  promise  to  accept  a  bill  to  be  drawn  would 
cover  as  damages  for  a  breach  the  whole  cost  and  expenses, 
including  re-exchange  and  interest.18  An  order  payable  in 
stocks  accepted  makes  the  acceptor  liable,  not  for  the  amount 
of  money  named,  but  for  the  value  of  the  stpcks  at  the  date 
they  should  have  been  delivered.19  The  acceptor  supra  pro- 
test recovers  from  the  drawer  or  the  party  for  whom  he  ac- 
cepts protest  fees  as  part  of  the  bill. 

§  229.  Conditional  and  variant  acceptances. —  A  condi- 
tional acceptance  is  an  absolute  acceptance  of  a  conditional 
order  or  a  conditional  acceptance  of  an  absolute  order.  Of 
the  first  sort  are  acceptances  of  orders  payable  out  of  a  par- 
ticular fund  or  if  certain  funds  should  be  realized.1  Such 
acceptances  are  impossible  to  arise  upon  bills  of  exchange, 
because  such  documents  are  not  bills  of  exchange.2  A  con- 
ditional written  acceptance  of  a  bill  of  exchange  must  be 
one  that  is  made  so  upon  its  face,  because  an  absolute  writ- 
ten acceptance  cannot  be  shown  to  be  conditional.3  But 
conditional  written  acceptances  may  be  acceptances  of  a  bill 

"Lambert  v.  Jones,  2  Pat.  &  H.  i8Russell  v.  Wiggin,  2  Story,  213. 

144    Lien  by  agreement,  see  Coats  19City  Bank  v.  Gerard  Bank,  10 

v.  Donnell,  94  N.  Y.  168;  and  for  the  La,  562. 

lien  of  holders  upon  securities  to  l  See  Seymour  v.  Lumber  Co.,  58 

secure  acceptances,  see  Kramer's  Fed.  R  957,  16  U.  S.  App.  245. 

Appeal,  37  Pa,  71.  2See  §  242,  post,  and  §§  207  and 

»  Pratalongo  v.  Larco,  47  CaL  378 ;  208,  ante. 

Gibson  v.  Bailey,  24  Miss.  237.    See  3  Haines  v.  Nance,  52  111.  App.  406; 

Millaudon  v.  Arnaud,  4  La.  542.  Cowan    v.  Hallock,   9    Colo.    572; 

16Henrick    v.  Farmers'  Bank,  8  Heavener  v.  Donnel,  7  Smedes  & 

Port  539;  Gibson  v.  Bailey,  24  Miss.  M.  244.    A  conditional  acceptance 

237;  Van  Arsdale  v.  Boardman,  3  must  be  clearly  expressed.    Coff- 

How.  Pr.  60.  man  v.  Campbell,  87  III  9a 

I?  Bowen  v.  Stoddard,  10  Met.  375; 
Manning  v.  Kohn,  56  Ala.  235. 


§  229.]  EXCHANGES,  SECURITIES,  ETO.  38J 

to  be  drawn  where  the  acceptance  might  be  considered  con- 
ditional, as  we  have  heretofore  seen.4  Oral  acceptances 
may  be  conditional  in  the  same  ways  as  written  acceptances 
are.5  If  the  acceptance  is  conditional,  the  holder's  assent  to 
it  makes  the  acceptor  liable  upon  the  happening  of  the  con- 
tingency named  in  the  order.8  If  that  condition  has  already 
happened,  the  order  and  acceptance  are  absolute;7  but,  if 
possible,  a  condition  will  be  applied  to  things  to  happen  in 
the  future,  not  to  matters  which  have  already  happened.8 
Again,  the  acceptor  cannot,  by  his  own  act,  defeat  the  con- 
dition and  thus  destroy  the  effect 'of  the  order.9  The  same 
rules  are  applied  to  acceptances  of  orders  which  are  made 
conditional.10  They  will  be  given  a  prospective  operation,11 
and  cannot  be  defeated  by  the  act  of  the  acceptor;12  but 
otherwise  the  acceptor  does  not  become  liable  until  the  con- 
tingency has  happened,13  but  when  it  has  happened  his  lia- 
bility is  absolute.14  An  offer  of  a  conditional  acceptance  is 
a  continuing  one  and  may  be  acted  upon  until  revoked.15 
But  a  general  acceptance  of  an  order  drawn  on  condition 
that  the  paper  is  presented  at  a  certain  time  renders  the  ac- 

4  See  §  220,  ante.   The  acceptance  7  Brabazon  v.  Seymour,  42  Conn, 
is  conditional   upon  the  bill  con-  551 ;  Phillips  v.  Frost,  29  Me.  77. 
forming  to  the  authority;  but  this  8 United  States  v.  Metropolis 
use  of  language  is  not  accurate.  Bank,  15  Pet.  377. 

No  acceptance  ever  existed.  9  Herter  v.  Goss  Co.,  57  N.  J.  Law, 

5  See,  for  instance,  Phelpsv. North-  42;  Phelps  v.  Northrup,  56111.  156. 
rup,  56  111.  156,  and  Hall  v.  Steel,  68  The  drawer  cannot  countermand 
III  231,  where  the  acceptance  im-  after  acceptance.    Northern  Bank 
plied  was  conditional  v.  Leverich,  8  Rob.  (La.)  207. 

6  Read  v.  Wilkinson,  2  Wash.  C.  C.  10  Consult  the    cases   in    note  6, 
514;  Ford  v.  Angebrodt.  37  Mo.  50;  supra,  and  Granmer  v.  Carrol,  4 
Rice  v.  Porter,  16  N.  J.  Law,  440;  Cranch,  C.  C.  400. 

Tyler  v.  Stalk,  103  Mich.  268 ;  Cum-  n  Consult  the  case  in  note  8,  supra. 

mings  v.  Hummer,  61  111.  App.  393;  12See  cases  in  note  9,  supra. 

Henry  v.  Hazen,  5  Ark.  401;  Walker  13See  cases  in  note  6,  supra,  and 

v.  Lide,  1  Rich.  Law,  249;  Riley  v.  Marshall  v.  Clary,  44  Ga,  511. 

Smith,  64  N.  Y.  576;  Keyes  v.  Fol-  14  Granmer  v.   Carrol,  4  Cranch, 

lett,  41  Ohio  St.  535;  Gill  v.  Weller,  C.  C.  400. 

52  Md.  8.    See  Newhall  v.  Clark,  3  isWylie  v.  Brice,  70  N.  C.  423. 
Cush.  876. 


382  BANKS   AND   BANKING.  [§  229. 

ceptor  liable  even  if  the  paper  be  not  presented  at  that  time,16 
and  the  same  rule  ought  to  apply  to  a  conditional  accept- 
ance of  a  general  order.  Acceptances  payable  out  of  cer- 
tain funds  are  conditional,17  but  absolute  when  the  fund  is 
realized-,18  and  the  acceptor  cannot  put  it  out  of  his  own 
power  to  collect  the  fund.19  Acceptances  according  to  the 
terms  of  a  certain  contract  are  conditional,20  as  are  accept- 
ances out  of  the  proceeds  of  work  to  be  done,  or  out  of  the 
proceeds  of  a  certain  contract,  or  out  of  the  proceeds  of  cer- 
tain goods  to  be-sold.21  Conditional  acceptances  result  where 
the  acceptance  is  made  conditional  when  in  funds,22  and 
where  an  order  is  so  accepted  the  holder  cannot  resort  to 
the  drawer  until  the  drawee  refuses  to  pay  when  in  funds,23 
and  the  construction  of  funds  is  that  the  word  means  cash.24 
The  drawee  cannot  defeat  by  his  own  act  the  realization  of 
funds,25  nor  can  the  drawer  countermand  the  order  after  ac- 
ceptance.'-"6 The  burden  is  upon  the  holder  of  the  order  to 
show  the  drawee's  possession  of  funds  when  suing  upon  such 
an  acceptance.27  It  must  be  noted  that  a  conditional  or 
variant  acceptance,  if  not  notified  to  prior  parties  on  the 
bill,  discharges  those  prior  parties.28  The  acceptance  must 
be  made  by  the  drawee  or  by  his  agent.29  If  accepted  by 

is  Gay  v.  Haseltine,  18  N.  H.  530.         »  Northern  Bank  v.  Leverich,  8 

"  Flanagan  v.  Mitchell,  16  Daly,  Rob.  (La.)  207. 
22a  »  Marshall  v.  Clary,  44  Ga.  511. 

18  See  last  note.  28  See  Rowe  v.  Young,  2  Bligh,  391 ; 

19  Phelps  v.  Northrup,  56  111.  156.  Walker  v.  State  Bank,  13  Barb.  636. 
20 Haseltine  v.  Dunbar,  62Wis.l62;  The  rule  would  be  the  same  as  to 

but  see  Cowan  v.  Hallock,  9  Colo,  paper  not  requiring  acceptance,  but 

572;  Keyes  v.  Follett,  41  Ohio  St.  acceptance  refused  on  it.  Thatcher 

535.  v.  Mills,  14  Tex.  13.    A  change  of 

21  See  cases  in  last  note  and  in  the  city  where  payable  is  a  vari- 
note  6,  supra.  ation  that    drawer    and   indorser 

22  See  Campbell  v.  Pettingill,  7  Me.  must  concur  in.    Niagara  Bank  v. 
126.  Manufacturing  Co.,  31  Barb.  403. 

23  See  last  case  cited.  K  Heenan  v.  Nash,  8  Minn.  407. 

24  Carlisle  v.  Hooks,  58  Tex.  420.  Unless  it  be  supra  protest  or  for 

25  See  cases  cited  in  note  19  and  honor.  The  acceptance  by  an  agent 
note  9,  supra,  and  Keyes  v.  Follett,  is  good  when  he  accepts  as  agent 
41  Ohio  St.  535.  and  is  authorized.    Gillig  v.  Lake 


§  230.]  EXCHANGES,  SECURITIES,  ETC.  383 

any  one  else  it  is  a  variant  acceptance,  but  that  person  will 
be  liable  according  to  his  contract.30  If  one  of  several  joint 
drawers  accepts  he  binds  himself,31  although  the  effect  of 
such  an  acceptance  upon  the  rights  of  drawer  and  indorsers 
would  be  to  release  them  unless  they  assented.  Like  any 
other  variant  acceptance  it  is  binding  between  the  acceptor 
and  the  holder.  The  acceptance  need  not  be  dated.32  The 
presumption  will  be  in  favor  of  its  having  been  made  before 
maturity  at  a  proper  time.23 

§  230.  Discharge  of  parties  to  accepted  bill.— A  bill  of 
exchange  differs  from  a  check l  in  this,  among  other  things, 
that  an  absolute  acceptance  of  it  does  not  release  the  drawer 
or  indorser;  they  remain  liable  secondarily  to  the  acceptor. 
But  in  order  to  have  this  effect  the  acceptance  must  be  an 
acceptance  according  to  the  tenor  of  the  bill.  It  must  be 
absolute,  or  if  conditional  it  must  be  notified  to  prior  parties.2 
If  the  prior  parties  acquiesce  and  do  not  object  to  such  an 
acceptance  they  will  be  held  to  have  assented  thereto.3  If 

Bigler  Road  Co.,  2  Nev.  214    If  he  31  Smith  v.  Milton,  133  Mass.  369. 

accepts  personally  he  binds  him-  82  Kenner  v.  Creditors,  1  La.  120. 

self.    Lollerstedt  v.  Griffin,  29  Ga.  ™  Roberts  v.  Bethell,  12  C.  B.  778. 

708;  Nicholls  v.  Diamond,^  Exch.  The  acceptance  may  be  made  be- 

154;  Taber  v.  Cannon,  8  Met.  456.  fore  the  bill  is  drawn  (Hopps  v. 

Compare  Walker  v.  State  Bank,  9  Savage,  69  Md.  513),  or  before  it  is 

N.  Y.  582.    But  it  has  been  held  completed.    Pittsburgh    Bank    v. 

that  the  agent  accepting  individu-  Neal,  22  How.  97. 

ally   may   show   that  the  holder  l  See  §  150,  ante, 

knew  he  was  agent  and  was  ao  2Rowe  v.   Young,  2  Bligh,  391; 

cepting  as  agent.    Bruce  v.  Lord,  Scattergood  v.  Finley,  20  Ga.  423, 

1  Hilt.   247.    But   see    Arnold    v.  semble. 

Sprague,  34  Vt.  402.    But  if  a  bill  3  The  holder  has  the  right  to  in- 

is  drawn  by  a  principal  upon  its  sist  upon  an  absolute  acceptance, 

officer  as  an  individual,  his  accept-  Tuckerman  v.  Hartwell,  3  Ma  153; 

ance  in  the  name  of  his  company  Green  v.  Raymond,  9  Neb.  295.   The 

is  not  an  acceptance  by  the  drawee,  making  of  the  acceptance  payable 

See  Walker  v.  Bank  of  State,  13  at  a  particular  place  of  business  is 

Barb.  636.  not  a  variation  or  a  condition.  Troy 

80  See  Markham  v.  Hazen,  48  Ga.  City  Bank  v.  Lauman,  19  N.  Y.  477; 

570;  Rice  v.  Ragland,  10  Humph.  Todd  v.  Kentucky  Bank,  3  Bush, 

545,  and  note  preceding.  626;  Myers  v.  Standart,  11  Ohio  St. 


384 


BANKS   AND   BANKING. 


[§  230. 


the  payment  of  the  bill  be  postponed  by  the  acceptance,  the 
prior  parties,  if  they  do  not  assent  thereto,  will  be  released.4 
This  results  from  the  general  rule  that  the  acceptor  being 
the  principal  debtor  and  the  prior  parties  sureties,  any  ex- 
tension of  time  granted  by  the  holder  to  the  principal  re- 
leases the  sureties  not  assenting  thereto.6  This  rule  is  so 
universal  that  it  is  nothing  less  than  astonishing  to  find  the 
Supreme  Court  of  Illinois  solemnly  asserting  that  an  exten- 
sion of  time  to  the  acceptor  does  not  release  the  drawer.* 
The  release  is  no  less  effectual,  it  is  said,  though  the  exten- 
sion of  time  be  void;7  but  the  very  same  court  has  said  that 
the  drawer  must  have  been  injured  in  order  to  complain.* 
But  an  extension  of  time  to  a  drawer  does  not  release  the 
acceptor,9  even  though  the  holder  knows  him  to  be  an  ac- 
commodation acceptor.10  Nor  does  a  release  to  one  indorser 
release  prior  parties  on  the  paper,11  even  though  the  paper 
be  made  for  the  accommodation  of  that  indorser.12  But  the 


29.  Contra,  Rowe  v.  Young,  2  Bligh, 
391. 

4  Burthe  v.  Donaldson,  15  La.  382; 
and  see  next  notes. 

5  This  is  an  extension  of  time  to 
acceptor,  and  hence  is  a  release  to 
the    drawer    and    indorsers.     See 
United  States  Bank  v.  Hatch,  6 
Pet  250;  Ross  v.  Jones,  22  Wall 
688;  Uniontown  Bank  v.  Mackey, 
140  U.  S.  220,  for  the  principle.  The 
acceptor    being   principal    debtor 
cannot  complain  as  to  the  holder's 
acts  toward  the  drawer.    Fowler 
v.  Gate  City  Nat.  Bank,  88  Ga.  29; 
Wilson  v.  Isbell,  45  Ala.  142;  Ash- 
ton  v.  Reeves,  3  Phila.  339;  Diver- 
sey  v.  Moor,  22  III  331.    But  see 
Bradford  v.  Hubbard,  8  Pick.  155. 

«  Diversey  v.  Moor.  22  III  330.  The 
opinion  is  by  Breese,  J.  It  is  mar- 
velous to  notice  the  ponderous 
unconsciousness  with  which  the 
learned  judge  perpetrates  this  start- 


ling error.    The  statement  is,  how- 
ever, absolute  dictum. 

7  Parmalee  v.  Williams,  72  Ga.  42. 
The  general  rule  as  to  sureties  is 
otherwise;   but  in  this  particular 
case,  where  notice  of  non-payment 
must  be  given,  the  void  extension, 
if  acted  upon,  is  certainly  a  release, 
unless  the  other  parties  concur. 

8  High  v.  Cox,  55  Ga.  662. 

9  Diversey  v.  Moor,  22  111.  330; 
Lambert  v.  Sanford,  2  Blackf.  137. 
Contra,  Meggett  v.  Baurn,  57  Miss. 
22. 

10  This  follows  from  the  rule  that 
the  acceptor  becomes  principal 
debtor,  which  legal  conclusion  he 
is  not  at  liberty  to  dispute.  See 
note  12,  infra,  and  note  5,  supra, 

"Bank  of  Kentucky  v.  Floyd,  4 
Met.  (Ky.)  159;  Sargent  v.  Apple- 
ton,  6  Mass.  85. 

12  See  In  re  Babcock,  2  Story,  393; 
Wilson  v.  Isbell,  45  Ala.  142;  Ander- 


§  231.]  EXCHANGES,  SECURITIES,  ETC.  385 

better  rule  would  be  that  the  parties,  except  the  acceptor, 
are  to  be  considered  principals  or  sureties  upon  the  paper, 
according  to  the  holder's  knowledge  of  their  relations,  not 
according  to  the  apparent  fact  shown  by  the  paper.  But 
an  intentional  release  to  one  joint  acceptor  releases  all  the 
acceptors,  unless  there  be  a  statute  making  a  different  rule.18 

ARTICLE  III. —  DEMAND. 

§  231.  Presentment  for  payment  —  What  law  governs. 

Under  the  settled  rules  of  law  the  presentation  of  commercial 
paper  for  payment,  the  demand  of  payment,  and  the  notice 
of  non-payment  are  governed  by  the  law  of  that  place  where 
the  paper  is  payable,1  because  the  parties  are  supposed  to 
have  contracted  with  reference  to  the  law  of  that  place. 
The  rule  governing  the  form  of  the  protest  will  be  considered 
under  another  section.2  A  bill  of  exchange  is  payable  where 
the  drawee  resides,  nothing  else  appearing.  If  that  residence 
is  given  in  the  bill,  or  if  the  bill  states  where  it  is  payable, 
the  declaration  in  the  bill  governs.  If  the  residence  is  given 
at  one  place,  and  the  payment  of  the  bill  is  fixed  for  another, 
the  rule  would  seem  to  be  that  the  law  of  the  latter  place  gov- 

son  v.  Anderson,  4  Dana,  352.   And  Compare  Bonnell  v.  Prince,  32  S. 

see  Ross  v.  Jones,  22  Wall.  576;  W.  R.  855  (Tex.). 
Brown  v.  Williams,  4  Wend.  360;        1  Wiseman  v.  Chiapella,  23  How. 

notes  5  and  10,  supra.  368;   Pierce  v.  Indseth,  106  U.  S. 

13This  is  the  rule  at  common  law.  546;  Wooley  v.  Lyon,  117  111.  244; 

But  an  exception  has  been  allowed  Brown  v.  Jones,  125  Ind.  375;  Na- 

arising  from  the  intention  o£  the  tional  Bank  v.  Wood,  142  Mass.  563; 

parties.    Elgin  City  Banking  Co.  v.  Spearman  v.  Ward,  114  Pa.   634; 

Self,  35  S.  W.  R.  953  (Tex.);  Her-  Todd  v.  Neal,  49  Ala.  266;  Webster 

chants'  Nat.  Bank  v.  McAnulty,  31  v.  Howe  Machine  Co.,  54  Conn.  394. 

S.  W.  R.  1091  (Tex.),  and  the  cases  And  the  case  of  Musson  v.  Lake,  4 

referred  to   therein.     But  it  has  How.  262,  decides  that  presentment 

been  held  that  if  one  of  the  joint  as  to  indorser  is  governed  by  the 

parties  is  a  surety  and  known  to  be  law  of  the  place  of  indorsement, 

such  to  the  holder,  a  release  to  the  But  a  bill  by  one  government  on 

principal  releases  him,  even  where  another  is  not  governed  by  the  law 

the  common-law  rule  does  not  pre-  merchant.     United  States  v.  Bank 

vail.    Irvine  v.  Adams,  48  Wis.  468.  of  U.  S.,  5  How.  382. 

2  See  §  305,  post. 
25 


386  BANKS   AND    BANKING.  [§  232. 

eras.  If  nothing  appears  as  to  the  place  of  payment  or  the 
residence  of  the  drawee,  the  law  governing  would  be  that 
of  the  place  where  the  bill  was  properly  presented.  A  promis- 
sory note,  if  it  declares  where  it  is  payable,  is  governed  by 
the  law  of  that  place.  If  no  such  declaration  be  made  in  it, 
its  payment  is  governed  by  the  law  of  the  place  where  it  is 
made  negotiable,3  or,  if  no  such  declaration  appears,  where 
it  is  dated.  If  neither  place  appears  in  the  note,  the  law  of 
the  place  of  contracting  or  making  of  the  note  governs.4  All 
the  above  rules  are  merely  a  method  of  ascertaining  where  the 
instrument  is  payable.  The  law  of  the  place  where  payable 
governs  both  maker,  or  drawer,  indorsers,  and  drawee  or 
payee.5  There  are  variant  decisions  given  below,  but  they 
are  not  authority.6  If  the  governing  law  is  that  of  another 
jurisdiction  it  is  to  be  proven  as  a  fact.7  If  no  proof  on  the 
matter  be  offered,  the  presumption  will  be  made  either  that 
the  law  of  the  foreign  jurisdiction  is  the  law  of  the  forurn8 
or  is  the  common  law.9 

§  232.  Acceptance  supra  protest. —  In  days  when  instan- 
taneous communication  by  telegraph  was  not  possible,  an 
acceptance  supra  protest  was  of  far  more  importance  than  it 
is  to-day.  If  a  bill  were  dishonored  and  the  drawer  could 

»  Oilman  v.  King,  2  Cranch,d  C.  Sheldon,  12  Wend.  439;  Musson  v. 

4a  Lake,  4  How.  262;  Williams  v.  Put- 

4  This  is  the  presumptive  place  of  nam,  14  N.  H.  540.    But  see  Bank 

payment.  of  Orange  Co.  v.  Colby,  12  N.  H. 

8  Commercial  Bank  v.  Barksdale,  520;  Raymond  v.  Holmes,  11  Tex. 

36  Ma  563.   And  see  cases  in«note  1,  54    Compare  Williams  v.  Wade,  1 

supra.  Met.  82.    In  this  last  case  the  note 

6  Thorp  v.   Craig,  10  Iowa.  461.  was  probably  payable  where  dated. 
The  law  of  the  place  where  draft  7  In  absence  of  proof  it  will  be  as- 
drawn  governs    presentment  and  sumed  to  be,  according  to  some 
notice.    But  see  Chatam  Bank  v.  states,  the  common  law,  in  others 
Allison,  15  Iowa,  357;   Belford  v.  the  law  of  the  forum. 
Bangs,  15  Bradw.  76.    Notice  to  in-  8Greenleaf  on  Evidence  (16th  ed.), 
dorser  must  be  according  to  the  §§  43,  486;  1  Chitty  on  Bills  (13th 
place    of    indorsement.     But   see  Am.  ed.),  344. 
Wooley  v.  Lyon,  117  III  244;  Snow  9See  last  note. 
v.  Perkins,  2  Mich.  238;  Aymer  v. 


§  232.]  EXCHANGES,  SECURITIES,  ETC.  387 

be  reached  only  by  the  slow  process  of  the  mails,  an  incalcu- 
lable injury  might  be  done  to  his  credit  should  his  bills  be 
dishonored.  The  acceptance  supra  protest  was  and  remains 
an  acceptance  made  by  some  one  not  a  party  to  the  bill.  It 
could  be  made  only  after  the  bill  had  been  dishonored,  and 
if  protest  were  required  only  after  protest.  The  usual  form 
was  for  such  acceptor  to  write  upon  the  bill, "  Accepted  supra 
protest  for  the  honor  of  "  the  person  for  whom  it  was  ac- 
cepted, or  simply  "  Accepts  s.  p."  The  engagement  of  such 
acceptor  is  to  pay  if  the  drawee  does  not  pay  at  maturity. 
The  acceptance  must  be  assented  to  by  the  holder,  but  need 
not  be  notified  to  the  drawer  and  indorsers  for  their  consent.1 
It  would  appear  that  since  the  acceptor  supra  protest  can 
only  accept  after  dishonor,  an  acceptance  supra  protest  pre- 
supposes that  notice  of  dishonor  has  already  been  given  to 
the  drawer  and  indorsers.  Therefore  the  holder  is  not  re- 
quired to  give  notice  of  the  acceptance  supra  protest;  yet  the 
acceptor  supra  protest  should  notify  the  person  for  whose 
honor  he  accepted.  The  acceptor  supra  protest  should  state 
for  whom  he  accepts.  If  no  statement  be  made,  the  presump- 
tion is  that  the  acceptance  is  for  the  honor  of  the  drawer. 
There  may  be  several  acceptances  for  honor  in  succession, 
and  the  engagement  of  each  acceptor  would  be  the  same, 
but  it  would  be  several.  Since  the  engagement  of  the  ac- 
ceptor supra  protest  is  to  pay  the  bill  if  the  drawee  does  not, 
the  bill  must  be  presented  upon  maturity  to  the  drawee,  or 
the  acceptor  supra  protest  will  be  released  as  well  as  the 
drawer.2  It  is  conceived  that  any  extension  given  to  the 
drawee  without  such  acceptor's  consent  would  release  him. 
The  acceptor  supra  protest  pays  for  his  principal,  who  is  the 
person  he  accepts  for.  But  such  acceptor  may  make  such 

1  See  1  Chitty  on  Bills  (13th  Am.  ers.    The  only  reason  that  can  be 
ed.),  344.  offered  for  such  a  ruling  is  that  the 

2  Williams  v.  Germaine,  7  B.  &  C.  holder  has  accepted  the  conditional 
468;  Schofield  v.  Bayard,  3  Wend,  engagement  of  the  acceptor  supra, 
488.    This  last  decision  holds  that  protest,  and  if  he  release  him  by 
such    presentment    for    payment  negligence  he  had  no  right  to  recur 
must  be  made  as  against  the  draw-  to  the  drawers. 


388  BANKS   AND   BANKING.  [§  233. 

acceptance,  though  he  does  it  under  a  guaranty  from  the 
drawee.3  If  he  pay,  he  should  notify  the  drawer  or  person 
for  whom  he  accepted,4  and  he  is  entitled  to  recover  the 
amount  he  paid  and  interest,  and  protest  fees,  if  he  paid 
them.8 

§  233.  Presentment  for  payment  of  accepted  or  non- 
accepted  bills. —  A  bill  that  has  been  accepted  must  none 
the  less  be  presented  for  payment,1  except  as  to  the  acceptor. 
There  is  an  apparent  exception,  however,  in  the  fact  that 
an  acceptance  may  be  made  payable  at  a  particular  bank 
or  particular  place  and  still  remain  a  general  acceptance. 
To  answer  the  rule  in  such  a  case,  it  is  sufficient,  as  to  the 
other  parties  to  the  bill,  that  it  be  at  such  place  for  pay- 
ment, or  presented  at  such  place  for  payment,  upon  its  ma- 
turity. Such  a  presentation  is,  in  fact,  a  proper  demand.2 
But  as  to  the  other  parties  to  the  bill,  the  rules  govern- 
ing an  accepted  bill  are  the  same  as  those  governing  a 
bill  not  requiring  acceptance,  but  merely  presentation  for 
payment.  A  waiver  of  acceptance  is  a  waiver  of  presenta- 
tion for  acceptance.  It  does  not  dispense  with  presentation 
and  demand  for.  payment.8  But  as  to  the  acceptor,  his  en- 
gagement, where  he  accepts,  becomes  absolute,  for  the  ac- 
ceptance is  his  promissory  note.  No  demand  is  necessary 
as  to  him ; 4  it  is  his  duty  to  look  up  the  holder  of  the  bill 
and  pay  it.  But  if  he  accepts  payable  at  a  particular  place, 

*  Konig  v.  Bayard,  1  Pet.  250.  ceptance  of  a  bill,  where  the  bill  is 
4Konig   v.   Bayard,   1  Pet.  250;    payable  at  a  particular  placa  Green 

Gazzam  v.  Armstrong,  3  Dana,  554;  v.  Goings,  7  Barb.  652;  Tuckerman 

Wood  v.  Pugh,  7  Ohio,  488.  v.  Hart  well,  3  Ma  147;  Brooks  v. 

*  City  Bank  v.  Girard  Bank,  10  Higby,  11  Hun,  235.    If  the  place 
La.  562.  is  fixed,  the  demand  must  be  made 

1  This  is  necessary  in  order  to  fix  there.    Brown  v.  Jones,  113  Ind.  46. 
the  liability  of  the  drawer  and  in-  3  Webb  v.  Mears,  45  Pa.  222. 
dorsers.    Allain  v.  Lazarus,  14  La.  4Hunt  v.  Johnson.  96  Ala.  130; 
327;  James  v.  Ocoee  Bank,  2  Cold.  Jackson  v.  Packer,  13  Conn.  342; 
59.  Blair    v.    Bank   of   Tennessee,   11 

2  Tuckerman  v.  Hart  well,  3  Me.  Humph.  84;  Plato  v.  Reynolds,  27 
147;  Wing  v.  Beach,  31  111.  App.  7a  N.  Y.  586;  Fall  River  Bank  v.  WiU 
The  same  result  follows  on  the  ao  lard,  5  Met  220. 


§  233.]  EXCHANGES,  SECURITIES,  ETC.  389 

and  he  is  at  the  place  ready  to  pay  the  bill  upon  the  matu- 
rity of  it,  his  readiness  would  relieve  him  from  the  payment 
of  interest  thereafter.5  But  in  no  event  does  the  holder  lose 
the  amount  of  the  bill  as  against  the  acceptor  by  a  failure 
to  present  the  bill  to  him  for  payment.6  In  the  case  of 
accepted  checks  the  rule  is  that  an  accepted  check  which 
has  been  accepted  to  the  holder  after  delivery  releases  the 
drawer,  and  by  necessity  releases  the  indorsers,  since  they 
are  secondarily  liable  to  the  drawer.7  But  a  check  accepted 
by  the  bank  to  the  drawer  does  not  release  the  drawer.8 
Such  an  accepted  check,  therefore,  should  be  treated  as  an 
ordinary  check,  and  if  the  holder  of  the  check  presents  it 
within  a  reasonable  time,  and,  if  it  be  not  paid,  gives  notice 
thereof,  the  indorser  will  be  held  liable;  the  drawer,  even 
if  it  be  not  presented  within  a  reasonable  time,  will  be  ex- 
onerated only  to  the  extent  of  his  injury.9 

Where  a  bill  of  exchange  requiring  presentation  for  accept- 
ance'is  presented  for  acceptance,  and  acceptance  is  refused, 
and  the  liability  of  the  parties  thereon  fixed,  no  presentation 
for  payment  is  required ; 10  the  bill  has  been  dishonored.  If 
the  holder  presents  the  bill  for  acceptance,  and  leaves  it  with 
the  drawee  for  acceptance,  he  need  make  no  second  demand 
either  for  acceptance  or  for  payment,11  although  the  rule 
would  be  otherwise  if  he  agreed  to  present  the  bill  again.12 
If  the  bill  be  one  not  requiring  presentation,  and  the  holder 
nevertheless  presents  it  for  acceptance,  we  have  seen  that, 
if  acceptance  is  refused,  he  must  notify  the  prior  parties.13 

8 See  §  238,  post,  as  to  promissory  3  Mason,  505  (as  to  indorser);  Wai- 
note,  and  Freeman  v.  Curran,  1  lace  v.  Agry,  4  Mason,  336;  Lucas 
Minn.  169.  v.  Ladew,  28  Mo.  342.  The  forego- 

6  See  last  note.  ing  are  cases  of  drafts  requiring 

7  See  §  150,  ante.  acceptance.    But  Exeter  Bank  v. 

8  See  §  150,  ante.  Gordon,  8  N.  H.  66;  Plato  v.  Rey- 

9  In  re  Brown,  2  Story,  502.    See  nolds,  27  N.  Y.  586,  and  perhaps 
Thompson  v.  British  North  Amer.  Picquet  v.  Mayer,  14  La.  74,  are  as 
Bank,  45  N.  Y.  Super.  Ct.  1.  to  bills  not  requiring  acceptance. 

10  Lenox   v.   Cook,    8    Mass.  460;       "  Allen  v.  Kramer,  2  Bradw.  205. 
Mason  v.  Franklin  Bank,  3  Johns.       12  Case  v.  Burt,  15  Mich.  82. 

202 ;  Wild  v.  Passamaquoddy  Bank,       w  See  §  237,  post. 


390  BANKS   AND   BANKING.  [§  234:. 

Whether  the  bill  could  then  be  treated  as  a  dishonored  bill 
is  very  questionable,  for  the  engagement  of  the  drawer  on 
a  bill  not  requiring  presentation  is  that  the  drawee  will  pay, 
not  that  he  will  accept;  and  hence  it  ought  to  be  the  rule 
that,  if  the  instrument  is  one  that  requires  no  presentation 
for  payment,  to  so  present  it,  if  the  drawer  or  some  prior 
party  has  not  taken  it  up  prior  to  maturity ;  but  the  decided 
cases  are  to  the  contrary,  as  the  last  note  indicates.  "Where 
a  check  is  presented  for  acceptance  and  acceptance  refused, 
the  check  is  at  once  dishonored,  and  notice  should  be  given; 
and  since  refusal  of  acceptance  of  a  check  is  refusal  of  pay- 
ment, no  further  demand  is  necessary.  The  rule  would  not 
seem  to  be  otherwise  in  those  states  which  recognize  the 
check  as  an  assignment  upon  presentation  to  the  bank.14 

§  234.  Parties  entitled  to  require  demand  of  payment. 

The  various  kinds  of  instruments  that  this  question  may 
arise  in  regard  to  are  bills  of  exchange,  checks,  promissory 
notes  and  non-negotiable  orders.  The  parties  to  bills  of  ex- 
change entitled  to  demand  of  payment  are  the  drawer  and 
indorser  and  acceptor  supra  protest.  Guarantors  hold  a 
peculiar  position.  Parties  for  whose  accommodation  the 
bill  is  drawn  will  require  special  examination.  The  parties 
to  checks  who  are  entitled  are  the  drawer  and  indorser, 
though  the  result  of  a  failure  to  demand  as  to  the  drawer 
requires  a  different  rule  than  the  one  applied  to  such  party 
to  a  bill  of  exchange.  The  indorser  of  a  promissory  note 
stands  in  a  different  position  from  the  maker  of  the  note,  but 
in  the  same  position  as  the  indorser  of  a  bill.  Guarantors 

14  The  theory  of  these  cases  is  (see  treat  a  check  as  an  ordinary  de- 

§  147,  ante)  that  the  presentation,  mand  bill,  so  far  as  notice  to  the 

and  the  presence  of  funds,  trans-  drawer  and  so  far  as  demand  as  to 

fers  so  much  of  the  drawee's  ao  the  drawer  is  required,  hence  the 

count  to  the  payee  of  the  check,  statement  in  the  text  is  correct. 

Strictly,  then,  it  would  result  from  See  Lester  v.  Given,  8  Bush,  357. 

this  theory  that  the  drawer,  having  But  the  very  fact  that  such  is  the 

transferred  so  much  money  to  the  case   shows  the   absolute  fallacy 

payee,  had  paid  the  check.    But  that  underlies  the  rule, 
those  states  which  hold  the  rule 


§  235.]  EXCHANGES,  SECURITIES,  ETC.  391 

of  the  note  are  governed  by  the  same  rule  as  guarantors  of 
bills  of  exchange.  Parties  'to  non-negotiable  orders  do  not 
fall  under  the  same  classification  as  parties  to  negotiable  in- 
struments. There  is  considerable  difference  of  opinion  as  to 
indorsers  of  certificates  of  deposit.  The  order  in  which  the 
various  parties  will  be  considered  is:  first,  the  drawer  and 
indorser  of  bills  of  exchange ;  second,  accommodation  drawer 
and  indorser  of  bills  of  exchange  and  parties  for  whose  ac- 
commodation the  bill  was  drawn ;  third,  drawer  and  indorser 
of  checks;  fourth,  maker  of  note;  fifth,  indorser  of  note; 
sixth,  accommodation  parties  to  note;  seventh,  guarantors 
of  bills  or  notes;  eighth,  parties  to  non-negotiable  orders; 
ninth,  indorser  of  certificates  of  deposit.  It  should  be  re- 
membered that  certain  bills  of  exchange  do  not  require  pre- 
sentment as  to  the  drawer  because  they  are  considered  the 
promissory  notes  of  the  drawer.1  The  indorser  upon  such 
paper  is  in  the  position  that  an  indorser  upon  a  promissory 
note  would  be  under  the  same  circumstances. 

§  235.  Drawer  and  indorser  of  bill. —  The  drawer  or  in- 
dorser of  a  bill  of  exchange  contracts  that  he  will  pay  the 
amount  of  the  bill,  if  the  bill  be  duly  presented  by  the  holder 
for  acceptance  (if  it  requires  it)  and  for  payment,  and  if  due 
notice  of  non-payment  is  given  to  him.  Presentment  for  ac- 
ceptance has  already  been  considered.  But  presentment  and 
demand  of  payment  of  a  bill  not  already  dishonored  must  be 
shown  preliminarily  to  fixing  the  liability  of  the  drawer  or 
indorser  upon  the  bill.1  The  rule  is  constantly  stated  in  con~ 
nection  with  notice  of  non-payment,  for  both  are  necessary; 
and  as  a  general  rule  notice  without  demand,  and  demand 
without  notice,  are  equally  futile.  Unless  the  demand  be 
waived  or  unless  it  be  excused  or  rendered  unnecessary  by 
some  of  the  facts  that  appear  in  the  following  sections,  the 
drawer  and  indorser  will  be  released  upon  the  bill.2  The  fact 

1  See  §  208,  ante.  74;  Winter  v.  Cox,  41  Ala.  207;  Mc- 

1  French  v.  Bank  of  Columbia,  4  Nabb  v.  Tally,  27  La.  Ann.  640. 

Cranch,  141;  Wallace  v.  Agry,  4  2See  the  cases  in  the  preceding 

Mason,  336;  Thayer  v.  Peck,  84  III  note. 


392  BANKS   AND   BANKING.  [§  236. 

that  the  drawer  or  indorser  has  not  been  injured  by  the 
failure  to  demand  is  immaterial,  since  the  demand  is  a  con- 
dition precedent  to  his  absolute  liability.8  The  failure  to 
make  the  demand  is  equivalent  to  a  payment  of  the  bill  by 
the  drawer  in  the  sense  that  the  original  demand  or  claim 
for  which  the  draft  was  given  either  as  payment  or  as  pro- 
visional payment  will  be  discharged  to  the  extent  of  the 
draft,4  or  if  it  has  been  taken  as  security  the  drawer  or  in- 
dorser so  transferring  will  be  entitled  to  a  credit  upon  the 
debt  secured  to  the  amount  of  the  bill,  just  as  if  the  paper 
were  given  in  payment.5  Even  paper  that  has  been  indorsed 
after  protest  requires  a  demand  as  to  an  indorser  after  pro- 
test for  the  reason  that  it  is  a  new  bill  payable  upon  demand.6 

§  236.  Accommodation  parties  to  bills. —  The  word  "ac- 
commodation" presupposes  two  persons, — one  who  accommo- 
dates and  another  who  is  accommodated.  An  accommoda- 
tion drawer,  that  is  to  say,  one  who  lends  his  name  for 
accommodation,  and  the  accommodation  indorser,  who  is  a 
regular  indorser,  are  entitled  to  have  a  demand  of  payment 
made  upon  the  drawee.1  But  the  above  statement  is  con- 

3  Slack  v.  Lpngshaw,  8  Ky.  Law  Boardman  v.  Steele,  13  Conn.  547: 
R.  166.  Van  Wart  v.  Smith,  1  Wend.  219; 

4  Dayton  v.  Trull,  23  Wend  345.  Gallegher  v.  Roberts,  2  Wash.  C.  C. 
And  see  next  note.  191. 

8  Brown  v.  Cronise,  21  Cal.  387;  6Cox  v.  Jones,  2  Cranch,  C.  C. 
Adams  v.  Boyd,  33  Ark.  33;  Carrol  370;  Stewart  v.  French,  2  Cranch, 
v.  Sweet,  30  N.  Y.  Supp.  204;  Far-  C.  C.  300;  Levy  v.  Drew,  14  Ark. 
well  v.  Curtis,  7  Biss.  160;  Shriner  334;  Colt  v.  Bernard,  18  Pick.  260; 
v.  Kelly,  25  Pa.  61;  Shipnmn  v.  Tyler  v.  Young,  30  Pa.  143;  Shelby 
Cook,  16  N.  J.  Eq  251;  Jennison  v.-  v.  Judd,  24  Kan.  161;  Hunt  v.  Wad- 
Parker,  7  Mich.  355:  Moore  v.Brun-  leigh,  26  Ma  271.  Contra,  Frencli 
gard,  6  Miss.  557;  Foote  v.  Brown,  v.  Jarvis,  29  Conn.  347;  Hall  v.  Mon- 
2  McLean,  369;  Blanchard  v.  Boom  ohan,  6  Iowa,  216. 
Co.,  40  Mich.  566.  As  to  want  of  1  French  v.  Bank  of  Columbia,  4 
notice,  see  Murphy  v.  Phelps,  12  Cranch,  141;  Buck  v.  Cotton,  2 
Mont  531;  Stam  T.  Kerr,  31  Miss.  Conn.  126;  Perry  v.  Green,  19  N.  J. 
199.  But  see  as  to  paper  taken  as  Law,  61 ;  Sawyer  v.  Brownell,  13 
security,  In  re  Brown,  2  Story,  502;  R.  L  141;  Bogg  v.  Keil,  1  Mo.  743; 
Westphal  v.  Ludlow,  6  Fed.  R.  348;  Braley  v.  Buchanan,  21  Kan.  274; 
Griffith  v.  Grogan,  12  Cal.  317;  Rea  v.  Dorrance,  18  Me.  137;  Barry 


§  236.] 


EXCHANGES,  SECURITIES,  ETC. 


393 


fined  to  regular  indorsers,  that  is  to  say,  indorsers  who  in- 
dorse upon  their  own  transfer  of  the  paper.  But  there  are 
also  irregular  indorsers,  that  is  to  say,  indorsers  who  indorse 
the  paper  without  transferring  it,  and,  as  will  appear  a  little 
later  in  this  section,  such  indorsers  are  governed  by  varying 
rules.  If  the  paper  were  drawn  for  the  accommodation  of 
the  drawer,  he  is  not  entitled  to  claim  a  demand,2  although 
one  court  says  that  an  acceptance  for  accommodation  of  the 
drawer  simply  devolves  upon  the  drawer  the  burden  of 
showing  that  he  furnished  funds  before  maturity,  if  he 
claim  to  be  entitled  to  notice.3  Such  an  acceptance  cannot 
be  called  an  accommodation  acceptance.  If  the  paper  is 
drawn  for  the  accommodation  of  the  regular  indorser,  who 
shares  in  the  consideration,  he  is  not  entitled  to  claim  that 
a  demand  should  be  made.4  If  the  drawer  is  an  accommo- 
dation drawer  as  to  the  indorser,  and  does  not  share  in  the 
consideration,  he  probably  would  be  held  to  be  entitled  to 
have  demand  made  and  notice  given  to  him  of  non-payment. 


v.  Friend,  87  Ark.  437.  The  greater 
part  of  these  cases  is  in  regard  to 
notes,  not  bills  of  exchange.  Sher- 
ley  v.  Fellowes,  9  Port.  300;  Taylor 
v.  Bank  of  Illinois,  7  T.  B.  Mon.  576; 
Todd  v.  Edwards,  7  Bush,  89;  Sus- 
quehanna  Valley  Bank  v.  Loomis, 
85  N.  Y.  207,  an  irregular  indorser, 
and  this  case  is  governed  by  the 
peculiar  rule  in  New  York  as  to 
irregular  indorsers.  It  states,  how- 
ever, the  general  rule  as  to  accom- 
modation indorsers.  But  this  rule 
should  only  apply  to  a  drawer  who 
accommodates  the  drawee,  and  to 
accommodation  indorsers.  A  case 
contrary  to  the  well-settled  rule  is 
Hull  v.  Myer,  90  Ga.  674,  where  the 
directors  of  a  corporation  were  in- 
dorsers on  the  corporation's  note. 
The  court  solemnly  announces: 
"Good  sense,  good  morality  and 
good  law  are  one  and  the  same  so 


long  as  they  are  not  sundered  vu> 
lently  by  legislation  or  ignorantly 
by  judicial  error,"  and  then  pro- 
ceeds to  perpetrate  some  violent 
sundering  on  its  own  account.  The 
inference  of  ignorance  is  irresisti- 
ble. 

2  Evans  v.  Norris,  1  Ala.  511;  Ross 
v.  Bedell,  5  Duer,  462;  McLaren  v. 
Marine  Bank,  52  Ga.  131;  Barba- 
roux  v.  Waters,  3  Met.  (Ky.)  304. 

SNicolet  v.  Gloyd,  18  La,  417;  La- 
coste  v.  Harper,  3  La.  Ann.  385. 
But  New  Orleans  Sav.  Bank  v.  Har- 
per, 12  Rob.  (La.)  231,  seems  contra. 

4  Reid  v.  Morrison,  2  Watts  &  S. 
401;  Bank  of  Washington  v.  Way, 
2  Cranch,  C.  C.  149;  Martel  v.  Tu- 
reaud,  6  Mart.  (N.  S.)  118.  Farmers' 
Bank  v.  Van  Meter,  4  Rand.  553, 
applies  the  rule  to  an  indorser  who 
knew  that  the  drawer  was  being 
accommodated. 


394  BANKS   AND   BANKING.  [§  23G. 

So  it  would  probably  be  as  to  a  regular  indorser  who  did 
not  share  in  the  consideration,  but  lent  his  name  for  the  ac- 
commodation of  a  subsequent  indorsor.  The  accommoda- 
tion acceptor,  however,  is  not  entitled  to  have  a  demand 
made  on  the  drawer.5 

Turning  now  to  the  case  of  irregular  indorsers,  that  is  to 
say,  indorsers  who  indorse  the  paper  without  being  either 
indorsee  or  payee  thereof,  which  indorsement  may  be  made 
before  the  paper  is  delivered  or  after  the  paper  is  delivered, 
the  rules  of  law  differ  in  different  jurisdictions.  If  such  an 
indorser  shared  in  the  consideration  or  was  the  party  for 
whose  benefit  the  paper  was  drawn,  he  ought  not,  under  the 
rule  before  stated,  to  be  permitted  to  claim  that  a  demand 
should  be  made  or  notice  given  to  him  in  any  jurisdiction. 
If  he  be  not  interested  in  the  paper  beyond  merely  lending 
his  name,  the  courts  differ  as  to  his  rights  and  liabilities.  In 
some  jurisdictions  the  question  is  controlled  by  a  statute, 
and  the  statute,  of  course,  would  govern.  But  in  nearly  all 
the  states  such  an  indorsement  may  be  explained  by  parol, 
and  the  actual  meaning  of  the  indorsement  may  be  shown. 
This  ruling  was  no  doubt  produced  by  the  varying  construc- 
tions given  to  such  an  indorsement,  and  is  an  instance  con- 
trary to  the  general  rule  that  does  not  permit  a  written 
contract  to  be  varied  by  parol.  That  actual  contract  would 
govern  as  to  the  rights  of  the  parties,  even  as  to  a  bonafide 
holder  who  had  no  notice  of  the  agreement,  since  the  in- 
dorsement is  ambiguous.  If  the  holder  had  notice,  either 
actual  or  constructive,  he  would  necessarily  be  bound  by  the 
agreement.  But  nothing  more  than  the  fact  of  the  irregu- 
lar or  anomalous  indorsement  appearing,  the  United  States 
courts  and  the  majority  of  the  state  courts  hold  that  such 
an  indorser  is  an  original  promisor.  This  must  mean,  as  to 
the  holder,  an  original  promisor  with  the  person,  drawer  or 
indorser,  for  whom,  or  to  give  credit  to  whom,  he  signed. 
If  that  person  was  entitled  on  the  bill  to  claim  demand  and 
notice,  he  ought  to  be  entitled;  but  the  language  of  the 

•  Cox  v.  Mechanics'  Suv.  Bank,  28  Ga.  529. 


§  237.]  EXCHANGES,  SECUKITIES,  ETO.  395 

courts  is  confined  to  cases  on  notes  and  does  not  warrant 
this  statement.  He  ought  not  to  be  governed  by  the  same 
rule  as  the  anomalous  indorser  of  a  note,  and  is  entitled  to 
have  a  demand  made  or  notice  given.6  This  matter  will 
rarely  be  of  importance,  since  the  question  of  authority  or 
right  to  draw  will  usually  control.  In  oth.er  jurisdictions, 
as  in  Illinois,  he  is  a  guarantor;  and  no  contract  other  than 
the  writing  being  shown,  he  is  not  entitled  to  have  demand.7 
In  other  jurisdictions,  such  as  New  York  and  Wisconsin, 
and  under  statutes,  he  is  a  first  or  second  indorser,  as  cir- 
cumstances may  determine,  and  hence  is  entitled  as  an  ac- 
commodation indorser.8  This  subject  will  be  examined  in 
section  241,  post. 

§  237.  Drawer  and  indorser  of  checks. —  A  check  being 
payable  upon  demand,  the  drawer,  if  he  had  funds  in  the 
bank,  and  the  indorser  are  entitled  to  have  demand  of  pay- 
ment made  within  a  reasonable  time;  such  is  the  law.1  But 
the  consequences  of  a  failure  to  demand  payment  of  the 
check  within  a  reasonable  time  are  not  the  same  as  those 
which  attend  the  failure  to  demand  payment  of  a  bill  payable 
on  demand,  so  far  as  the  drawer  is  concerned.  Courts  have 
recognized  in  the  case  of  bank  checks  that  the  ordinarily 
prudent  man  will  assume  that  a  bank  is  solvent,  and  that 
there  is  no  pressing  necessity  for  prompt  action ;  but  the  con- 
trolling consideration  has  been,  no  doubt,  that  the  drawer 

6  For  the  rule  as  to  notes,  see  drawer  and  not  for  the  drawee,  and 

Good  v.  Martin,  95  U.  S.  90;  Ben-  hence  is  entitled  to  demand  and 

dey  v.  Townsend,  109  U.  S.  665;  notice    of    non-payment    to    the 

Phipps  v.  Harding,  70  Fed.  R.  468,  drawer;    but  the    cases   seem   to- 

34  U.  S.   App.   148.    The    federal  speak  of  anomalous  indorsers  of 

courts  disregard  the  state  courts'  negotiable  paper.    See  §  240,  post. 

holdings  and  enforce  the  general  8  See  cases  in  note  6,  supra,  cited 

rule.    Contra,  Hooks  v.  Anderson,  from  California,  Indiana  and  Ala- 

58  Ala.  238;  Jones  v.  Goodwin,  39  bama. 

Cal.  493 ;  Fessenden  v.  Summers,  62  1  Daniels  v.  Kyle,  5  Ga.  245 ;  Smith 

Cal.   484;    De   Pauw  v.   Bank    of  v.  Janes,  20  Wend.  192;  Sherman  v. 

Salem,  126  Ind.  553.  Comstock,  2  McLean,  19;  Minturn 

"Strictly   the  rule  ought  to  be  v.  Fisher,  4  CaL  85;  Harker  v.  An- 

that  he  is  a    guarantor   for   the  derson,  21  Wend.  372. 


396  BANKS   AND   BANKING.  [§  237. 

of  the  check  is  not  injured  in  any  way  by  the  failure  to  pre- 
sent the  check,  except  in  case  of  the  bank's  failure.  There- 
fore the  rule  is  that  as  to  the  drawer  of  a  check  he  can  only 
complain  of  a  failure  to  present  the  check  to  the  bank  to  the 
extent  that  he  has  been  actually  injured;2  but  as  to  the  in- 
dorser  of  a  check  the  rule  is  the  same  as  that  which  applies 
to  the  indorser  of  a  bill  of  exchange.  He  is  entitled  to  have 
a  presentment  of  the  check  for  payment  made  within  a  rea- 
sonable time  after  its  delivery  after  his  indorsement.3 

Accommodation  drawers  of  checks  are  governed  by  the 
same  rule  as  the  ordinary  drawer  of  a  check.  They  can 
complain  of  a  delay  in  presentation  only  if  they  are  injured 
thereby.4  A  mere  accommodation  drawer,  who  has  not  re- 
ceived value,  would  seem  to  be  in  the  same  position  of  any 
other  drawer  of  a  check.5  But  an  indorser  or  drawer  who 
has  received  value  for  his  check  or  for  his  indorsement  would 
seem  to  be  in  the  position  of  the  ordinary  drawer  of  a  check.8 
If  the  check  is  given  for  the  accommodation  of  an  indorser 
upon  it,  the  proper  rule  to  apply  to  such  an  indorser  does 
not  seem  to  have  received  judicial  examination.7  It  is  need- 
less to  say  that,  until  a  demand  has  been  made,  no  suit  can 

2  Gough  v.  Staats,  13  Wend.  549.        5  He  would  be  an  accommodation 

The  cases  upon  this  point  are  very  drawer  of  a  bill  under  the  same 

numerous.      There    is    no   contra-  circumstances,  and  unless  demand 

dictory  authority.     Of  course  the  was  excused  for  some  reason,  he 

holder  of  the   check    cannot  sue  could  not  be  held  without  a  de- 

the  drawer  until  he  has  presented  mand,  and,  if  the  bank  failed,  the 

the  check.    But  Breese,  J.,  says  in  question  would  be  upon  the  time  of 

Springfield  Fire  Ins.  Co.  v.  Tincher,  demand. 

30  III  399,  that  he  understands  the       6  He  could  only  claim  exonera- 

rule  differently,  and  as  usual  he  tion  where  he  had  been  injured  by 

understands  the  matter  wrongly.  the  delay.    Where  the  bank  had 

3Veazie  Bank  v.  Winn,  40  Me.  60;  failed,  or  some  other  injury  had 

<3ough  v.  Staats,  13  Wend.  549.  been  suffered  by  the  drawer,  he 

4  Diener  v.  Brown,  1  McArthur,  would  be  released.     But  a  mere  ac- 

350.    This  question  is  rarely  of  im-  commodation  indorser  of  a  check 

portance,  because,  unless  a  demand  before  delivery  is  'governed  by  the 

is  excused,  no  suit  can  be  brought  rule  stated  in  §  236,  ante,  as  to  the 

on  the  check,  and  then  the  ques-  anomalous  indorser  of  a  bill 
tion  is  whether  the  drawer  is  in-       7  He  would  be  discharged  where 

jured  by  delay.  the  drawer  would  be  discharged. 


§  238.]  EXCHANGES,  SECURITIES,  ETC.  397 

Tfe  maintained  against  the  drawer  or  indorser.  Hence  the 
question  upon  checks  is  always  whether  the  demand  was  in 
time.  The  giving  of  a  check  in  payment  of  a  claim  pays 
the  claim  where  the  drawer  is  released,  just  as  in  the  case  of 
a  bill  or  note.8 

§  238.  Maker  of  note  or  acceptor  of  bill. —  The  maker  of 
a  promissory  note  stands  in  the  same  position  as  the  acceptor 
of  a  bill  of  exchange.  A  failure  to  demand  payment  of  the 
note  does  not  prejudice  him  in  any  way.  His  engagement 
is  to  pay  the  note,  and  only  payment  will  relieve  him.  A 
failure  to  demand  payment  from  him  or  from  an  acceptor, 
except  one  supra  protest,  will  not  discharge  the  note1  or  ac- 
ceptance unless  it  was  supra  protest,  nor  prevent  suit  being 
brought  upon  it.2  The  suit  itself  becomes  a  demand.  A 
valid  tender  will  prevent  the  running  of  interest  against  him 
from  the  date  of  the  tender  to  the  date  of  a  demand.  Again, 
if  the  note  be  payable  at  a  particular  place,  or  the  accept- 
ance be  payable  at  a  particular  place,  and  the  maker  or  ac- 
ceptor be  present  there,  or  a  deposit  be  present  there  at  the 
maturity  of  the  note  or  bill,  and  the  note  be  not  there,3  or 
the  holder  be  not  there  prepared  to  receive  payment,4  the 

8  See  notes  4  and  5,  §  235,  ante.  port  Gas  Co.  v.  Pinkerton,  95  Pa. 

1  Wallace  v.  McConnel,  13  Pet.  62;  City  of  Nashville  v.  First  Nat. 

136,  and  many  other  cases.    The  Bank,  1  Baxt.  402.    But  attorney's 

same  rule  applies  to  a  note  payable  fees  provided  for  in  note  in  order 

at  a  particular  place.    Dockray  v.  to  be  recovered  require  a  demand 

Dunn,  37  Me.  442;  Carter  v.  Smith,  upon  the  maker.    See  Prescott  v. 

9  Gush.  321 ;  Nichols  v.  Pool,  47  N.  C.  Grady,  91  CaL  518;  Lindley  v.  Ross, 

23.    The  maker,  by  a  tender  at  the  137  Pa.  629.    But  this  ought  to  be 

place,  stops  interest.    See  notes  3  true  only  as  to  a  demand  note.   The 

and  4,  infra.    If  the  maker  is  in-  maker,  if  the  place  of  payment  is 

dorser,  he  has  been  held  not  enti-  not  fixed,  must  look  up  the  holder 

tied  to  notice.   Schmidt  v.  Archer,  and  pay  the  note  so  far  as  he  him- 

113  Ind.  365.    But  if  demand  is  re-  self  is  concerned.    Gale  v.  Corey, 

quired  to  make  the  note  draw  in-  112  Ind.  39. 

terest,  as  a  demand  note  without  -  See  note  4,  §  233,  ante. 

interest,  a  demand  is  necessary  if  3  Nichols  v.  Pool,  47  N.  C.  23. 

interest  is  desired.    Scovil  v.  Scovil,  4  Mulherrin  v.  Hannum,  2  Yerg. 

45  Barb.  517.     Coupons  for  interest  81;    Montgomery  v.  Tutt,  11   CaL 

need  not  be  demanded.    Williams-  307;  Pryor  v.  Wright,  14  Ark.  189; 


398  BANKS   AND   BANKING.  [§  239. 

maker  or  acceptor  will  be  relieved  from  interest  until  a  de- 
mand be  made  upon  him,8  when  interest  will  again  run. 

§  239.  Indorser  of  note. —  The  regular  indorser  of  a  ne- 
gotiable promissory  note  is  entitled  to  have  a  demand  of  pay- 
ment made  upon  the  maker  by  the  holder  at  the  date  of  the 
legal  maturity  of  the  note,  whatever  that  may  be,1  unless 
such  a  demand  is  excused  or  waived.  Unlike  certain  bills 
of  exchange,  which,  if  put  into  circulation,  may  not  require 
presentment  for  acceptance  until  after  their  maturity,2  a 
promissory  note  must  be  presented  for  payment  as  to  the  in- 
dorser at  the  date  of  its  maturity.8  If  due  at  a  certain  time, 
its  maturity  may  be  determined  from  inspection.  If  due 
upon  demand,  its  maturity  must  be  determined  by  circum- 
stances or  by  the  statute;4  but  it  seems  plain  that  each  suc- 
cessive indorsement  is  equivalent  to  a  new  demand  note,  and 
a,s  each  prior  indorser  is  responsible  to  each  subsequent  in- 
dorser, the  question  of  the  propriety  of  the  time  of  demand 
must  be  determined  solely  with  reference  to  the  date  of  the 
last  indorsement,  unless  such  a  time  has  elapsed  between 
two  indorsements  as  to  have  relieved  the  prior  of  the'  two 
indorsers,  which  fact  would  have  necessarily  released  all 

Yeaton  v.  Beriiey,  62  III  61 ;  Bud-  dorser  before  maturity.    See  note  6 

weiser  Brewing  Co.  v.  Capparelli,  for  indorsers  after  maturity. 

38  N.  Y.  Supp.  972.    But  where  the  2  See  §  251,  post. 

maker  of  the  note,  payable  at  his  3  See  note  1  to  §  236,  ante.    House 

factor's  office,  provided  funds  by  v.  Vinton  Nat.  Bank,  43  Ohio  St. 

settling  witli  his  factor,  and  there  346;  Magruder  v.   Union  Bank,  3 

was  no  demand  at  maturity,  and  Pet.  87.    The  same  rule  is  held  as 

the  factor  failed,  the  maker  of  the  to  an  assignor.    Ruddellv.  Walker, 

note  was  held  released.    Charles-  7  Ark.  457;  Aides  v.  Johnson,  1  Vt 

ton  Banking  Ass'n  v.  Zorn,  14  S.  C.  136.    Statutes  may  affect  this  ques- 

444    (wrong    because    factor    was  tion.    See  Frosh  v.  Holmes,  8  Tex. 

maker's  agent).  29.    Contra  to  the  text  is  Hull  v. 

5  Mahan    v.  Waters,  60  Mo.  167.  Myers,  90  Ga.  674 
The  subsequent  demand  must  not  4  The  general  rule  is  that  a  de- 
include  interest  not  due  on  account  mand  note  is  due  within  a  reason- 
of  the  tender  made.  able  time,  but  statutes  place  the 

1  Farmers'  Bank  v.  Small,  2  T.  B.  apparent  maturity  in  various  in- 

Mon.  88.    This  is  true  as  to  an  in-  stances  from   two  weeks   to   six 

months. 


§  240.] 


EXCHANGES,  SECURITIES,  ETC. 


399 


indorsers  prior  to  the  one  actually  released.5  Indorsers 
after  maturity  are  entitled  to  the  same  demand  as  drawers 
of  demand  bills  of  exchange.6 

§  240.  Accommodation  parties  to  notes. —  The  accommo- 
dation maker  of  a  promissory  note,  though  known  to  be 
such  to  the  holder,  is  nevertheless  responsible  as  maker  to 
the  holder.1  He  certainly  cannot  claim  any  demand  upon 
the  party  whom  he  accommodated.2  The  accommodation 
inclorser,  if  he  be  a  regular  indorser  of  a  note,  is  of  course 
entitled  to  have  a  demand  made  upon  the  maker.3  But  an 
indorser  for  whose  accommodation  a  note  was  made  is  the 
real  maker,  and  if  he  received  the  benefit  of  the  note  he  is 
not  entitled  to  have  a  demand  made  upon  the  maker.4  An 
indorser  for  whose  accommodation  a  bill  is  made  really 
stands  in  a  different  position  from  an  indorser  for  whose  ac- 


5  The  last  indorser  indorsed  an 
overdue  note,  and  if  the  demand 
was  good  as  to  him  he  is  held.   He 
can  hold  any  preceding  indorser 
not  discharged,  and  since,  as  we 
shall  see,  any  party  to  the  paper, 
who  is  subsequent  to  the  person  to 
whom  the  notice  is  given,  may  give 
not  ice,  the  question  becomes  merely 
one  of  notice. 

6  A   note   indorsed   overdue   be- 
comes a  note  or  bill  payable  upon 
demand,  and,  as  will  later  appear, 
must  be  presented  within  a  reason- 
able time  for  payment.    But  there 
is    some    authority    contra.     See 
French  v.  Jarvis,  29  Conn.  347;  Hall 
v.  Monohan,  6  Iowa,  216. 

1  Bank  of  Montgomery  v.  Walker, 
9  S.  &  R  229  (here  the  holder  was 
ignorant  of  the  fact) ;  Marion  Nat. 
Bank  v.  Phillips,  35  S.  W.  R.  910; 
Hansborough  v.  Gray,  3  Grat.  356 
(here  the  holder  knew  the  fact). 
Contra,  Connerly  v.  Planters'  Ins. 
Co.,  66  Ala.  432.  See  Hays  v.  North- 


western Nat.  Bank,  9  Grat.  127. 
The  same  rule  would  apply  as  to 
makers  who  were  accommodation 
makers  for  another  maker. 

2  See  last  note. 

3  French  v.  Bank  of  Columbia,  4 
Cranch,  141;  Braley  v.  Buchanan, 
21  Kan.  274;  Rea  v.  Dorrance,  18 
Ma  137;  Bogg  v.  Keil,  1  Mo.  743; 
Perry  v.  Friend,  57  Ark.  437;  Buck 
v.  Cotton,  2  Conn.  126;    Perry  v. 
Green,  19  N.  J.  Law,  61 ;  Sawyer  v. 
Brownell,  13  R  I.  141.    The  rule  as 
to  an  irregular  indorser  is  a  differ- 
ent matter. 

4  It  makes  no  difference  whether 
this  indorsement  is  before  or  after 
delivery,  or  is   regular  or  anom- 
alous.  Bank  of  Washington  v.Way, 
2  Cranch,  C.  C.  149;  Thornton  v. 
Stoddert,  1  Cranch,  C.  C.  534;  Mar- 
tel  v.  Tureaud,  6  Mart.  (N.  S.)  118; 
Blenderman  v.  Price,  50  N.  J.  Law, 
296;  Holman  v.  Whiting,  19  Ala. 
703;  Torrey  v.  Foss,  40  Me.  74;  First 
Nat.  Bank  v.  Ryerson,  23  Iowa,  508. 


400  BANKS    AND   BANKING.  [§  241. 

commoclation  a  note  is  drawn.  It  is  true  the  one  is  really 
the  drawer  of  the  bill,  and  the  other  is  really  the  maker  of 
the  note.  But  the  drawer  of  the  bill  ordinarity  has  the  right 
to  have  a  demand  of  payment  made,  while  the  maker  of  a 
note  has  not.  Therefore  the  rule  is  strictly  logical  that  the 
indorser  for  whose  accommodation  a  note  is  made,  and  who 
receives  the  benefit,  is  not  entitled  to  claim  that  demand 'of 
payment  should  be  made  upon  the  ostensible  maker.  An 
accommodation  indorser  of  a  note  after  maturity  is  simply 
the  accommodation  indorser  of  a  note  payable  upon  demand, 
and  should  be  governed  by  the  same  rule.  The  case  of  ir- 
regular indorsers  of  promissory  notes  varies  with  the  rule  of 
law  held  as  to  his  liability,  as  will  appear  in  the  next  sec- 
tion.6 

§241.  Guarantors  of  bills  or  notes. —  A  guaranty  of  a 
negotiable  instrument  may  result  from  an  actual  contract 
of  guaranty  upon  the  bill  or  in  a  separate  written  agree- 
ment,1 or  may  result  from  the  relation  of  a  party  to  the  bill. 
The  actual  contract  of  indorsement  upon  the  bill  itself  may 
either  be  written  upon  the  bill  or  may  be  provable  by  parol. 
Thus,  if  the  indorser  writes  or  signs  upon  the  bill  a  guar- 
anty,2 or  such  words  as  "  holden  for  the  within,"  or  words  of 
similar  import,3  he  becomes  a  guarantor.  But  a  blank  in- 

5  In   those    jurisdictions   which  therefore  is  entitled  to  notica   For 

hold  the  anomalous  indorser  to  be  the  authorities  upon  the  rule,  see 

an  original  promisor,  he  is  a  maker,  1  Daniel  on  Neg.  Inst.,  £§  707  to 

and  therefore  no  demand  is  neces-  714,  and  see  the  next  section,  notes 

sary  as  to  him.    Rey  v.  Simpson,  22  14  to  20. 

How.  341;  Good  v.  Martin,  95  U.  S.  1  Duvall  v.  Farmers'  Bank,  9  Gill 

90.    See  the  note,  Book  16,  p.  260  &  J.  44 

(Law.  ed.),  Sup.  Ct.  U.  S.  Reports.  2Furber  v.  Caverly,  42  N.  H.  74; 
The  actual  contract  may,  however,  Burt  v.  Parish,  9  Ala.  211. 
be  shown.    In  other  jurisdictions  3  Blanchard  v.  Wood,  26  Me.  358 ; 
he  is  held  to  be  a  guarantor,  and  Bay  ley    v.  Hazard,  3   Yerg.   487; 
therefore  subject  to  the  rule  in  the  Tatum    v.  Bowner,    27  Miss.  760; 
next  section,  and  subject  to  the  Baker  v.  Kelly,  41  Miss.  696;  Furber 
rule  that  the  actual  contract  may  v.  Caverly,  42  N.  H.  74  ("account- 
be  shown.    In  other  states  he  is  a  able  ").     Contra,  Vance  v.  Collins, 
second  indorser,  liable  to  be  made  6  CaL  435. 
a  first  indorser  by  evidence,  and 


§  241.]  EXCHANGES,  SECURITIES,  ETC.  401 

dorsement  if  irregular,  but  not  if  regular,  may  by  parol  be 
shown  to  be  a  guaranty,  and  if  the  agreement  at  the  time 
of  the  blank  irregular  indorsement  was  for  a  guaranty  by 
the  indorser,  the  indorsee  may  write  the  guaranty  above  the 
indorsement,4  but  not  unless  such  was  the  agreement.5  A 
transfer  of  the  bill  by  delivery  without  indorsement  may  be 
shown  to  be  a  guaranty  by  parol,  and  certainly,  if  the  parol 
agreement  of  guaranty  was  made  at  the  date  of  delivery 
and  receipt  of  value  for  the  note,  such  an  agreement  would 
have  a  consideration  to  support  it,  and  would  not  be  within 
the  statute  of  frauds.7  The  guaranty  may  also  arise  from 
the  relation  of  the  party  to  the  paper.  Thus  the  drawer  of 
a  bill  for  whose  accommodation  the  acceptor  accepts  may  be 
considered  a  guarantor,8  and  an  indorser  of  a  bill  for  whose 
accommodation  the  drawer  acts  may  be  considered  a  guaran- 
tor.9 Likewise  an  indorser  who  is  interested  in  the  original 
consideration  for  the  bill  and  receives  it,  or  a  part  of  it,  may 
be  considered  a  drawer  or  a  joint  drawer  and,  under  some 
circumstances,  equally  a  guarantor.10  The  indorser  of  a  note 
for  whose  accommodation  the  note  is  made,  or  who  is  inter- 
ested in  the  consideration,  or  who  receives  the  consideration 
or  a  part  of  it,  may  be  considered  a  maker,  or  joint  maker, 
or  a  guarantor.11  Likewise  irregular  or  anomalous  indorsers 

4Beckwith  v.  Angell,  6  Conn.  6  Edwards  v.  Shields,  7  Bradw.  70; 
315.  But  as  to  a  regular  indorser.  Catlin  v.  Jones,  1  Pin.  130;  Kimbro 
Rodney  v.  Wilson,  67  Mo.  123;  v.  Lamb,  4  Humph.  94;  Hill  v.  Mar- 
Beeler  v.  Frost,  70  Mo.  185;  Barnard  tin,  12  Mart.  (O.  S.)  177.  The  last 
v.  Galin,  23  Minn.  192;  Barry  v.  cases  are  where  a  waiver  was  writ- 
Morse,  3  N.  H.  132;  Bank  of  Albion  ten  above  a  blank  indorsement, 
v.  Smith,  27  Barb.  489;  Schmitz  v.  The  two  things  practically  amount 
Hawkeye  Co.,  8  S.  D.  544  The  rule  to  the  same  agreement, 
does  not  apply  to  irregular  indors-  7  See  King  v.  Summit,  73  Ind.  312; 
era.  Their  waiver  may  be  shown  Evans  v.  Stuhrberg,  78  Mich.  145; 
by  parol.  See  notes  14  to  20,  infra.  Milks  v.  Rich,  80  N.  Y.  269. 

6  Fanner  v.  Rand,  14  Me.  225 ;  Ed-  8  See  §  236,  ante. 

wards  v.  Shields,  7  Bradw.  70 ;  Beck-  9  See  §  236,  ante, 

with  v.  Angell,  6  Conn.  315.    For  10  See  §  236,  ante. 

an  assignment  of  a  non-negotiable  u  See  §  240,  ante. 
instrument,  see  Josselyn  v.  Ani*»«. 
3  Mass.  274. 
26 


402  BANKS   AND   BANKING.  [§  241. 

who  indorse  a  note  before  delivery,  certainly  if  interested 
in  the  consideration,12  and  by  the  weight  of  authority  re- 
gardless of  their  interest,13  will  be  considered  guarantors  of 
the  note.  But  there  is  other  authority  holding  that  such 
an  indorser  is  merely  an  ordinary  indorser.14  The  weight 
of  authority  is  that  the  real  contract  of  the  parties  upon 
such  an  indorsement  may  be  shown  by  parol.15  In  some 
states  parol  proof  may  be  adduced  to  rebut  the  presumption 
of  guaranty  arising  from  such  an  indorsement,16  but  this  rule 
is  denied  in  other  jurisdictions.17  And  in  those  jurisdictions 
which  consider  such  an  indorser  to  be  an  ordinary  indorser 
a  contract  of  guaranty  may  be  shown  by  parol; 18  but  other 
authority  disputes  this  proposition.19  In  other  states  it  is  held 
that  the  presumption  of  guaranty  cannot  be  denied  by  parol 
as  against  a  bona  fide  holder.20  But  however  the  guaranty 
may  arise,  whether  it  be  made  by  a  party  to  the  paper  in  connec- 
tion with  his  liability  on  the  paper,  or  by  one  not  a  party,  who 
binds  himself  only  if  he  has  a  consideration,  the  guarantor 
or  surety  of  the  payment  of  a  note,  unless  he  has  stipulated 
therefor,  is  not  entitled,  by  the  best  opinion,  to  a  demand  of 

12  See  §§  236,  240,  ante.  ritt,  61  Ind.  425;  Faulkner  v.  Faulk- 

»  See  §§  236,  240,  ante.  ner,  73  Mo.  327. 

14  This  is  sometimes  caused  by  a  16  Kingsland  v.  Koeppe,137IlL  344: 

statute,  but  the  rule  is  held  without  Strong  v.  Riker,  16  Vt.  554.    But 

a  statute.  See  Deering  v.  Creighton,  not,  of  course,  to  contradict  the 

19  Oreg.  118;  Tillman  v.  Wheeler,  actual  written  guaranty.    Jones  v. 

17  John.  326;  Gulden  v.  Linderman,  Albee,  70    III  34    But  see  Lane  v. 

34  Pa.  58;  Cady  v.  Shepard,  12  Wis.  Steward,  20  Me.  98. 

639;  Early  v.  Foster,  7  Black  f.  35;  "Gurney  v.  Giegling,  108  Mich. 

Fear   v.    Dunlap,   1    Greene,   331;  295;  Watson  v.  Hart,  6  Grat.  633; 

Holmes  v.  Preston,  70  Miss.  152;  De  Allen  v.  Brown,  124  Mass.  77;  Dale 

Pauw  v.  Bank  of  Salem,  126  Ind.  553.  v.  Gear,  38  Conn.  15. 

i»  Key  v.  Simpson,  22  How.  341;  « Heath  v.  Van  Cott,  9  Wis.  516; 

Cady  v.  Shepard,  12  Wis.  639 ;  Bright  Stack  v.  Beach,  74  Ind.  571. 

v.  Carpenter,  9  Ohio,  139:  Feather-  19  Coulter  v.  Richmond,  59  N.  Y. 

stone  v.  Hendrick,  59  111.  App.  497;  478;  Deering  v.  Creighton.  19  Oreg. 

O wings  v.  Baker,  54  Md.  82;  Kuntz  118. 

v.  Tempel,  48  Mo.  71 ;  Stack  v.  Beach,  *>  Schneider  v.  Schiffman,  20  Mo. 

74  Ind.  571;  Chaddock  v.  Vanness,  571;  Salisbury  v.  First  Nat.  Bank, 

85  N.  J.  Law,  517;  Browning  v.  Mer-  37  Neb.  872. 


§  242.] 


EXCHANGES,  SECURITIES,  ETC. 


403 


payment  by  the  holder  of  the  note,21  or  to  notice  of  non-pay- 
ment, whether  he  has  been  injured  by  delay  or  not.  The 
reason  is  plain :  he  contracts  to  perform  the  maker's  obliga- 
tion, which  is  to  pay  without  notice.  A  guarantor  for  a 
drawer,  however,  is  entitled  to  claim  a  demand  and  notice 
to  the  drawer.  But  a  guarantor  may  contract  for  such 
demand  and  notice,  and  then  the  contract  will  control." 
Those  courts  which  hold  that  a  demand  is  necessary  against 
the  guarantor  generally  confine  his  right  to  complain  to  the 
extent  of  the  injury  suffered,  and  the  notice  of  non-pay- 
ment is  riot  required  to  be  of  the  strict  character  as  to  time 
that  is  given  to  an  indorser.23 

§  242.    Parties  to  non-negotiable  instruments. —  The 

great  weight  of  authority  is  that  the  drawer  or  assignor  or 
the  indorser,  so  called,  of  a  non-negotiable  instrument  is  not 


21  Read  v.  Cutts,  7  Me.  180;  Klein 
v.  Currier.  14  111.  237;  Gage  v.  Me- 
chanics' Nat.  Bank,  79  111.  62 ;  French 
v.  Citizens'  Nat.  Bank,  97  Ind.  211 ; 
Tyler  v.  Waddington,  58  Conn.  375; 
Claflin  v.  Reese,  54  Iowa,  544,  semble; 
Adams  v.  Gordon,  22  La.  Ann.  41; 
Matthewson  v.  Sprague,  1  R.  L  8; 
Clay  v.  Edgerton,  19  Ohio  St.  549; 
Buchner  v.  Liebig,  38  Mo.  188;  Don- 
ley  v.  Camp,  22  Ala.  659;  Park  man 
v.  Brewster,  15  Gray,  271;  Hunger- 
ford  v.  O'Brien,  37  Minn.  306; 
Wright  v.  Dyer,  48  Mo.  525;  Bloom 
v.  Warder,  13  Neb.  476;  Stout  v. 
Stevenson,  4  N.  J.  Law,  178;  Hough 
v.  Gray,  19  Wend.  202;  Williams  v. 
Irwin,  3  Dev.  &  B.  74  (indorsers 
sureties  by  statute);  Carpenter  v. 
McLaughlin,  12  R  L  270.  Contra, 
Pierce  v.  Kennedy,  5  Cal.  138.  But 
see  First  Nat.  Bank  v.  Babcock,  94 
Cal.  96,  for  present  rule.  Lewis  v. 
Brewster,  2  McLean,  21 ;  Off utt  v. 
Hall,  1  Cranch,  C.  C.  534;  Bradley 
v.  Phelps,  2  Root,  325  (see  Williams 


v.  Granger,  4  Day,  444) ;  Second  Nat. 
Bank  v.  Gay  lord,  34  Iowa,  246;  Par- 
ker v.  Riddle,  11  Ohio,  102.  But  see 
Forest  v.  Stewart,  14  Ohio  St.  246; 
Sibley  v.  Van  Horn,  13  Iowa,  209; 
Fuller  v.  Scott,  8  Kan.  25;  Wheton 
v.  Mears,  11  Met.  563;  Talbotv.  Gay, 
18  Pick.  534;  Newton  Wagon  Co.  v. 
Diers,  10  Neb.  284 

22  Dickerson  v.  Derrington,  39  111. 
574;  Farmers'  Bank  v.  Kercheval, 
2  Mich.  504;  Clay  v.  Edgerton,  19 
Ohio  St.  549;  Hammond  v.  Cham- 
berlain, 26  Vt.  406.  See  Sylvester 
v.  Downer,  18  Vt.  32;  Woodson  v. 
Moody,  4  Humph.  303. 

23Rhett  v.  Poe,  2  How.  457;  Reyn- 
olds v.  Douglass,  12  Pet.  497 ;  Martyn 
v.  Lamar,  75  Iowa,  235;  Parkman 
v.  Brewster,  15  Gray,  271;  Johnson 
v.  Wilmarth,  13  Met.  416;  Gibbs  v. 
Cannon,  9  S.  &  R.  198;  Sibley  v. 
Van  Horn,  13  Iowa,  209;  Fuller  v. 
Scott,  8  Kan.  25.  And  see  cases 
contra,  in  note  21,  supra. 


404  BANKS   AND   BANKING.  [§  242. 

entitled  to  have  a  demand  made  upon  the  drawee;1  but  if  the 
instrument  is  a  promise  to  pay  money  at  a  clay  certain,  there 
is  no  reason  for  holding  that  the  indorser  of  such  a  docu- 
ment ought  not  to  be  entitled  to  all  the  rights  of  an  ordi- 
nary indorser  of  a  negotiable  promissory  note,  or  where  the 
order  is  for  money,  a  sum  certain,  words  of  negotiability 
are  not  necessarily  required  to  make  it  a  bill  of  exchange, 
and  hence  demand  and  notice  ought  to  be  necessary.2  The 
reason,  however,  doubtless  is  that  the  law  as  to  demand 
and  notice  is  a  part  of  the  law  merchant,  applicable  to 
negotiable  instruments  as  such,  and  ought  to  have  no  ap- 
plication to  instruments  that  do  not  fall  within  this  class. 
But  there  are  other  decisions  which  require  such  demand  as 
to  the  drawer  and  indorser  of  a  non-negotiable  order,3  and 
one  exception  that  might  seem  reasonable  is  that,  if  the  in- 
dorsee shows  that  he  treated  the  order  as  negotiable,  then 
the  indorser  is  entitled  to  the  rights  of  an  indorser  of  a  ne- 
gotiable instrument.4  But  whether  the  instrument  be  nego- 
tiable or  not  is  purely  a  matter  of  law,  and  a  mistake  of  law 
is  not  usually  held  to  give  the  man  who  makes  it  or  who 
concurs  in  it  any  right  from  the  standpoint  of  civil  liabili- 
ties, unless  the  circumstances  would  amount  to  an  estoppel. 
The  courts  which  hold  this  rule  that  a  demand  must  be 

1  Seymour  v.  Van  Slyck,  8  Wend,  torney's  receipt,  Runnells  v.  Spen- 

403;  Ishv.  Mills,  1  Cranch,C.  C.  567;  cer,  1  Miss.  362.    Compare  Wood  v. 

Huse  v.   Hamblin,  29   Iowa,  501;  Duval,  9  Leigh,  6. 

Briggs   v.  Parsons,  39  Mich.  400;  2  An  order  for  money,  see  the  next 

Smith  v.  Barnes,  24  Ga.  442;  Rich-  note. 

ards  v.  Waring,  1  Keyes,  576;  Ford  3  Hawkins  v.  Barney,  27  Vt.  392 

v.Mitchell,  15  Wis.  304  (a  certifi-  (injury  must  be  shown):  Adams  v. 

cate  of  deposit  held  non- negotiable) ;  Boyd,  33  Ark.  33 ;  Hart  v.  Eastman, 

Lyell  v.  Lapeer  Co.,  6  McLean,  446  7  Minn.  74;  Rhodes  v.  Morgan,  1 

(municipal  order);  Steel  v.  Davis  Baxt.  360;  Brown  v.  Teague,  52  N. 

Co.,  2  G.  Greene,  469  (municipal  C.  573;  Henderson  v.  Griffin,  3  Mart, 

order);  Pitman  v.  Brackenridge,  3  (N.  S.)  403;  Strader  v.  Batchelor,  8 

Gratt.  127;  Sinclair  v.  Johnson,  85  B.  Mon.  168;  National  Bank  v.  Good- 

Ind.  527.    A  guarantor  of  an  order  ing,  87  Me.  337.    For  order  on  an 

can  require  no  notice  of  non-pay-  attorney,  see   Wood    v.  Duval,  9 

ment.    Gammel  v.  Parramore,  58  Leigh,  6. 

Ga.  54.    See,  for  the  effect  of  an  at-  4  Haber  v.  Brown,  101  CaL  445. 


§  243.]  EXCHANGES,  SECURITIES,  ETC.  4:05 

shown  as  to  the  indorser  of  a  non-negotiable  order  must 
necessarily  hold  the  same  rule  as  to  the  drawer  of  an  order,5 
but  in  no  event  ought  the  defense  to  be  allowed  except  as 
to  the  amount  of  injury  suffered.6  But  unless  the  order  be 
for  money,  certainly  it  needs  no  demand  as  to  the  drawer 
or  indorser.  Thus  an  order  for  lumber  needs  no  present- 
ment.7 And  orders  of  public  corporations  issued  by  author- 
ity of  law  need  no  demand  as  against  an  indorser.8 

§243.  Parties  to  certificates  of  deposit. —  Courts  have 
spoken  of  certificates  of  deposit  as  the  promissory  notes  of 
the  bank  issuing  them,  and  apparently  upon  that  theory  it 
has  been  held  that  being,  if  payable  upon  demand,  demand 
notes,  as  to  one  who  made  the  deposit  for  the  benefit  of  the 
payee  as  a  payment  they  should  be  presented  within  a  rea- 
sonable time.1  Another  court  seems  to  have  treated  the 
certificate  as  a  check  and  held  that  the  certificate  must  be 
presented  as  against  an  indorser  upon  the  next  business  day,2 
although  it  is  certain  that  if  the  payee  and  indorser  requested 
or  acquiesced  in  the  delay  they  could  not  object.3  But  the 
better  authority  is  that  such  certificates  are  not  subject  to 
the  rule  as  to  the  necessity  of  a  demand  in  order  to  bind  the 
indorser,4  although  the  holding  mentions  the  wholly  unten- 
.  able  ground  that  the  certificate  was  not  negotiable.5  The 

5  See  cases  in  note  3,  supra.  Citizens'  Bank  v.  Brown,  45  Ohio 

« Hawkins  v.  Barney,  27  Vt.  392.  St.  39;  Bean  v.  Briggs,  1  Iowa,  148; 

7  Smith  v.  Barnes,  24  Ga.  442.  Blood  v.  Northrup,  1  Kan.  28;  Fells 

8  Lyell  v.  Lapeer  Co.,  6  McLean,  Point  Sav.  Inst.  v.  Weldon,  18  Md. 
446:  Steel  v.  Davis  Co.,  2  G.  Greene,  320;  Mitchell  v.  Easton,  37  Minn. 
469.  For  rule  as  to  presentment  for  335;  Frank  v.  Wessels,  64  N.  Y.  155; 
acceptance,  see  £§  207,  208,  ante.  Curran  v.  Witter,  68  Wis.  16.    Con- 

1  Bower  v.  Hoffman,  23  Md.  263.  tra,  Shute  v.  Pacific  Nat.  Bank,  136 
The  great  weight  of  authority  is  Mass.  487;  Lebanon  Bank  v.  Man- 
that  these  certificates  of  the  bank  gan.  28  Pa.  452. 
are  promissory  notes  and  negotiable        2Piner  v.  Clary,  17  B.  Mon.  645. 
as  such.    Miller  v.  Austin,  13  How.        3  Gate  v.  Patterson,  25  Mich.  191. 
218;  Brummagim  v.  Tallent,  29  Cal.        <Lindsey  v.  McClelland,  18  Wis. 
503;  Swift  v.  Whitney,  20  III  144;  481.    See  Pardee  v.  Fish,  60  N.  Y. 
Kilgore  v.  Buckley,  14  Conn.  362;  265. 
Maxwell  v.  Agnew,  21    Fla.   154;        » See  §  161,  ante. 


4:06  BANKS    AND   BANKING.  [§  244: 

sufficient  reason  for  the  rule  is  that  such  certificates  are  not 
issued  for  the  purpose  of  maturing  at  any  fixed  time,  whethei 
they  are  demand  certificates  or  are  payable  upon  time,  or 
interest-bearing  or  not  subject  to  interest,  and  therefore  a 
demand  at  any  time  before  they  are  barred  by  the  statute 
of  limitations  (which  of  course  destroys  the  liability  of  both 
the  bank  and  the  indorser)  is  a  demand  within  a  reasonable 
time.6  Subject  to  this  rule,  however,  a  demand  on  the  bank 
or  a  sufficient  excuse  for  want  of  it  must  be  shown  before 
an  indorser  upon  the  certificate  can  be  charged,  or  before 
the  bank  could  be  charged.7 

§  244.  Forged,  stolen  and  void  paper. —  If  the  paper  be 
forged  and  therefore  a  nullity,  nothing  whatever  passed  from 
the  indorser  to  the  indorsee,  and  therefore  no  demand  of  pay- 
ment of  the  paper,  or  of  acceptance  where  that  is  required, 
needs  be  shown  in  order  to  charge  an  indorser  thereon  who 
indorsed  the  paper  after  the  forgery  was  committed.1  Since 
the  forgery  must  be  a  material  alteration,  it  follows  that  if 
it  be  made  by  a  party  to  the  paper  the  paper  is  destroyed ; 2 
therefore  where  such  a  forgery  appears,  no  question  can  arise 
upon  the  liability  of  any  of  the  parties  prior  to  the  forgery. 
And  this  is  true  whether  the  forgery  be  of  an  indorsees 
name  or  of  a  material  alteration  in  the  paper.  But  if  the 
alteration  be  made  not  fraudulently,  or  by  a  stranger,  the 
holder  may  under  some  circumstances  enforce  the  paper  as 
it  originally  stood,  by  restoring  it  to  its  original  condition ; 3 
and  blanks  left  in  commercial  paper  which  have  been  im- 
properly filled  up  do  not  avoid  the  paper  in  the  hands  of  a 

6  Pardee  v.  Fish,  60  N.  Y.  265.  But  1  Goddard  v.  Merchants'  Bank,  4 
this  cannot  be  safely  relied  upon  as  N.  Y.   147;    Harrison  v.  Smith,  2 
the  law,  and  caution  would  suggest  Willson  Civ.  Cas.,  §  396.    But  see 
presentation  of  the  certificate  by  Collier  v.  Budd,  7  Mo.  485. 

the  indorsee  at  the  proper  time.  2  Wood  v.  Steele,  6  Wall  80;  Mers- 

7  Pardee  v.  Fish,  60  N.  Y.  265;  Rid-    man  v.  Werges,  112  U.  S.  139. 

die  v.  First  Nat  Bank,  27  Fed.  R.  »See  the  article  Alteration  of  In- 

503.    But  see  Beardsley  v.  Webber,  struments  in  2  Am.  &  Eng.  Enoyo. 

104  Mich.  88.    For  the  discussion  of  Law  (2d  ed.),  213,  261. 
this  question,  see  §  161,  ante. 


§  245.]  EXCHANGES,  SECURITIES,  ETC.  407 

lona  fide  holder.4  In  the  case  of  alteration  by  a  stranger 
and  the  paper  restored  to  its  original  form,  it  is  conceived 
that  the  rights  of  the  various  parties  would  remain  what 
they  were  upon  the  unaltered  paper.  Paper  void  in  its  in- 
ception does  not  need  a  demand  of  payment  in  order  that 
an  indorser  be  held.5 

Stolen  paper,  if  in  negotiable  form  to  pass  by  delivery,  gives 
a  good  title  to  a  lona  fide  holder,  and  the  rights  of  such  a 
holder  and  the  requirements  of  him  as  to  demand  would  be 
the  same  as  those  governing  any  other  holder.  If  the  paper 
was  stolen  not  in  such  negotiable  form,  the  transferee  under 
the  thief  would  get  no  title,  just  as  he  would  not  if  he  were 
not  a  holder  for  value  and  in  good  faith,  or  if  he  were  a 
transferee  after  maturity  and  therefore  put  upon  notice.  In 
such  case  the  true  owner  would  proceed  as  if  he  had  the 
paper,  giving  such  guaranties  as  he  would  be  required  to 
give;  but  the  rights  of  the  parties  as  to  a  demand  would  be 
the  same  as  if  the  paper  had  not  been  stolen,  although  the 
loss  of  the  paper  might,  as  in  the  case  of  paper  actually  lost, 
excuse  some  delay.6 

§245.  Sufficiency  of  the  demand. —  The  question  as  to 
whether  a  demand  of  payment  has  been  made  depends,  of 
course,  upon  whether  a  proper  demand  has  been  made,  and 
this  must  be  determined  with  reference  to  the  person  who 
makes  the  demand  and  the  person  upon  whom  the  demand 
has  been  made,  and  the  place  and  time  of  making  it.  The 
person  to  make  the  demand  depends  upon  the  nature  of  the 
instrument.  Foreign  bills  of  exchange  are  governed  by  one 
rule,  and  domestic  paper,  including  promissory  notes,  checks, 
inland  bills,  certificates  of  deposit  and  certified  checks,  are 
governed  by  another  rule.  The  person  upon  whom  to  make 
the  demand  must  be  determined  by  the  presence  or  absence 
of  the  person  upon  whom  the  demand  ought  to  be  personally 
made.  The  elements  of  place  of  demand  and  time  of  mak- 

4  Angle  v.  N.  W.  Mut  Life  Ins.        ^Benton  v.  Martin,  81  N.  Y.  383; 
Co.,  92  U.  S.  330.  Aborn  v.  Boswortli,  1  R.  L  401. 

5  Chandler  v.  Mason,  2  Vt  1QB. 


408  BANKS   AND   BANKING.  [§  246. 

ing  the  demand  enter  largely  into  the  question.  The  death 
of  the  holder  or  of  the  party  upon  whom  demand  is  to  be 
made  introduces  further  variations  as  to  the  person  and  time 
and  place.  The  character  of  the  paper,  as  to  whether  it  is 
a  check  or  a  bill  of  exchange  or  a  note  or  other  paper,  will 
vary  the  rule  as  to  the  time  of  the  demand.  The  considera- 
tion as  to  whether  the  paper  is  payable  at  a  certain  place  or 
not  made  so  payable  affects  the  place  of  the  demand.  Cus- 
toms and  business  usages  also  have  their  influence.  If  no 
demand  is  made  it  may  be  excused  by  a  waiver  of  a  demand, 
by  a  lack  of  right  or  authority  to  draw  in  the  case  of  a  bill 
of  exchange  or  a  check,  by  a  change  of  the  residence  of  the 
party  upon  whom  demand  is  to  be  made,  or  by  his  abscond- 
ing, or  by  a  state  of  war,  or  the  prevalence  of  an  epidemic. 
Generally  the  question  of  reasonable  diligence  on  the  part 
of  the  holder  will  be  controlling  as  an  excuse  for  failure  to 
demand.  The  divisions  of  the  subject  which  follow  seem  to 
be  the  most  appropriate  to  the  subject. 

§  246.  Person  to  make  demand  on  foreign  bills. —  Since 
a  foreign  bill  of  exchange  must  be  protested  if  not  paid,  the 
demand,  unless  there  be  no  anticipation  of  a  refusal  of  ac- 
ceptance or  of  payment,  should  be  made  by  a  notary  public.1 
The  notary  public  is  authorized  to  act  in  any  of  the  ways  in 
which  an  agent  can  be  authorized,  as  pointed  out  in  the  case 
of  domestic  paper  in  the  next  section.2  The  test  of  whether 
bills  of  exchange  are  foreign  is  whether  the  bill  is  drawn  in 
a  foreign  country  payable  in  this  country  or  vice  versa,  or 
drawn  in  one  state  payable  in  another  state.3  If  the  bill  in- 
dicates where  it  is  drawn  or  where  payable,  it  is  no  less  a 
foreign  bill  because  all  the  parties  reside  in  one  state.4  But 

1  Union  Bank  v.  Hyde,  6  Wheat,  v.  Finley,  2  Pet.  586;  U.  S.  Bank  v. 
572;  Commercial  Bank  v.  Varnum,  Daniels,  12  Pet.  32),  although  all  the 
49  N.  Y.  269;  Cribbs  v.  Adams,  13  parties  reside  in  the  stata    Mason 
Gray,  597.  v.  Dousay,  35  111.  424;  Freeman's 

2  See  §  247,  post,  notes  7  to  12.  Bank  v.  Perkins,  18  Me.  292. 

8  Bills  drawn  in  one  state  payable        4  See  the  last  two  cases  in  the  pre- 
in  another  are  foreign  bills  (Towns-    ceding  note. 
ley  v.  Sumrall,  2  Pet  170;  Buckner 


§  246.]  EXCHANGES,  SECURITIES,  ETC.  409 

where  the  bill  does  not  indicate  the  residence  of  either  party 
or  the  place  of  payment,  the  fact  may  be  shown5  in  order  to 
determine  the  nature  of  the  bill.  The  rule  requiring  a  no- 
tarial protest  is  satisfied  by  the  protest  of  a  de  facto  notary ; 
but  it  has  been  said  that  a  notary  commissioned  by  a  state 
government  after  its  attempted  secession  from  the  Union 
was  not  a  de  facto  notary;6  but  the  protest  is  not  rendered 
invalid,  the  same  court  has  held,  by  the  fact  that  the  notary 
is  an  officer  of  a  seceding  state.7  The  necessity  or  the  occa- 
sion for  such  decisions  is  not  likely  to  recur.  But  the 
notary  can  act  only  in  the  district  or  county  wherein  his  au- 
thority extends.8  If  there  is  no  notary  at  the  place  of  pay- 
ment, the  bill  may  be  protested  by  any  substantial  person  in 
the  presence  of  witnesses.9  Where  the  interest  of  a  witness 
disqualifies  him  from  testifying,  a  condition  which  no  longer 
exists  except  in  peculiar  instances,  such  a  disqualified  wit- 
ness is  not  a  competent  notary  to  protest  a  bill.  Thus  where 
a  notary  was  a  stockholder  in  a  bank,  it  was  held  that  he 
could  not  protest  a  bill  owned  by  the  bank.10  But  the  rea- 
son of  the  rule  has  ceased  when  interest  ceases  to  disqualify 
a  witness.11  In  some  localities  it  is  still  the  rule  that  a  so- 
called  atheist  or  unbeliever  in  a  future  state  of  rewards  and 
punishments  is  not  a  competent  witness,  and  the  reason  of 
the  rule  would  disqualify  him  as  a  notary.  But  the  son  of 
the  holder  may  as  a  notary  protest  his  father's  bill.12  The 
demand  of  payment  must  be  made  by  the  same  notary  who 
protests  the  bill,1"1  and  the  rule  seems  to  be  that  the  clerk  of 
the  notary  cannot  make  the  demand  and  the  notary  protest 

5 Harmon  v.  Wilson,  1  Duv.  222.  "Nelson  v.  First  Nat.  Bank,  6S 

6Toddv.Neal,49Ala.266.  But  he  Fed.  R.  798  (C.  C.  A.);  Morland  v 

may  be  an  officer  of  a  seceding  Citizens'  Sav.  Bank,  97  Ky.  211. 

state.   Tyrie  v.  Rives,  57  Ala.  173.  12Eason  v.  Isbell,    42  Ala.    456; 

7  See  last  note.  Waters  v.  Petrovic,  19  La,  584.  The 

8  Gordon  v.  Dreux,  6  Rob.  (La.)  maker  of  the  note  may  as  a  notary 
399;  Neeley  v.  Morris,  2  Head,  595.  protest,  Dykman  v.  Northridge,  153 

9  Bank  of  Kentucky  v.  Pursley,  3  N.  Y.  662,  1  App.  Div.  26. 

T.  B.  M6*n.  238.  13  Kentucky  Commercial  Bank  v. 

10  Herkitner  Bank  v.  Cox,  21  Wend.    Barksdale,  36  Mo.  56& 
119;  Bank  v.  Porter,  2  Watts,  141. 


410 


BANKS   AND   BANKING. 


[§  246. 


the  bill ; M  nor  can  the  notary  make  the  protest  upon  the  de- 
mand of  some  one  else ; 15  and  a  protest  by  the  clerk  or  tlie 
deputy  of  a  notary  is  not  good,  even  if  the  clerk  or  deputy 
presents  the  bill  and  makes  the  demand.16  But  this  rule  is 
relaxed  or  denied  by  some  courts  as  to  a  notary's  clerk  or 
deputy  in  large  cities,17  and  in  other  courts  the  custom  is 
held  to  justify  the  clerk's  or  deputy's  acting,18  and  in  other 
instances  the  notary  is  empowered  by  law  to  appoint  a  dep- 
uty.19 If  the  notary  is  authorized  by  law  to  appoint  a  dep- 
uty, a  protest  by  the  notary  upon  a  demand  by  his  deputy  is 
sufficient.20  But  certainly  a  protest  by  the  clerk  of  a  notary 
without  the  knowledge  of  or  any  authority  from  the  notary 
is  not  valid.21  Under  the  statutes  of  many  states  protest  is 
permitted  as  to  domestic  paper,22  and  if  the  statute  be  held 
to  mean  protest  by  a  notary,  the  demand  should  be  made 
by  the  notary  in  order  to  prove  protest  by  his  certificate, 
unless  a  statute  otherwise  permit  as  to  a  clerk  or  deputy.23 
The  party  who  employs  a  notary  as  an  agent  either  iinme- 


14  Kentucky  Commercial  Bank  v. 
Barksdale,  supra;  Gawtry  v.Doane, 
51  N.  Y.  84;  Williamson  v.  Turner, 
2  Bay,  410;  Hunt  v.  Maybee,  7  N.  Y. 
266.  See  Bank  of  Kentucky  v.  Gary, 
6  B.  Mon.  626;  McClane  v.  Fitch,  4 
B.  Mon.  599;  Lee  v.  Buford,  4  Met. 
(Ky.)  7;  Chew  v.  Read.  11  Smedes 
&  M.  182;  Carter  v.  Union  Bank,  7 
Humph.  548  (statutes  allowing  no- 
tary to  appoint  deputy);  so  Bank  of 
Louisiana  v.  Lawless,  3  La.  Ann. 
129. 

15Marsaudet  v.  Jacobs,  6  Rob. 
(La.)  276;  Shepherd  v.  Jonte,  14 La. 
246;  Meise  v.  Newman,  76  Hun,  341. 

wDonegan  v.  Wood,  49  Ala.  242; 
Chenoweth  v.  Chamberlin,  6  B. 
Mon.  60,  semble;  Cribbs  v.  Adams, 
13  Gray,  597;  Ellis  v.  Commercial 
Bank,  7  How.  (Miss.)  294;  Commer- 
cial Bank  v.  Barksdale,  36  Mo.  563 
(demand  by  notary's  partner  who 


was  also  a  notary);  Onondaga  Bank 
v.  Bates,  3  Hill,  53;  Lock  v.  Huling, 
24  Tex.  311.  See  Bank  of  Alexan- 
dria v.  Wilson,  2  Cranch,  C.  C.  5. 
This  decision  may  be  put  upon  the 
ground  that  a  demand  not  by  a  no- 
tary is  good  except  where  notary's 
demand  is  compulsory;  provided 
the  person  making  the  demand  tes- 
tifies and  reliance  is  not  placed  on 
the  certificate. 

"  Monroe  v.  Woodruff,  17  Md.  159; 
Sacrider  v.  Brown,  3  McLean,  481. 

18  Miltenberger  v.  Spaulding.  33 
Mo.  421.  This  creates  a  new  species 
of  public  officer. 

19  See  last  two  cases  in  note  14, 

20  See  cases  cited  in  note  14. 

21  Sacrider  v.  Brown,  3  McLean, 
481. 

22  See  §  310,  post 

23  See  notes  14  and  16,  supra. 


247.] 


EXCHANGES,  SECURITIES,  ETC. 


411 


cliately  or  mediately  through  a  collecting  bank  or  collect 
ing  agency,  so  far  as  the  person  sought  to  be  charged  is- 
concerned,  must  bear  the  result  of  the  notary's  inadequate 
demand,24  or  want  of  diligence  in  making  the  demand,  just 
as  if  he  were  a  private  individual.25  The  rules  as  to  the  no- 
tary's action  in  making  a  demand  of  payment  apply  with 
equal  force  to  the  notary's  presentation  for  acceptance,  where 
such  presentation  is  required.26 

§  247.  By  whom  demand  made  on  domestic  paper. —  Do- 
mestic paper,  which  includes  everything  requiring  a  demand 
of  payment,  such  as  promissory  notes,  checks,  orders  or  cer- 
tificates of  deposit,  does  not  require  a  notarial  demand  unless 
a  statute  so  provides.1  And  this  is  true  though  a  note  be 
made  in  one  state  payable  in  another.2  Yet  without  a  stat- 
ute, if  such  paper  is  presented  and  protested  by  a  notary,  the 
fact  may  be  proven  as  a  demand  by  the  holder  through  an 
The  demand  must  be  made  by  the  holder  or  his 


agent.3 


24  Davy  v.  Jones,  42  N.  J.  Law,  28; 
Allen  v.  Merchants'  Bank,  22  Wend. 
215. 

25  See  §  182,  ante,  showing  a  num- 
ber of  cases  of  this  character.  Ros- 
son  v.  Carroll,  90  Tenn.  90. 

26  Phillips  v.  McCurdy,  1  Har.  &  J. 
187.    Lenox  v.  Leverett,  10  Mass.  1, 
holds  that   a    foreign  draft  sued 
upon  for  non-payment  must  show 
both    protest    for   non-acceptance 
and  non-payment.    The  rule  is  dif- 
ferent as  to  bills  drawn  in  this 
country  upon  Europe.    Brown  v. 
Barry,  3  Dall.  365;  Clarke  v.  Rus- 
sell, 3  Dall.  415. 

'Inland  bills  need  not  be  pro- 
tested by  notary.  Young  v.  Bryan, 
6  Wheat.  146;  McCord  v.  Curlee,  59 
111.  221;  Miller  v.  Hackley,  5  Johns. 
875;  Knott  v.  Venable,  42  Ala.  186. 
Promissory  notes  need  not.  Young 
v.  Bryan,  6  Wheat.  146;  Burke  v. 


McKay,  2  How.  66.  Though  stat- 
ute makes  notary's  certificate  evi- 
dence, it  does  not  make  protest  by 
a  notary  compulsory.  Bryant  v. 
Lord,  19  Minn.  396.  See  Tevis  v. 
Randall.  6  Cal.  632.  Checks  need  no- 
notarial  protest.  Griffin  v.  Kempr 
46  Ind.  172;  Wittich  v.  First  Nat. 
Bank,  20  Fla.  843;  Pollard  v.  Bowen, 
57  Ind.  232;  Mutual  -Nat  Bank  v. 
Rotge,  28  La.  Ann.  933;  Wood  River 
Bank  v.  First  Nat  Bank,  36  Neb. 
744.  But  if  the  statute  permits,  any 
paper  may  be  protested,  Moses  v» 
Franklin  Bank,  34  Md.  574. 

2  Smith  v.  Little,  10  N.  H.  526. 
But  a  check  drawn  in  New  Orleans 
on  London  needs  notarial  protest 
New  Orleans  Bank  v.  Girard  Bank, 
10  La.  562. 

3  He  may  testify  to  the  fact  as 
any  other  witness  who  made  de- 
mand.   See  note  6. 


412  BANKS   AND   BANKING.  [§  248. 

agent.4  The  ownership  of  the  paper  is  determined  by  the 
ordinary  rules  of  law  applicable.  A  bailee  or  pledgee  of 
paper  who  holds  the  paper  as  collateral  security  or  for  the 
purposes  of  collection  may  be  considered  the  owner,  but  the 
distinction  is  not  important,  because  even  if  not  holder  he  is 
agent.  Where  the  wife's  personal  property  passes  by  mar- 
riage to  the  husband  he  is  the  owner  of  paper  owned  by  his 
wife  upon  marriage,  and  properly  makes  the  demand  in  order 
to  reduce  the  property  to  possession.5  The  demand  may  be 
made  by  any  one  lawfully  in  possession  and  competent  to 
testify.6  Possession  is  sufficient  evidence  of  authority  to  de- 
mand payment.7  A  person  who  receives  or  holds  the  paper 
for  collection  may  make  demand 8  or  authorize  it.9  The  au- 
thority of  the  clerk,  or  on  principle  any  other  employee,  of 
the  holder  to  make  the  demand  need  not  be  shown.10  The 
indorsement  by  the  cashier  of  a  bank  of  the  bank's  paper  to 
a  cashier  of  another  bank  is  certainly  within  the  scope  of  his 
authority,  and  is  presumed  to  be  authorized.11  The  verbal 
request  of  the  holder  is  sufficient  authorization.12  But  where 
the  agent's  authority  is  terminated  by  the  death  of  his  prin- 
cipal, a  demand  by  the  agent  after  the  death  is  insufficient.18 

§  248.  On  whom  demand  to  be  made. — The  general  state- 
ment of  the  rule  for  making  a  demand  upon  the  obligor  upon 
commercial  paper,  where  a  demand  is  required,  is  that  the 

« Gale  v.  Tappan,  12  N.  H.  145.  »  See  §  182,  ante. 

5  It  is  of  little  importance  whether  10  Draper  v.  Clemens,  4  Mo.  52,  so 
he  be  considered  holder  or  agent.  states  as  to  authority  to  receive  a 

6  Shed  v.  Britt,  1  Pick.  401;  Cole  demand,  and  the  same  rule  must  be 
v.  Jessup,  10  N.  Y.  96;  Jex  v.  Tu-  true  as  to  making  demand, 
reaud,  19  La.  Ann.  64.  See  Batchel-  "  Church  v.  Barlow,  9  Pick.  547. 
lor  v.  Priest,  12  Pick.  399.  12  Freeman  v.  Boynton,  7  Mass.  483; 

7  Cole    v.    Jessup,   10    N.  Y.  96;  Bank  of  Utica  v.  Johnson,  18  Johns. 
Agnew  v.  Bank  of  Gettysburg,  2  230.  The  drawees  may  act  as  agents 
Har.  &  G.  478;  Morris  v.  Foreman,  for  the  holder  in  giving  notice  to 
1  Dall.  193.  other  parties.   Mt  Pleasant  Branch 

8  Blakeslee  v.  Hewitt,  76  Wis.  341 ;  Bank  v.  McLeran,  26  Iowa,  806. 
Powell  v.  State  Bank,  1  Disn.  260;  "Gale  v.  Tappan,  12  N.  H.  145. 
Freeman's  Bank  v.  Perkins,  18  Me. 

292. 


§  248.]  EXCHANGES,  SECURITIES,  ETC.  413 

demand  should  be  made  upon  the  drawee  or  maker,  or  upon 
his  agent  duly  authorized.1  Subject  to  many  limitations 
arising  from  considerations  as  to  the  proper  place  to  make  a 
demand  and  as  to  diligence  in  discovering  the  drawee  or 
maker,  the  rule  is  correct.  If  a  personal  demand  is  made 
at  a  proper  time  and  place  and  in  a  proper  manner,  it  is  of 
course  sufficient.  The  ingredients  of  time  and  place  and  a 
proper  manner  of  making  the  demand  will  be  discussed  in 
the  succeeding  sections,  but  even  if  the  demand  be  not  made 
in  a  proper  manner  or  at  a  proper  hour  or  place,  an  absolute 
refusal  to  pay  or  to  accept,  where  no  objection  is  made  as 
to  the  nature  of  the  demand,  will  cure  the  defects  in  the  pre- 
sentment.2 The  determination  of  the  obligor  is  not  always 
an  easy  matter,  but  generally  the  persons  named  as  makers 
or  drawees  are  the  proper  recipients  of  the  demand.  Thus, 
the  makers  of  a  note  were  the  standing  committee  of  the 
parish,  and  a  demand  upon  them  was  held  sufficient  without 
any  demand  upon  the  treasurer  of  the  parish.3  In  the  case 
of  joint  obligors,  the  rule  is  that  if  the  note  is  joint  and  sev- 
eral,4 or  joint,8  the  demand  must  be  upon  each  obligor;6  and 
this  rule  is  applied  in  one  jurisdiction,  as  the  cases  cited  show, 
to  indorsers,  who  are  in  fact  makers ;  but  some  cases  which  do 
not  seem  well  decided,  considering  a  joint  note  in  the  form 

1  See  the  cases  cited  in  the  follow-  Union  Bank  v.  Willis,  8  Met.  504; 

ing  notes,  which  all  recognize  the  Benedict  v.  Schweig,  13  Wash.  476; 

rula  Taylor  v.  Davidson,  2  Cranch,  C.  C. 

2Follain  v.  Dupre,  11  Rob.  (La.)  434;  Harris  v.  Clark.  10  Ohio,  5; 

454;  Gilbert  v.  Dennis,  3  Met.  495;  Greenoughv.  Smead,  3  Ohio  St.  415; 

Waring  v.  Betts,  90  Va.  46;  King  v.  Shedd  v.  Britt,  1  Pick.  401;  Hestus 

Crowell,  61  Me.  244;  Parker  v.  Kel-  v.  Petrovic,  1  Rob.  (La.)  119. 

logg,  158  Mass.  90.    A  refusal  to  »Bank  of  Red  Oak  v.  Orvis,  4Q 

change  account  is  not  a  demand  Iowa,  332;   Arnold   v.  Dresser,  90 

and  refusal.   Burch  v.  Newberry,  10  Mass.  435. 

N.  Y.  374  Presenting  check  for  6  If  one  joint  obligor  is  dead,  de- 
certification not  a  demand.  Brad-  mand  must  be  made  on  his  per- 
ford  v.  Fox,  39  Barb.  203,  wrong,  and  sonal  representative.  Hale  v.  Burr, 
absurdly  so.  Certification  is  pay-  12  Mass.  86;  Haight  v.  Kindhart,  1 
ment  by  a  novation.  S.  C.  189.  This  of  course  does  not 

3  Casco  Bank  v.  Mussey,  19  Me.  20.  apply  to  partnership  paper.    Union 

4  Blake  v.  McMillen,  22  Iowa,  358;  Bank  v.  Willis,  8  Met  504 


BANKS   AND   BANKING. 


[§  248: 


of  a  partnership  venture,  hold  that  a  demand  upon  one  of 
the  joint  makers  is  sufficient.7  But  if  some  of  the  makers 
are  accommodation  makers  and  the  indorser  had  notice  of 
that  fact,  a  demand  upon  the  makers  primarily  liable  ought 
to  be  sufficient.8  In  the  case  of  partnership  notes  a  demand 
upon  either  partner  before  dissolution  is  sufficient.9  If  the 
partnership  note  was  made  after  dissolution  in  renewal  of  a 
partnership  note  or  for  a  demand  against  the  partnership,  a 
demand  upon  one  partner  is  sufficient.10  But  where  the  part- 
nership is  dissolved  it  has  been  held  that,  though  the  holder 
knew  of  the  dissolution,  a  demand  upon  one  partner  is  good, 
and  this  is  the  proper  rule.11  Other  courts  admit  the  validity 
of  the  demand  upon  one  partner  where  the  holder  had  no 
notice  of  the  dissolution.12  Other  courts  hold  that  where 
the  holder  has  notice  of  the  dissolution,  or  it  seems  even  if 
he  has  not  such  notice,  a  demand  upon  one  partner  after  dis- 
solution is  not  sufficient.13  There  might  be  some  rational 
excuse  for  this  holding  if  the  partnership  had  appointed  one 
of  its  members  to  wind  up  the  partnership  affairs  and  this 
fact  was  known  to  the  holder.  He  might  then  be  required 


7  Harris  v.  Clark,  10  Ohio,  5.  Com- 
pare Greenough  v.  Smead,  3  Ohio 
St.  415;  Hestus  v.  Petrovic,  1  Rob. 
(La.)  119. 

8Britt  v.  Lawson,  15  Hun,  123. 

9Shedd  v.  Britt,  1  Pick.  401;  Mt 
Pleasant  Bank  v.  McLeran,  26  Iowa, 
306;  Hunter  v.  Hempstead,  1  Mo. 
67;  and  see  the  cases  in  notes  4  and 
5,  supra. 

10  Greatrake  v.  Brown,  2  Cranch, 
C.  C.  541 

"Crowley  v.  Barry,  4  Gill,  194; 
Fourth  Nat.  Bank  v.  Hueschen,  52 
Mo.  207;  Gates  v.  Beecher,  60  N.  Y. 
518.  This  is  true  of  an  acceptance 
also.  Kendrick  v.  Campbell,  1 
Bailey,  522.  Where  partnership  is 
dissolved  by  death  of  one  partner 
the  demand  should  be  on  the  sur- 
viving partner,  not  the  personal 


representative  of  the  deceased  part- 
ner. Barlow  v.  Coggan,  1  Wash. 
Ter.  257. 

12  See  the  next  note. 

13See  the  case  of  Commercial  Bank 
v.  Perry,  10  Rob.  (La.)  61,  which  holds 
that  one  partner  after  dissolution 
cannot  accept,  payable  at  a  partic- 
ular placa  If  that  is  so,  he  cannot 
accept  at  all,  and  therefore  a  pre- 
sentment to  him  for  acceptance  is 
not  good,  and  by  necessary  infer- 
ence a  presentment  to  him  for  pay- 
ment would  not  be  binding.  This 
same  court  holds  the  rule  as  to  no- 
tice that  if  given  to  one  partner 
after  notice  of  dissolution  to  the 
holder  the  notice  is  not  good.  It 
must  necessarily  hold  the  same  as 
to  a  demand.  See  Nott  v.  Down- 
ing, 6  La.  680. 


§  24:8.]  EXCHANGES,  SECURITIES,  ETC.  415 

to  present  his  note  to  that  partner.  But  the  controlling  con- 
sideration is  that  when  the  note  was  given  the  holder  gained 
the  right  to  present  it  for  demand  to  any  one  of  the  part- 
ners, and  to  say  that  the  partners  can  by  some  arrangement 
between  themselves  change  the  holder's  rights,  or  his  trans- 
feree's rights,  is  wholly,  profoundly  and  perfectly  absurd. 
Where  the  partnership  is  dissolved  by  death  of  one  of  the 
partners,  the  surviving  partner  or  partners  gain  the  right  to 
close  up  the  partnership  affairs.  A  demand  upon  the  sur- 
vivors, or  one  of  them,  is  sufficient  without  any  demand  upon 
the  personal  representative  of  the  deceased  partner,  because 
he  has  nothing  to  do  with  the  matter.  The  fact  that  the 
individual  property  of  the  deceased  partner  may  become 
liable  if  the  partnership  assets  are  insufficient  does  not  vary 
the  matter,  except  to  the  extent  of  requiring  the  claim  to 
be  presented  to  the  administrator  or  executor.  That  pres- 
entation is  not,  however,  anything  that  the  inclorser  can 
claim,  but  is  a  defense  for  the  estate.  There  is  a  case,  how- 
ever, which  holds  that  where  one  partner  is  dead  and  his 
administrator  is  out  of  the  state,  and  the  other  partner  has 
absconded,  demand  upon  the  syndic  of  the  firm  (who  is  a 
sort  of  statutory  assignee)  is  sufficient.14  This  suggests  the 
rule  that,  if  a  partner  is  dead  and  the  other  partners  cannot 
be  found,  demand  should  be  made  upon  the  administrator  or 
executor  of  the  deceased,  which  is  a  very  proper  rule.  But 
where  the  firm  is  insolvent  a  demand  upon  the  assignee  is  said 
not  to  be  sufficient,15  but  that  holding  is  wrong.  The  only 
excuse  for  it  is  that  the  individual  property  of  the  partners 
may  not  be  assigned,  and  therefore  the  indorser  has  the  right 

14  Wogan  v.  Thompson,  9  La.  Ann.  tice  of  non-payment  upon  the  as- 
300.  signee  has  been  held  to  be  good. 

15  Armstrong  v.  Thruston,  11  Md.  American  Nat  Bank  v.  Junk  Bros. 
148.    Either  a  demand  is  excused  Co.,  94  Tenn.  624,  which  cites  all 
altogether  because  the  maker   is  the  authorities.    There  is  one  case 
absolutely   insolvent   (as    to    this,  which  rules  that  a  demand  on  a 
however,  there  is  considerable  ques-  certificate  of  deposit  must  be  made 
tion),  or  the  assignee  should  be  con-  upon  the  receiver  of  the  bank.    Bal- 
sidered  the  agent  of  the  partners  to  lard  v.  Burton,  64  Vt  387. 
receive  a  demand.    Service  of  no- 


416  BANES   AND   BANKING.  [§  248. 

to  a  demand  upon  one  or  both  of  the  partners  in  order  to 
see  whether  the  note  might  not  be  paid.  But  that  reason 
would  not  be  germane,  because  it  would  require  a  present- 
ment to  each  partner  of  an  insolvent  firm  still  doing  busi- 
ness. The  indorser  is  not  prejudiced  in  the  least  by  a  failure 
to  demand  from  all  the  partners.  The  rule  is  unquestion- 
ably wrong  in  Maryland,  where  it  was  held  because  in  that 
state  a  partnership  assignment  must  include  the  individual 
property  of  the  partners,  which  ought  to  be  the  rule  every- 
where, but  some  deluded  courts  deny  it.  "Where  the  bill  of 
a  bank  is  payable  at  its  branch,  but  the  branch  is  discontin- 
ued, the  demand  should  be  made  at  the  bank  itself.16 

Where  the  presentment  for  payment  is  made  to  an  agent 
the  difficulty  lies  in  determining  whether  the  agent  is  au- 
thorized to  receive  the  demand.  If  the  authority  actually 
exists  no  difficulty  arises  except  upon  the  proof.  But  where 
the  authority  must  be  implied,  the  inference  arises  from  cir- 
cumstances. But  if  an  attorney  in  fact  signs  a  note,  demand 
may  not  be  made  upon  him,17  on  the  presumption  that  his 
authority  is  co-extensive  with  the  note.  And  even  if  the 
power  to  pay  were  given,  it  would  cease  upon  the  death  of 
the  principal.  The  authority  would  be  revoked  unless  it 
were  coupled  with  an  interest.  So  if  one  signs  as  agent 
without  stating  his  principal,  a  demand  upon  him  as  agent 
is  good  though  he  had  in  fact  ceased  to  be  agent.18  The 
principal  should  have  been  given  notice  if  he  knew  of  the 
note ;  if  he  did  not,  he  is  bound  by  his  agent's  act  appar- 
ently;  but  the  decision  is  very  questionable  unless  the  holder, 
took  all  proper  steps  to  ascertain  who  the  principal  was. 
A  demand  at  the  place  of  business  of  the  drawee  or  maker 
upon  a  bookkeeper  or  clerk,  when  the  drawee  or  maker  is 

16  Nashville  Bank  v.  Henderson,  5  ous.    A  demand  on  the  authorized 

Yerg.  104  agent  is,  of  course,  good.    Phillip- 

» Luning  v.  Wise,  64  CaL  410.  v.  Poindexter,  18  Ala.  579.    Good 

18  Hall  v.  Bradbury,  40  Conn.  33.  on    treasurer    of   corporation    for 

Compare  Stinson  v.  Lee,  63  Miss,  corporation.    Commercial  Bank  v. 

113,  which  seems  palpably  errone-  Manufacturing  Co.,  23  Ma  280. 


§  249.]  EXCHANGES,  SECURITIES,  ETC.  417 

absent,  is  prima  facie  sufficient.19  If  the  clerk  states  that 
he  is  authorized  to  receive  the  demand  it  is  certainly  suffi- 
cient.20 The  same  rule  is  held  as  to  a  firm  as  drawee.21  The 
rule  seems  to  be  that  no  evidence  is  needed  to  show  the 
clerk's  authority,22  although  such  evidence  may  be  given.23 
The  person  presenting  at  the  place  of  business  is  not  only 
justified  in  relying  upon  the  clerk's  statement,  but  if  some 
one  therein  states  that  he  is  the  maker  or  drawee  he  may 
rely  upon  that  statement.24  If  no  one  is  at  the  place  of  busi- 
ness within  business  hours  of  the  day,  the  place  being  closed, 
the  demand  is  complete.25  A  demand  at  a  bank  should  be 
upon  some  officer  or  employee  in  the  bank  who  is  competent 
to  make  answer  to  the  demand.26 

§  249.  Manner  of  presentation  for  payment. —  Subject  to 
certain  qualifications  which  will  appear  under  the  head  of 
demand  upon  paper  payable  at  a  particular  place,  the  gen- 
eral rule  unquestionably  is  that  a  demand  must  be  accom- 
panied by  the  instrument  itself.1  It  is  not  necessary  that  the 
instrument  be  actually  exhibited,  but  it  is  sufficient  that  the 
person  making  the  presentment  has  the  instrument  ready  to 
produce  it  if  a  production  of  it  should  be  required.2  And 

19  Gardner  v.  Bank  of  Tennessee,  23  Iowa,  185;  bookkeeper:  Armor  v. 
1  Swan,  420;  Decatur  Branch  Bank  Lewis,  16  La.  331.    To  one  appar- 
v.  Hodges,  17  Ala.  42;   Draper  v.  ently  cashier.    New  Orleans  R.  Co. 
Clemens,  4  Mo.  52.  v.  McKelvey,  2  La.  Ann.  359.    But 

20  Wesson  v.  Garrison,  8  La.  Ann.  the  officer  must  be  in  the  bank. 
136.  Peabody  Ins.  Co.  v.  Wilson,  29  W. 

21  See  Brown  v.  Turner,  15  Ala.  832.  Va,  528. 

22  Nelson  v.  Fotterall,  7  Leigh,  180;  1  Musson  v.  Lake,  4  How.  262. 
Stainback  v.  State  Bank,  11  Gratt.  2Draper  v.   Clemens,   4  Mo.  52; 
260;  Draper  v.  Clemens,  4  Mo.  52.  Arnold  v.  Dresser,  90  Mass.  435.   But 

23  See  the  cases  in  the  last  note.  see  Maine  Bank  v.  Smith,  18  Me. 

24  Hunt  v.  Maybee,  7  N.  Y.  266.          99  (customary  demand  by  the  cash- 
26  Wiseman  v.  Chiapella,  23  How.    ier  of  a  bank ;  the  note  was  at  the 

366;  Baumgardner  v.  Reeves,  35  Pa.  bank  in  the  same  town,  but  cashier 

250;  Berg  v.  Abbott,  83  Pa.  177;  did  not  have  it);  Gallagher  v.  Rob- 

Shedd  v.  Brett,  1  Pick.  413;  Great-  erts,   11  Ma  489;  Union  Bank  v. 

rake  v.  Brown,  2  Cranch,  C.  C.  541.  Morgan,  2  La.  Ann.  418. 
26  Teller:  First  Nat.  Bank  v.  Owen, 
27 


418  BANKS   AND   BANKING.  [§  249. 

if  a  view  of  the  instrument  is  requested  the  demand  will  not 
be  good  unless  the  instrument  be  produced,  unless  it  should  be 
lost  or  destroyed.3  Of  course,  however,  if  the  note  or  other 
instrument  be  lost  or  destroyed,  its  production  is  not  requi- 
site;4 but  the  demand  must  be  accompanied  by  an  offer  of 
the  proper  indemnity,  if  such  protection  is  required  by  the 
person  to  be  charged.5  Some  authority  holds  that  the  in- 
strument must  be  exhibited,6  while  other  authority  holds 
that  the  person  making^  the  presentment  need  not  have  the 
instrument  to  produce,  even  if  requested.7  But  if  the  de- 
mand is  made  upon  interest  coupons  the  presenter  need  not 
have  the  notes  with  the  coupons.8  The  person  upon  whom 
a  demand  is  made  has  the  right  to  have  the  instrument  sur- 
rendered,9 and  also  the  collateral  deposited  with  it,  securing 
it,  and  this  is  the  reason  for  the  above  rule  as  to  presenta- 
tion ;  if  the  person  upon  whom  a  demand  is  made  offers  and 
is  ready  to  pay  the  paper  upon  surrender  of  the  collateral 
and  the  instrument,  and  the  person  presenting  refuses  to  so 
surrender  unless  the  holder  has  some  other  right  to  retain 
the  collateral,  there  is  no  refusal  of  payment  upon  which  to 
predicate  the  liability  of  an  indorser.10  Whether  a  present- 
ment made  through  the  mail  is  a  good  presentment  for  pay- 
ment or  not  depends  upon  whether  the  party  to  be  charged 

8  King  v.   Crowell,   61    Ma  244  notarial  certificate.    It  is  undoubt- 

And  see  Arnold  v.  Dresser,  90  Mass,  edly  incorrect,  a  hasty  and  inaccu- 

435.  Where  a  demand  is  upon  inter-  rate  statement.    See  the  cases  in 

est  coupons  it  is  not  necessary  to  note  2,  supra,  and  First  Nat.  Bank 

have  or  to  produce  the  note  with  v.  Hatch,  78  Mo.  13;  Fisher  v.  Beck- 

the  coupons.    Codman  v.  Vermont  with,  19  Vt.  31. 

R.  Co.,  17  Blatchf.  1.  7See  cases  contra  in  note  2. 

4  Arnold  v.  Dresser,  90  Mass.  435.  8  Codman  v.  Vermont  R  Co.,  17 

8  This  is  true  as  to  all  negotiable  Blatchf.  1. 

paper.    But  see  Hinsdale  v.  Miles,  9  Bank  of  Vergennes  v.  Cameron, 

6  Conn.  331.  7  Barb.  143,  and  cases  in  notes  1 

6  Smith  v.  Gibbs,  2  Smedes  &  M.  and  2,  supra. 

479;  Draper  v.  Clemens,  4  Mo.  52.  10  Ocean  Nat  Bank  v.  Tant,  50 

Musson  v.  Lake,  4  How.  262,  is  a  N.  Y.  475. 
decision  as  to  the  statements  of  a 


§  250.]  EXCHANGES,  SECURITIES,  ETC.  4:19 

refuses  payment.11  If  he  does  refuse  to  pay  it  is  a  good  de- 
mand ;  for  as  in  all  other  cases  a  refusal  to  pay  the  instru- 
ment dispenses  with  a  demand  or  presentment.12  But  if 
presentment  be  made  through  the  mail  and  the  person  to 
whom  the  presentment  is  to  be  made  pays  no  attention  to  the 
demand,  the  indorser  will  be  discharged  as  well  as  a  drawer 
of  a  bill.13  Sending  the  paper  directly  to  the  drawer  or 
maker  is prima  facie  a  want  of  diligence  in  the  holder,14  and 
it  is  easy  to  see  that  unless  a  refusal  to  pay  is  received  the 
holder  cannot  tell  whether  to  give  notice  of  dishonor  or 
not.15  The  demand  must  also  comport  with  the  tenor  of  the 
bill  or  note.  Thus,  a  demand  of  payment  in  gold  upon  a 
bill  not  made  so  payable  is  not  a  good  demand,16  and  such 
is  the  rule  as  to  any  other  demand  which  departs  from  the 
apparent  and  legal  effect  of  the  instrument.17 

§250.  Hour  of  demand. —  The  consideration  as  to  the 
proper  time  in  which  to  make  a  demand  involves  two 
branches:  first,  the  proper  hour  at  which  to  make  a  demand ; 
and  second,  the  proper  day  on  which  to  make  a  demand. 

11  Carmichael     v.     Pennsylvania  But  the  maker  may  agree  upon  a 
Bank,  4  How.  (Miss.)  567.  place  at  which  to  leave  notice  of 

12  Gilbert  v.  Dennis,  3  Met.  495;  maturity,  and  it  binds  the  indorser. 
Waring  v.  Betts,  90  Va,  46;  Legg  v.  State  Bank  v.  Hurd,  12  Mass.  172. 
Vinal,  165  Mass.  555;  Merchants'  Whatever  demand  is  obligatory  on 
Bank  v.  Spicer,  6  Wend.  443.  the  maker  is  sufficient  as  to  the  in- 

13  See  Parker  v.  Stroud,  98  N.  Y.  dorser.  Bank  of  Portland  v.  Brown, 
379;  Stuckert  v.  Anderson,  3  Whart.  22  Me.  295. 

116;  Barnes  v.  Vaughan,  6  R.  L  259;  15  This  is,  perhaps,  the  real  reason 

Halls  v.  Howells,  Harp.  426.     But  of  the  rule. 

in  two  jurisdictions  the  sending  of  16  Langenburger   v.    Kroeger,  48 

a  notice  by  a  bank  by  mail  that  the  Cal.  147. 

paper  is  at  the  bank  and  must  be  17Thus  presentation  for  allowance 

paid  is  a  good  demand  by  custom,  as  a  claim  against  the  estate  of  a 

Grand  Bank  v.  Blanchard,  23  Pick,  deceased  maker  is   not  sufficient 

306 ;  State  Bank  v.  Smith,  18  Me.  99.  (Chase  v.  Evoy,  49  Cal.  467) ;  or  to  as- 

And  see  Farmers'  Bank  v.  Duvall,  certain  genuineness,  or  for  the  pur- 

7  Gill  &  J.  78,  and  cases  above  in  pose  of  identification,  or  to  learn 

this  note,  and  Tredick  v.  Wendell,  whether  funds  to  meet  it,  not  suffi- 

1  N.  H.  80.    See  also  §  261,  post.  cient.    Simpson  v.  Pacific  Ins.  Co., 

14  Farwell  v.  Curtis,  7  Biss.  160.  44  CaL  139. 


420  BANKS   AND   BANKING.  [.§  250. 

The  proper  hour  for  a  demand  involves  the  consideration  of 
whether  the  demand  is  made  at  the  place  of  business  of  a 
person  or  corporation,  or  whether  the  demand  is  made  at  the 
residence  of  the  person  upon  whom  the  demand  is  being 
made.  The  place  of  making  the  demand  depends  upon  ques- 
tions which  will  be  discussed  under  that  head.  Assuming 
that  a  demand  is  being  properly  made  at  a  business  house, 
office  or  room,  the  general  rule  is  that  the  demand  must  be 
made  during  business  hours.1  What  are  business  hours  must 
be  determined  by  the  customs  and  methods  of  doing  busi- 
ness in  the  particular  place.2  A  number  of  instances  will  be 
found  in  the  note  below.3  But  one  peculiar  difficulty  is  to 
be  noted,  and  that  is  the  case  of  a  bank  at  which  a  note  is 
made  payable.  The  demand  should  be  made  there  on  the 
day  of  maturity,  as  will  in  the  succeeding  sections  be  ex- 
plained. Now  some  cases  hold  that  the  drawee  or  maker 
has  the  whole  of  the  banking  hours  of  the  day  of  maturity 
in  which  to  pay,4  i.  e.,  the  last  day  of  grace,  if  grace  is  allowed 
upon  the  paper,  and  that  a  demand  made  before  the  close  of 
banking  hours  upon  that  day  is  premature.8  Yet  other  cases 
hold  that  the  demand  must  be  made  at  the  bank  on  the  last 
day  and  during  business  hours.6  It  is  apparent  that  no 
human  being  can  fulfill  both  requirements  unless  he  can 
make  a  demand  at  the  instant  of  the  bank's  closing^  but  the 
courts  are  not  really  so  unreasonable  as  the  above  statements 
would  indicate.  In  those  states  where  the  maker  or  drawee 
has  the  whole  of  the  banking  hours  of  the  day  of  maturity 

1  Ashton  v.  Dull,  31  Leg.  Int.  61;  in  the  morning).    At  a  bank  the 
McFarland    v.   Pico,    8    CaL    626;  demand  should  be  during  banking 
Clough   v.   Holden,   115    Mo.  336;  hours.    Cayuga  Co.  Bank  v.  Hunt, 
Strong  v.  King,  35  TIL  9.  2  Hill,  635. 

2  Estes  v.  Tower,  102  Mass.  65;  Me-       <  Church  v.  Clark,  21  Pick.  310; 
Farland  v.  Pico,  8  CaL  626.  Harrison  v.  Crowder,  6  Smedes  & 

'Triggs  v.  Newnham,  1  C.  &  P.  M.  464  (custom);  Planters'  Bank  v. 

631  (at  eight  in  evening);  Morgan  Markham,  5  How.  (Miss.)  397. 

v.  Davidson,  1  Stark.  92  (six  or  seven  8  See  cases  last  cited, 

in  evening);  Clough  v.  Holden,  115  6Swan  v.  Hodges,  8  Head,  251; 

Mo.  336  (at  5:20  in  evening),  wimble;  India  Rubber  Mfg.  Co.  v.  Bishop, 

Lunt  v.  Adams,  17  Me.  230  (at  eight  8  E.  D.  Smith,  148. 


§  250.]  EXCHANGES,  SECURITIES,  ETC.  421 

in  which  to  pay  the  paper,  the  rule  is  that  demand  can  be 
made  after  the  close  of  business  hours  if  there  is  any  one  in 
the  bank  to  make  answer,  such  as  the  officers  of  the  bank,7 
or  a  toller,8  or  cashier,9  and  this  is  the  rule  everywhere. 
Those  states  which  hold  that  the  demand  must  be  made 
during  business  hours  at  the  bank  permit  it  to  be  made  upon 
paper  payable  at  the  bank  at  any  time  during  these  business 
hours.10  They  hold  that  the  maker  or  drawee  must  have 
made  provision  to  pay  there  at  the  beginning  of  business 
hours,  and  if  a  demand  is  made  and  a  refusal  to  pay  at  any 
time  during  business  hours  of  the  day  it  is  a  refusal  to  pay, 
even  though  the  maker  or  drawee  did  afterwards  during 
the  day  offer  to  deposit  funds  to  pay  the  paper.11  These 
courts  also  permit  a  demand  to  be  made  after  business  hours, 
provided  there  be  any  one  in  the  bank  competent  to  make 
reply  to  the  demand.12  But  it  should  be  remembered  that 
the  question  of  whether  the  demand  is  made  in  business 
hours  is  of  importance  only  where  personal  demand  is  not 
obtained.13  If  the  demand  be  made  personally  upon  the 
maker  or  drawee  in  his  business  house,  it  is  of  no  importance 

7  Shepherd  v.  Chamberlin,  8  Gray,  li  Moore  v.  Britton,  22  La.  Ann. 
225;  Cohea  v.  Hunt,  2  Smedes  &  M.  64.    While  this  case  may  seem  to 
227;  Barbaroux  v.  Waters,  3  Met.  be  wrong  at  first  sight,  yet  if  the 
(Ky.)  304;  Flint  v.  Rogers,  15  Me.  rule  is  admitted  that  a  good  de- 
67:   Allen  v.   Avery,  47  Me.  287;  mand  can  be  made  after  banking 
Moore  v.  Britton,  22  La.  Ann.  64;  hours,  it  follows  as  a  matter  of  ne- 
Reed  v.  Wilson,  41  N.  J.  Law,  29;  cessity  that  a  man  must  leave  his 
Fox  v.  Newell,  8  W.  L.  J.  421.  deposit  after  business  hours.    But 

8  Commercial  Bank  v.  Hamer,  7  Salt  Springs  Nat.  Bank  v.  Burton, 
How.  (Miss.)  448;  Bank  of  Utica  v.  58  N.  Y.  430,  has  a  dictum  to  the 
Smith,  18  Johns.  230.  contrary.     The    court    intimates 

9  See  Lafayette  Bank  v.  McLaugh-  that  the  deposit  need  be  left  only 
lin,  4  W.  L.  J.  70;  Salt  Springs  Nat.  until  the  close  of  banking  hours; 
Bank  v.  Burton,  58  N.  Y.  430.  but  that  statement  is,  like  most 

10  Salt  Springs  Nat.  Bank  v.  Bur-  dicta,  rash  and  badly  considered, 
ton,  58  N.  Y.  430;  Thorp  v.  Peck,  28  Etheridge  v.  Ladd,  44  Barb.  69  (a 
Vt  127.    The  same  rule  applies  to  store  fixed  as  a  place  of  payment), 
paper  made  payable  at  any  place  12  See  the  cases  in  notes  7,  8,  9, 
of  business.    Presentment  for  pay-  supra. 

rnent  may  be  made  at  any  business      l3  See  cases  in  note  3,  supra. 
hour  of  the  day  of  maturity. 


4:22  BANKS    AND   BANKING.  [§  250. 

that  it  is  out  of  business  hours,14  provided  it  be  at  some  rea- 
sonable hour.  But  where  the  demand  is  made  upon  some 
one  in  the  office  or  business  house  in  the  absence  of  the  per- 
son to  be  charged,  or  is  made  by  finding  no  one  there,  where 
that  is  permissible,  the  demand  should  be  properly  made  in 
business  hours,15  for  the  very  apparent  reason  that  it  is  only 
during  business  hours  that  either  the  proprietor  or  his  clerks 
can  be  expected  to  be  there,  or  that  any  one  there  can  be 
assumed  to  have  any  authority  to  represent  the  business  of 
the  proprietor. 

Now,  in  the  case  where  demand  can  be  made  at  a  dwell- 
ing-house or  domicile,  the  case  as  to  the  hour  may  vary, 
owing  to  the  fact  of  the  drawee's  or  maker's  presence 
there.  If  the  maker  or  drawee  is  himself  served  there,  it 
makes  little  difference  what  the  hour  may  be,  provided  it  is 
reasonable;16  but  if  the  drawee  or  maker  be  not  personally 
served,  either  because  he  is  not  there  or  because  no  one  ap- 
pears, it  should  appear  that  the  demand  was  at  some  rea- 
sonable hour.  But  if  some  one  appears  competent  to  receive 
the  demand,  the  hour  of  the  demand,  if  it  be  after  the  usual 
hour  of  arising  and  be  before  the  hour  of  retiring,  can  cut 
but  little  figure.17  If  no  one  appears,  the  hour  of  the  de- 
mand should  appear  to  have  been  a  reasonable  one.18  The 
reason  for  the  above  rules  is  that  the  drawee  or  maker  may 
have  made  provision  to  pay  the  note  or  bill  at  his  office,  or, 
even  though  he  be  away  from  home,  may  have  left  proper 

14  Ashton  v.  Dull,  31  Leg.  Int.  61.       17  See  the  cases  in  the  preceding 
The  fact  that  the  person  was  in  his    note. 

place  of  business  would  seem  con-  18This  service  of  demand  at  the 

elusive  evidence  as  to  the  reason-  residence,  where  it  is  proper,  is  the 

ableness  of  the  hour.  equivalent  of  personal  service.    If 

15  See  cases  in  note  1,  supra.  the  house  is  deserted,  the  inference 

16  Cayuga  Co.   Bank  v.   Hunt,  2  is  that  the  person  was  away  from 
Hill,  635.    But  12  o'clock  at  night,  home  with  his  family.    If  there  is 
when  the  party  to  be  charged  was  some  one  there  •who  receives  the 
aroused  from  his  bed,  was  held  un-  demand,  the  service  is  as  good  as 
reasonable.     Dana  v.  Sawyer,   22  if  made  upon  the  person  himself. 
Me.  244    See  Farnsworth  v.  Allen,  See  §  259,  post,  as  to  place  of  de- 
4  Gray,  453;  Skelton  v.  Dustin,  92  mand. 

Ill  94. 


§  251.]  EXCHANGES,  SECURITIES,  ETC.  423 

directions  with  some  one  at  his  residence.  The  remaining 
questions,  concerned  with  the  time  of  presentment  for  a  de- 
mand, will  be  discussed  in  the  following  sections. 

§  251.  Time  of  demand  upon  bills  of  exchange. —  Bills  of 
exchange  may  be  drawn  payable  on  demand  or  at  sight,  or 
so  many  days  after  sight,  or  upon  a  fixed  day.  As  we  have 
seen,  a  bill  payable  so  many  days  after  sight,1  and  a  bill  pay- 
able at  sight,2  needs  presentment  for  acceptance,  and  the 
non-acceptance  of  a  bill  dispenses  with  the  necessity  of  de- 
mand in  order  to  hold  the  drawer  and  indorser,  if  their 
liability  be  fixed  upon  the  non-acceptance.3  If  the  bill  be 
accepted  it  must  none  the  less  be  presented  for  payment  to 
the  acceptor  in  order  to  hold  the  drawer  and  inclorsers,  unless 
such  demand  be  excused  or  waived.4  The  proper  time  for  a 
demand  may  be  looked  at,  first,  from  the  standpoint  of  delay. 
The  reasonableness  of  a  delay  upon  a  bill  of  exchange  pay- 
able on  demand  or  at  sight  must  be  determined  from  the 
manner  in  which  the  bill  has  been  treated  by  the  holder. 
If  the  bill  has  not  been  put  into  circulation,  a  demand  of 
payment  upon  a  bill  payable  at  sight  or  upon  demand  must 
be  made  within  a  reasonable  time  after  its  reception  by  the 
holder;5  or  if  it  is  a  demand  bill  or  a  sight  bill  and  it  has 
been  accepted,  and  no  date  for  maturity  of  the  acceptance 
fixed,  the  acceptance  may  go  into  circulation;  demand  may 
be  delayed  for  a  reasonable  time,  it  has  been  held,  after  its 
acceptance.6  The  rule  has  been  held  by  a  court,  which  did 
not  understand  the  rule,  to  be  that  the  bill  should  be  pre- 
sented for  payment  upon  the  same  day,  or  forwarded  upon 

1  See  §  206,  ante,  note  10.  Hill,  26  Tex.   472;    Thornburg   v. 

2  See  £  206,  ante,  note  11.  Emmons,  23  W.  Va.  325  (sight  draft). 

3  See  §  233,  ante,  note  10.  « Nichols  v.  Blackmore,  27  Tex. 

4  See  §  293  et  seq.,  post,  and  §  233,  586.    This  case  is  a  good  instance 
ante,  note  3.  of  oversight  by  both   court   and 

6  Dumont  v.  Pope,  7  Blackf.  367  counsel,  for  no  one  seemed  to  know 

(the  document  was  treated  as  a  bill  the  difference  between  an  accepted 

of  exchange);  English  v.  Trustees,  and  an  unaccepted  bill.    Thestate- 

6  Ind.  437;  Mohawk  Bank  v.  Brod-  ment  in  the  text  is  what  the  case 

erick,  10  Wend.  304;  Chambers  v.  amount*  to  as  an  actual  decisidh. 


424  BANKS   AND   BANKING.  [§  251. 

the  next  day  after  its  receipt.7  In  accordance  with  the 
general  rule,  a  sight  draft  drawn  in  Arkansas  upon  the  fif- 
teenth day  of  the  month  and  deposited  in  a  Memphis  bank 
for  collection,  and  presented  for  payment  in  Kansas  City  on 
the  nineteenth  day  of  the  month,  was  considered  to  have 
been  presented  within  a  reasonable  time;8  but  a  sight  draft 
upon  New  York  indorsed  to  a  party  in  Wisconsin,  upon 
which  a  delay  of  fourteen  days  was  had  by  a  particular 
holder,  was  held  not  to  have  been  presented  within  a  rea- 
sonable time.9  A  delay  of  four  days  upon  a  bill  of'exchange 
has  been  held  to  be  unreasonable.10  The  cases  upon  demand 
drafts  are  more  numerous  under  the  head  of  checks,  but 
those  cases  are  not  reliable  criteria,  because  a  draft  payable 
at  sight  or  after  sight  or  demand  may  be  put  into  circula- 
tion,11 while  a  check,  it  appears,  is  not  expected  to  be  so 
treated.  Since  such  a  draft  may  be  put  into  circulation,  it 
necessarily  follows  that  what  is  a  reasonable  time  for  its 
presentation  for  payment,  whether  the  draft  is  a  sight  draft 
or  a  demand  draft,  depends  wholly  upon  circumstances.  If 
the  draft  passes  from  hand  to  hand  and  is  by  no  holder  held 
for  an  unreasonable  time,  its  presentment  cannot  be  con- 
sidered as  unreasonably  delayed.12  A  bill  of  exchange  drawn 
in  the  West  Indies  at  sixty  days  sight  upon  London  was  put 
into  circulation  and  not  presented  for  several  months,  yet 
the  presentment  was  in  time.13  So  a  bill  drawn  in  Antigua, 

7  Slack  v.  Longshaw,  8  Ky.  Law  would  appear  in  this  case  that  the 
R   166.    The  case  cites  1  Daniel,  court  did  not  seem  to  know  that 
Neg.  Inst.,  sec.  605,  but  the  author  this  draft  was  presentable  for  ao 
does  not  seem  to  know  that  a  de-  ceptance;   but  a  reference  to  the 
mand  bill  can  be  put  into  circula-  former  decision,  12  Wis.  635,  would 
tion.    See  Angaletos  v.   Meridian  indicate  that  proof  was  made  that 
Nat  Bank,  4  Ind.  App.  573,  holding  under  the  New  York  law  a  sight 
that  demand  bills  can  be  put  into  draft  does  not  require  presentment 
circulation.  for  acceptance. 

8  Wards  v.  Sparks,  53  Ark.  519.  10  See  note  18,  infra. 

The  case  impliedly  holds  the  above,  »  Robinson  v.  Ames,  20  Johns.  146. 

but  the  objection  was  that  it  was  12  Wallace  v.  Agry,  4  Mason,  336; 

presented     for    payment    prema-  Bolton  v.  Harrod,  9  Mart  (O.  S.)  326. 

turely.  is  See  first  case  in  last  note. 

9  Walsh  v.  Dart,  23  Wis.  334    It 


§  251.]  EXCHANGES,  SECURITIES,  ETC.  425 

• 

one  of  the  West  Indies,  upon  London  at  ninety  days,  which 
was  presented  after  a  delay  of  six  months,  was  presented 
within  a  reasonable  time,  it  appearing  that  the  bill  had 
numerous  indorsements;14  and  a  St.  Louis  bill  at  sixty  days 
upon  New  Orleans  which  had  numerous  indorsements  was 
presented  in  time  though  delayed  for  three  months.15  The 
rule  to  be  extracted  from  the  cases  is  that  the  question  of 
reasonable  time  upon  the  presentment  of  the  bill  depends 
not  only  upon  the  distance  and  means  of  communication 
between  the  place  of  drawing  and  that  of  payment,  but  also 
upon  the  manner  in  which  the  bill  has  been  circulated.  A 
delay  of  eighty  or  ninety  days,16  a  delay  of  fifteen  days  be- 
tween Ohio  and  New  York  City,17  a  delay  of  two  months 
where  the  holder  resided  for  part  of  the  time  with  the 
drawee,18  have  been  judicially  determined  to  be  unreason- 
able, while  a  delay  of  forty-seven  days,19  or  of  ten  days',20  has 
been  considered  reasonable.  Each  case  depends  upon  its 
peculiar  circumstances,  and  not  a  little  upon  the  disposition 
of  the  particular  court.  It  is  needless  to  say  that  drafts  pay- 
able at  a  fixed  date  must  be  presented  for  payment  at  ma- 
turity, just  as  a  promissory  note  or  an  acceptance  payable 

14  Gowan  v.  Jackson,  20  Johns.  176.  Angaletos  v.  Meridian  Nat.  Bank, 

l»  Little  v.  Pratt,  1  Mo.  201.    See  4Ind.App.  573  (two or  five  months); 

Montelius  v.  Charles,  76  III  303.  Phoenix  Ins.  Co.  v.  Allen,  11  Mich. 

16Brower  v.  Jones,  3  Johns.  230.  501  (twenty  days);  Phoenix  Ins.  Co. 

17  Vantrol  v.   McCulloch,  2  Hilt.  v.  Gray,  13  Mich.  191  (twenty-one 
272.  days);  Orear  v.  McDonald,  9  Gill, 

18  Fernandez  v.  Lewis,  1  McCord,  350;  Brady  v.  Little  Miami  R.  Co., 
322.    For  other  cases  of  unreason-  34  Barb.  249  (four  days) ;  Taylor  v. 
able  delay  see  Burrett  v.  Tidmarsh,  Sip,  30  N.  J.  Law,  284  (two  days,  but 
5  Bradw. 341  (six  years);  Bridgeford  this  is  wrong.     It  was  a  post-dated 
v.    Simon,   18  La.   Ann.   121  (two  check  put  into    circulation.    The 
years);  First  Nat.  Bank  v.  Bensley,  opinion  of  the  chief  justice  is  so 
2  Fed.  R  609  (one  year);   Bull  v.  manifestly  correct  that  it  is  amaz- 
First  Nat.  Bank,  14  Fed.  R.  612  (five  ing  to  see  that  the  other  two  judges 
months);  Little  v.  Phoenix  Bank,  2  overruled  him;. 

Hill,  425,  7  Hill,  359  (ten  months);  ^ Nichols  v.  Blackmore,  27  Tex. 

Olshausen  v.  Lewis,  1  Biss.  419  (one  586. 

month);  Willets  v.  Paine,  43  III  432  2°  National  Newark  Banking  Co. 

(twenty-five  days,  but  the  ground  v.  Second  Nat.  Bank,  63  Pa.  404 
of  this  decision  was  wholly  wrong); 


4:26  BANKS   AND   BANKING.  [§  251. 

•  .          . 

at  a  fixed  date  must  be  presented  at  maturity  in  order  to 
hold  the  drawer  or  the  indorser.  Bank  drafts,  which  are 
drafts  by  one  bank  upon  another,  are  said  to  be  governed 
by  a  more  liberal  rule  than  bills  of  exchange,21  but  as  a  mat- 
ter of  fact  bank  drafts  are  sin  ply  checks  and  are  to  be  gov- 
erned by  the  rules  in  regard  to  checks.22  The  delay  may  be 
occasioned  by  a  mistake  in  the  postoffice  or  by  the  fact  that 
the  bill  has  been  lost.  The  postmaster's  mistake  will  not 
prejudice  the  holder,  nor  will  a  delay  in  demand  caused  by 
a  loss  of  the  bill.23  One  court  informs  us  that  the  loss  of 
the  bill  excuses  only  a  reasonable  delay.24  It  meant  to  say 
that  a  delay  on  account  of  the  loss  of  the  bill  would  not  be 
extended  to  cover  a  delay  not  occasioned  by  the  loss  of  the 
bill.  This  time  within  which  presentment  for  payment 
should  be  made  may  be  varied  or  extended  by  statute.25 

The  foregoing  cases  have  been  concerned  with  the  fact  of 
a  demand  not  within  time.  But  a  bill  cannot  be  properly 
presented  for  payment  before  its  maturity.  If  the  bill  be 
accepted  so  as  to  fix  its  maturity,  a  demand  at  its  maturity 
is  necessary.  If  the  maturity  of  the  bill  is  fixed  by  the  bill 
itself,  the  acceptance  must  be,  as  we  have  seen,  unless  the 
drawer  and  indorsers  concur  in  an  extension,  one  payable 
upon  the  day  of  maturity.26  If  the  accepted  bill  is  payable 
at  sight  the  acceptance  is  not  payable  until  maturity.  The 
maturity  of  all  bills  of  exchange,  except  demand  bills,  is  de- 
termined by  adding  to  the  date  of  apparent  maturity  the 

21  Nutting  v.  Burked,  48  Mich.  241 ;  22  See  §  206,  ante,  note  3. 
Marbourg  v.  Brinkman,  23  Mo.  App.  23  Windham  Bank  v.  Norton,  22 
511.   The  reason  for  this  statement  Conn.  213;  Pier  v.  Heinrichshoffen, 
is  not  sound,  if  it  is  based  upon  the  67  Mo.  163,  which  were  postal  mis- 
proposition  that  bank  drafts  are  takes;  Beuton  v.  Martin,  31  N.  Y. 
supposed  to  be  put  into  circulation,  382,  and  Aborn  v.  Bosworth,  1  R  1. 
as  is  suggested    in    McDonald  v.  401  (loss  of  bill). 
Mosher,  23  111.  App.  206,  and  Na-  24  Aborn  v.  Bosworth,  1  R  I.  401. 
tional  Newark  Banking  Co.  v.  Sec-  25  See  Warner  v.  Citizens'  Bank, 
ond  Nat  Bank,  63  Pa.  404    They  6  S.  D.  152. 
would  be  governed   by  the  same  2e  See  §  230,  ante,  note  4. 
rule  precisely  as  a  bill  of  exchange 
put  into  circulation. 


§  252.]  EXCHANGES,  SECURITIES,  ETC.  427 

three  days  of  grace,  and  the  presentment  for  payment  must 
be  not  before  the  last  of  the  three  days  of  grace,27  unless  the 
bill  is  drawn  without  grace,  or  unless  days  of  grace  upon 
bills  are  abolished  by  statute.  A  demand  of  payment  before 
the  last  day  of  grace  is  premature,28  and  will  not  hold  the 
drawer  and  indorser;  and  this  is  true  as  to  the  indorsereven 
though  the  other  parties  to  the  bill  agree  upon  an  earlier  date.29 
Days  of  grace  are  added  even  to  an  acceptance  due  on  a 
particular  day  unless  it  appear  that  the  acceptance  included 
the  days  of  grace.  Thus  an  acceptance  due  May  21st,  where 
the  acceptance  was  not  dated,  was  due  May  24th,  and  a  de- 
mand on  May  21st  was  premature.30  It  will  appear  that 
the  time  of  demand  upon  bills  of  exchange  may  be  varied 
by  the  usage  of  banks,  or  by  the  death  of  a  party. 

§  252.  Time  of  demand  upon  notes. — A  promissory  note 
differs  from  a  bill  of  exchange  in  the  fact  that  it  is  always 
payable  either  at  a  fixed  day  or  upon  demand,  and  notes 
payable  at  a  fixed  day  are  like  bills  so  made  payable.  Prom- 
issory notes  may  be  payable  upon  demand  or  at  a  certain 
date.  A  demand  note  as  regards  the  indorser  must  be  pre- 
sented to  the  maker  for  payment  within  a  reasonable  time.1 
Statutes  fix  this  time  at  periods  varying  from  six  months  to 
shorter  periods.2  The  statute,  of  course,  is  controlling.  Until 

'"Edgar  v.  Greer,  8  Iowa,  394;  l Martin v. Winslow, 2 Mason, 241 ; 
Jones  v.  Fales,  4  Mass.  245:  Leavitt  Mudd  v.  Harper,  1  Md.  110;  Perry 
v.  Simes,  3  N.  H.  14:  Hough  v.  v.  Green,  19  N.  J.  Law,  61;  Lock- 
Young,  1  Ohio,  230;  Windham  Bank  wood  v.  Crawford,  18  Conn.  361; 
v.  Norton,  22  Conn.  213;  Piatt  v.  Alexander  v.  Parsons,  3  Lans.  333, 
Eads,  1  Blackf.  63.  a  note  payable  one  day  after  sight; 

28  See  cases  in  last  note.  Bassenhorst  v.  Wilby,  45  Ohio  St 

29  Perry  v.  Green,  19  N.  J.  Law,  61,  333. 

a  case  on  a  note.    This  question  .2Rice  v.  Wesson,   11  Met  400; 

could  not  arise  on  unaccepted  bills  Warner  v.  Citizens'  Bank,  6  S.  D. 

of  exchange    But  this  would  be  152;  Verder  v.  Verder,  63  Vt  38. 

the  rule  on  accepted  bills.    See  the  Sometimes  the  statute  is  simply 

next  note.  declaratory  of   the  common   law 

30  Bell  v.  First  Nat.  Bank,  115  U.  S.  (Davis  v.  Herrick,  6  Ohio,  55),  but 
873.    See  Kenner  v.    Creditors,  7  this  statute  applied  to  all  notes. 
Mart  (N.  S.)  540. 


428  BANKS   AND   BANKING.  [§  252. 

that  time  has  elapsed  no  demand  is  necessary.8  But  if  there 
be  no  statute  controlling,  what  is  a  reasonable  time  must 
depend  upon  circumstances  and  the  situation  of  the  parties ; 4 
the  demand  upon  notes  due  at  a  certain  day  is  governed  by 
the  rule  that,  unless  days  of  grace  are  abolished  by  a  stat- 
ute controlling  the  note,  or  the  paper  is  payable  without 
grace,  the  note  is  entitled  to  days  of  grace.5  The  demand 
must  be  made  on  the  day  of  maturity,  which  is  the  last  of 
the  three  days  of  grace,6  if  grace  is  allowed;  a  demand  be- 
fore that  day  is  premature ; 7  and  a  demand  after  that  day  is, 
generally  speaking,  too  late,8  unless  a  custom  or  usage  varies 
the  rule.9  Applying  the  rule  of  reasonableness  to  demand 
notes,  it  has  been  held  that  a  demand  note,  if  negotiated, 
must  be  pressnted  for  payment  upon  the  next  day  if  the 
parties  reside  in  the  same  place,10  and  otherwise  within  due 
course  of  mail.11  But  no  such  hard-and-fast  rule  can  be  laid 
down.  It  is  variously  stated  that  a  delay  of  four  days12  is 
reasonable,  but  of  two  weeks,13  of  four  months,14  of  seven 
months,15  of  eight  months,16  of  thirteen  months,17  of  sixteen 
months,18  of  four  years 19  and  of  five  years  M  is  unreasonable, 

3  See  the  first  two  cases  in  the    Simes,  3  N.  H.  14;  Hough  v.  Young, 
last  note;  and  the  decision  in  the    1  Ohio.  504 

other  case  in  the  last  note  held  that  8  Renner  v.  Bank  of  Columbia,  9 

a  delay  of  eight  days  was  not  rea-  Wheat.  581 ;  Magruder  v.  Bank  of 

sonable.  Washington,  9  Wheat.  598. 

4  Losse  v.  Dunkin,  7  Johns.   70.  9  See  §  261,  post. 

See  Vreeland  v.  Hyde,  2  N.  Y.  Super.  10  Camp  v.  Scott,  14  Vt.  387. 

Ct  429  (a  note  not  for  business  pur-  w  See  last  note, 

poses,  where  a  more  liberal  rule  was  12  Laughlin  v.  Marshall,  19  HI.  390, 

applied).  certificate  of  deposit 

*  Griffin  v.  Coff,  12  Johns.  423;  13  Keyes  v.  Fenstermaker,  24  CaL 

Renner  v.   Bank    of  Columbia,  9  329. 

Wheat.  581.  14  Sice  v.  Cunningham,  1  Cow.  397. 

6  See  the  cases  in  the  next  two  15  Martin  v.  Winslow,  2  Mason,  241. 
notes  and  Peet  v.  Zanders,  6  La.  le  Field  v.  Nickerson,  13  Mass.  131. 
Ann.  364  "  Jerome  v.  Stebbins,  14  Cal.  457. 

7  Edgar  v.   Greer,  8   Iowa,  394;  18Good    v.    Arrowsmith,     Anth. 
Griffin  v.  Goff,  12  Johns.  423;  Jones  N.  P.  289. 

v.  Fales,  4   Mass.   245;  Leavitt  v.      "In  re  Crawford,  Fed.  Cas.  No. 

20  In  re  Grant,  Fed.  Cas.  No.  5691. 


§  252.1  EXCHANGES,  SECURITIES,  ETC.  429' 

but  a  delay  of  six  days,21  of  seven  days,22  of  sixty  days 23  is 
reasonable.  There  has  been  some  suggestion  that  if  a  de- 
mand note  draws  interest  the  indorser  remains  liable  until 
a  demand  is  actually  made,  because  the  note  must  have  been 
understood  to  be  a  continuing  obligation ; 24  but  this  rule  is 
denied  in  toto  by  some  authority.23  Another  exception  as  ta 
a  demand  exists  in  some  jurisdictions  as  to  demand  of  pay- 
ment where  the  parties  are  farmers.  A  demand  upon  the 
next  occasion  when  a  farmer  may  be  expected  to  desert  the 
plough,  such  as  court  day  or  muster  day,  is  considered  suffi- 
cient.26 But  other  courts  incline  to  think  that  a  farmer  is  a 
business  man  and  that  the  necessity  of  a  journey  into  the 
country  is  not  an  excuse  for  non-presentment  on  the  day  of 
maturity.27  Notes  that  are  due  upon  a  certain  day  must  be 
demanded  upon  that  day,  making  allowance  for  days  of 
grace  if  the  note  is  entitled  thereto.28  A  failure  to  demand 
upon  the  last  day  of  grace,29  or  a  day  later  under  the  usage 
of  banks,30  exonerates  the  indorser,  unless  he  is  an  indorser 
before  delivery  of  the  note,31  or  unless  he  has  assented  to  a 
postponement,32  or  waived  a  demand.33  It  seems  to  have  been 
held  that  a  demand  need  not  have  been  made  upon  the  day  of 
maturity  if  the  maker  lives  at  a  distance,34  but  the  true  rule 
is  that  it  should  be  so  made.  The  reason  offered  is  that  the 
holder  cannot  assume  until  the  close  of  the  day  of  maturity 

3364.     A  register   in  bankruptcy  26  Brown  v.  Johnston,  13  N.  C.  293. 

had  had  the  marvelous  hardihood  27  Kiddell    v.    Ford,    2    Treadw. 

to  decide  that  four  years  was  a  rea-  Const.  678. 

sonable  time.  28  See  notes  5,  6  and  8,  supra. 

21  Lindsey  v.  McClelland,  18  Wis.  '^  The    demand  may  be  at  any 

481,  certificate  of  deposit.  time  on  that  day  at  a  proper  hour. 

"Seaver  v.  Lincoln,  21  Pick.  267.  Estes  v.  Tower,  102  Mass.  65;  Gor- 

23  Rice  v.  Wesson,  11  Met.   400,  don  v.  Parmlee,  15  Gray,  413. 

semble.  30See  §  261,  post. 

2<  Wethey  v.  Andrews,  3  Hill,  582;  S1  See  §§  236  and  240,  ante. 

"Weeks  v.  Pryor,  27  Barb.  79;  Sal-  32  Lock  wood  v.  Crawford,  18  Conn, 

mon  v.   Grosvenor,  66  Barb.  160;  361. 

Merritt  v.  Todd,  23  N.  Y.  28.    See  33  See  §  293  et  seq.,  post. 

Grim  v.  Starkweather,  88  N.Y.  339;  8*  Freeman  v.  Boynton,  7  Mass. 

Sice  v.  Cunningham,  1  Cow.  397.  483:  Haddock  v.  Murray,  1  N.  H. 

25  Verder  v.  Verder,  63  Vt.  38.  140. 


430  BANKS    AND   BANKING.  [§  253. 

that  the  maker  does  not  intend  to  pay.  But  if  for  any  suffi- 
cient reason  a  demand  cannot  be  made  at  maturity,  a  de- 
mand must  be  made  as  soon  thereaf ter  as  practicable.35  The 
effect  of  war  or  epidemic  in  exercising  a  delay  will  be  no- 
ticed later.36  A  delay  in  the  postoffice  is  not  to  be  imputed 
to  the  holder,37  nor  is  a  delay  rendered  necessary  through 
a  loss  of  the  note.38  But  the  inability  to  cross  a  river,39  or 
the  occurrence  of  a  hard  rain  not  rendering  roads  impas- 
sable,40 or  a  violent  storm  rendering  travel  difficult,41  is  not 
an  excuse  for  a  total  failure  to  present  for  payment.  In 
such  or  similar  cases  the  rule  is  that  if  the  demand  is  ren- 
dered impossible  at  the  time  of  maturity,  a  demand  should 
be  made  as  soon  thereafter  as  practicable.  The  mere  ab- 
sence of  the  indorser  is  no  excuse  for  not  making  the  de- 
mand, since  his  presence  is  not  at  all  necessary.42 

§  253.  Paper  indorsed  overdue. —  Special  attention  must 
be  given  to  a  note  or  bill  indorsed  after  its  maturity,  in 
which  case  the  paper  becomes  ordinary  demand  paper.  If 
the  note  has  not  been  presented  for  payment  at  maturity, 
the  indorser  upon  it,  except  in  exceptional  cases,  has  been 
released.  But  if  an  indorser  before  maturity  takes  up  and 
sells  the  note,  after  maturity  he  is  liable  to  the  holder  upon 
his  former  indorsement  as  a  guarantor.1  Or  if  the  holder 
of  the  note  who  has  extended  it  indorses  to  an  indorsee 
without  notice  of  the  extension,  no  demand  as  to  him  is  nec- 
essary ; 2  but  the  indorser  after  maturity,  it  has  been  held, 

»  Jex  v.  Tureaud,  19  La.  Ann.  64;       38  gee  §  251,  ante,  note  23,  for  other 

Apperson  v.  Bynum,  5  Cold.  341.  paper. 

36  See  §  268,  post.  39  Durnford  v.  Johnson,  2  Mart 

87  See  Simonds  v.  Black  River  Ins.  (O.  S.)  183. 

Co.,  Fed.  Gas.  No.  12,874;  Windham       <°  Barker  v.  Parker,  6  Pick.  80. 
Bank  v.  Norton,  22  Conn.  213;  Scho-      41  McDonald  v.  Mosher,  23  III  App. 

field  v.  Bayard,  3  Wend.  488;  con-  206. 

tra,  Grant  v.  Long,  12  La.  402  (cases      "Wilson  v.  Senier,  14  Wis.  380. 
on  other  kinds  of  negotiable  paper).        l  St  John  v.  Roberts,  31  N.  Y.  441 ; 

Would  this  rule  apply  while  the  Coleman  v.  Dunlap,  18  S.  C.  591. 
paper  was  being  transmitted  to  an        2  Williams  v.  Probst,  10  Watts, 

agent  in  order  that  the  agent  might  111;  Ridgway  v.  Day,  13  Pa.  208. 
make  the  demand?    It  should  apply 
if  the  reasons  of  the  rule  are  good. 


§  253.]  EXCHANGES,  SECURITIES,  ETC.  431 

may  show  in  defense  of  his  liability  as  to  his  immediate 
indorsee  the  non-performance  by  the  indorsee  of  a  special 
agreement  made  at  the  time  of  the  indorsement.3  But  gen- 
erally speaking,  an  indorser  after  maturity  or  dishonor  of  a 
note  is  treated  as  the  indorser  of  a  new  note  payable  upon 
demand,  and  the  indorser  of  a  bill  after  maturity  is  treated 
as  the  drawer  of  a  new  bill  payable  upon  demand.4  It 
makes  little  difference  whether  the  indorser  is  treated  as 
the  indorser  of  a  new  note  or  the  drawer  of  a  new  bill  pay- 
able upon  demand.  In  either  case  he  is  entitled  to  claim  a 
demand  for  payment  within  a  reasonable  time,  whether  the 
maker  was  insolvent  or  not  at  the  date  of  the  indorsement, 
and  without  regard  to  the  indorser's  knowledge  of  the  in- 
solvency.5 Here  again  the  cases  vary  widely  in  their  appli- 
cation of  the  term  "  reasonable  time."  A  delay  of  twenty- 
five  days,"  or  from  April  19th  to  July  3d  in  the  same  year,7 
or  from  July  30th  to  November  21st  in  the  same  year,8  or 
of  ten  months,9  or  of  twenty-four  months,10  or  of  one  year,11 
or  two  years,12  has  been  considered  unreasonable  under  vary- 
ing circumstances,  while  a  delay  of  twenty-three  days,13  or 

sRidgely    v.    Davidson,    2    Mill  Haseldon,  2  Bailey,  457;    Winston 

Const.  33.    This  may  not  be  shown  v.  Kelly,  33  Tex.  354     Contra,  if 

as  to  the  remote  indorsee.    Cox  v.  negotiated  after  dishonor  no  new 

Jones,  2  Cranch,  C.  C.  370.  demand    is  necessary.     French  v. 

4Beebe  v.   Brooks,   12  Cal.  308;  Jarvis,  29  Conn.  347;  Hall  v.  Mono- 
Hunt   v.  Wadleigh,  26    Me.    271;  han,  6  Iowa,  216  (Seymour  v.  Van 
Jones  v.  Middleton,  29  Iowa,  188  Slyck,  8  Wend.  421,  is  cited  in  the 
(the  court  does  not  seem  to  know  last  case,  but  the  court  did  not  un- 
that  it  is  overruling  Hall  v.  Mono-  derstand  that  case  at  all).    See  Mo- 
han, 6  Iowa,  216);  Sanborn  v.  South-  Ilhenny  v.  Jones,  6  Har.  &  J.  256. 
ard,  25  Me.  409;  Godwin  v.  Daven-  6Levy  v.  Drew,  14  Ark.  334. 
port,  47  Ma  112;  Hartv.  Eastman,  '  Light  v.  Kingsbury,  50  Mo.  331. 
7  Minn.  74:  Union  Bank  v.  Ezell,  10  SBassenhorst  v   Wilby,  45  Ohio 
Humph.  385;  Corwith  v.  Morrison,  St.  333. 

1  Pin.  489;  Jones  v.Robinson,  11  Ark.  9  Hill  v.  Martin,  12  Mart.  (O.  S.) 

504;  Stewart  v.  French,  2  Cranch,  177. 

C.  C.  300.  w  Eisenford  v.  Dillenback,  15  Hun, 

8  Cox  v.  Jones,  2  Cranch,  C.  C.  23. 

370;  Colt  v.  Bernard,  18  Pick.  260;  "Jones  v.  Robinson,  11  Ark.  504 

Tyler  v.  Young,  30  Pa.  143;  Shelby  w  See  the  case  in  note  10,  supra. 

v.  Judd,  24  Kan.  161;  Stockman  v.  is  Goodwin  v.  Davenport,  47  Me. 

liiley,  2  McCord,  398;  Attwood  v.  112. 


432 


BANKS    AND   BANKING. 


[§254. 


of  four  weeks,14  has  been  considered  reasonable.  !N"o  differ- 
ent rule  should  be  applied  than  the  rule  already  stated  as  to- 
demand  bills  not  circulated 15  and  demand  notes.16 

§  254.  Demand  upon  checks. —  A  check  being  an  order 
payable  upon  demand  and  negotiable  should  be  treated  as 
to  demand  as  a  demand  draft.  Generally  speaking,  a  check 
therefore  resembles  a  demand  draft,  but  business  conven- 
ience has  produced  one  very  important  difference.  A  check, 
like  a  demand  draft,  is  not  entitled  to  days  of  grace,1  unless 
it  is  post-dated  upon  its  face ; 2  nor  is  the  drawer  of  the  check 
entitled  to  claim  a  demand  unless  he  has  been  injured 
thereby,3  and  then  he  is  released  only  to  the  extent  of  hia 
injury.4  But  as  to  the  indorser  of  a  check,  the  same  rule 
prevails  as  to  a  demand  draft,5  except,  perhaps,  that  a  check, 
unless  it  be  a  bank  check  or  a  certified  check,  cannot  be  put 
into  circulation,6  although  it  has  been  suggested  that  it  can 

4  Pack  v.  Thomas,  13  Smedes  & 
M.  1;  In  re  Brown,  2  Story,  502^ 
Griffin  v.  Kemp,  46  Ind.  172;  Woodin 
v.  Frazer,  38  N.  Y.  Super.  Ct.  190. 

8  Veazie  Bank  v.  Winn,  40  Me.  60; 
Parker  v.  Reddick,  65  Miss.  242; 
Mohawk  Bank  v.  Broderick,  13 
Wend.  133;  First  Nat.  Bank  v.  Mil- 
ler, 37  Neb.  500;  Gough  v.  Staats, 
13  Wend.  549. 

6  See  the  second  and  fourth  cases 
in  the  last  note.  Nat.  State  Bank 
v.  Weil,  141  Pa.  457;  Industrial 
Co.  v.  Weakley,  103  Ala,  458;  Gif- 
ford  v.  Hardell,  88  Wis.  538.  But 
Stephens  v.  McNeill,  26  Barb.  651, 
and  Middleton  Bank  v.  Morris, 
28  Barb.  616,  recognize  that  a 
check  may  be  put  into  circulation, 
especially  as  to  a  party  who  knew 
that  was  the  intention.  See  also 
Taylor  v.  Wilson,  11  Met.  44.  As  to 
bank  checks,  McDonald  v.  Mosher, 
23  111  App.  206,  states  the  rule  with 
positiveness  that  they  may  be  put 
into  circulation,  and  Nutting  v. 


14  Van  Hoesen  v.  Van  Alstyne,  3 
Wend.    75.     This    decision   is,    of 
course,  wrong.    The   upper  court 
expresses  its  regret  that  the  lower 
court  did  not  do  justice  secundum 
artem,  and  then  proceeds  to  make 
this  astounding  ruling,  which  is  not 
so  bad  as  to  demand,  but  is  wholly 
inexcusable  as  to  the  notice. 

15  See  §  251,  ante. 

16  See  §252,  ante. 

1  See  §  206,  ante,  note  2. 

2  See  §  206,  ante,  note  8. 

3  Exchange  Bank  v.  Sutton  Bank, 
78  Md.  677;   Allen  v.  Kramer,  2 
Bradw.  205;  Offutt  v.  Rucker,  2  Ind. 
App.  350;  Springfield  Fire  Ins.  Co. 
v.  Tincher,  30  III  399  (in  this  case 
the  document  was  a  check,  but  the 
court  treats  it  as  a  demand  draft, 
and  makes  a  correct  -ruling,  but 
uses  an  incorrect  dictum);  Gough 
v.  Staats,  13  Wend.  549;  Gregg  v. 
George,  16  Kan.  546;  Henshaw  v. 
Root,  60  Ind.  220;  Stewart  v.  Smith; 
17  Ohio  St  82. 


§  254.] 


EXCHANGES,  SECURITIES,  ETC. 


433 


be  so  treated.7  Therefore,  as  to  the  regular  indorser  of  a 
check,  or  as  to  a  drawer  who  has  been  injured,  the  check 
must  have  been  presented  for  payment  within  a  reasonable 
time  under  all  the  circumstances.8  If  the  parties  reside  in 
the  same  place,  that  reasonable  time  is  at  most  the  next  day 
after  its  receipt  by  the  holder.9  If  the  parties,  holder  and 
drawee,  do  not  reside  in  the  same  place,  the  check  should 
be  forwarded  upon  the  next  day  after  its  receipt.10  But  the 
check  may  be  put  through  the  usual  course  of  business, 
though  that  course  may  be  circuitous.11  It  is  not  doubted 
that  a  party  may  always  deposit  a  check  in  a  bank  for  col- 
lection or  for  deposit,  and  the  presentment  is  reasonable  if 

ruff  v.  Plant,  41  Conn.  344;  Pollard 
v.  Bo  wen,  57  Ind.  232;  Marbourg  v. 
Brinkman,  23  Mo.  App.  511;  Hem- 
melman  v.  Hotaling,  40  Cal.  111. 

9  Simpson  v.  Pacific  Mut.  Ins.  Co., 
44  Cal.  139;  Cawein  v.  Browinski, 
6  Bush,  457;  Wear  v.  Lee,  87  Mo. 
358;  Smith  v.  Miller,  43  N.  Y.  171; 
Doherty  v.  Watson,  29  Wkly.  Notes 
Cas.  32;  Schoolfield  v.  Moon,  9 
Heisk.  171.  In  First  Nat  Bank  v. 
Alexander,  84  N.  C.  30,  it  is  sug- 
gested that,  if  the  holder  of  the 
check  knows  the  bank  t5  be  in  a 
failing  condition,  he  should  show 
greater  promptitude.  The  rule  ex- 
cludes Sundays,  of  course.  O'Brien 
v.  Smith,  1  Black,  99. 

10  Smith  v.  Janes,  20  Wend.  192; 
N.  W.  Coal  Co.  v.  Bowman,  69  Iowa, 
150.    This  rule  is  extended,  by  stat- 
ute   covering    bills    of   exchange 
(Warner  v.  Citizens'  Bank,  6  S.  D. 
152),  as  to  a  bank  check. 

11  Werk  v.  Mad  River  Valley  Bank, 
8  Ohio  St.  301;  First  Nat.  Bank  v. 
Buckhannon    Bank,  80    Md.  475; 
Allen   v.  Kramer,  2  Bradw.  205; 
Backwill  v.  Bridgeport  Wood  Co.,. 
62  III  App.  663. 


Burked,  48  Mich.  241,  and  Marbourg 
v.  Brinkman,  23  Mo.  App.  511,  deny 
the  rule  as  to  prompt  demand  as  to 
bank  checks.  The  rule  ought  to 
be,  as  to  bank  checks  or  certified 
checks,  that,  if  they  are  actually 
put  into  circulation,  they  are  to  be 
governed  by  the  rule  as  to  bills  of 
exchange.  See  §251, ante.  See,  as 
to  certified  checks,  Farmers'  Bank 
v.  Butchers'  Bank,  4  Duer,  219,  16 
N.  Y.  125;  Thomson  v.  Brit.  North 
Am.  Bank,  45  N.  Y.  Super.  Ct.  1. 

'  See  last  note. 

8  Bull  v.  First  Nat.  Bank,  14  Fed. 
R.  612,  reversed  in  123  U.  S.  105 
(both  decisions  stating  the  same 
principle.  But  the  lower  court  had 
held  that  a  check  not  presented 
within  a  reasonable  time  was  dis- 
honored and  overdue,  and  there- 
fore an  indorsee  took  subject  to 
equities  between  the  drawer  and 
the  first  indorser  or  payea  The 
upper  court  reverses  this  ruling, 
and  holds  that  a  check  is  not  over- 
due, as  to  an  indorsee  for  value, 
until  it  has  been  presented  for  pay- 
ment and  payment  has  been  re- 
fused); Mohawk  Bank  v.  Broderick, 
10  Wend.  304, 13  Wend.  133;  Wood- 
28 


4:34:  BANKS   AND   BANKING.  [§  254:. 

it  is  consumed  in  the  check's  passage  through  banks;12  or  if 
the  time  is  taken  up,  where  a  check  is  payable  to  a  princi- 
pal, in  transmitting  the  check  to  the  principal,  the  delay  is 
reasonable.13  The  loss  of  the  check  may  well  occasion  delay, 
but  delay  is  excused  only  to  the  extent  that  it  is  rendered 
necessary.14  But  subject  to  the  above  qualification  and 
other  excuses  for  delay,15  the  rule  is  held  quite  strictly  as  to 
checks.  A  delay  of  three  days,  where  the  parties  resided 
in  the  same  town,  or  of  two  weeks,  or  of  six  days,  or  of  seven 
days,  or  of  thirteen  days,  or  of  ten  months,  have  been  held 
unreasonable;  but  each  case  must  be  examined  to  ascertain 
the  varying  facts  in  each  case.16  There  is,  however,  no  ques- 
tion that  the  person  to  whom  the  check  is  intrusted  for  col- 
lection stands  in  such  a  relation  to  the  holder  that  the  holder 
will  be  responsible  for  such  person's  negligence.17  Some 
courts  impose  upon  a  person  who  takes  a  check  in  payment 
of  a  draft  or  note  the  utmost  diligence,  and  require  a  pre- 
sentment for  payment  upon  the  same  day.18  This  rule  is 
enforced  with  especial  severity  against  a  bank,  or  other  per- 

12  Braun  v.  Kimberlin,  9  Am.  Law  (three  days) ;  Little  v. Phoenix  Bank, 
Rec.  405;  Loux  v.  Fox.  171  Pa.  68;  2  Hill,  425,  7  Hill,  359  (ten  months, 
Cox  v.  Boone,  8  W.  Va.  500;  Taylor  New  York  on  New  Orleans);  Car 
v.  Wilson,  11  Met  44  (the  check  roll  v.  Sweet,  80  N.  Y.  Supp.  204 
seems    to  have  been  negotiated),  (nine  days);  Dalon  v.  Davidson,  89 
See  next  note.  N.  Y.  Supp.  394;  Merchants'  Bank 

13  Rosenthal  v.  Erlicher,  154  Pa.  v.  Parker,  12  N.  Y.  St  R.  558  (six 
396.    Contra,  Gifford  v.  Hardell,  88  days).    See  State  v.  Gates,  87  Mo. 
Wis.  538;  Hazleton  v.  Colburn,  1  139;  Miller  v.  Moseley,  26  La.  Ann. 
Robt  345.  667. 

14  See  §  244,  ante,  note  6.    Moody       17  Simonds  v.  Black  River  Ins.  Co., 
v.  Mack,  43  Mo.  210,  was  wrongly  Fed.  Cas.  No.  12,874  (even  if  drawee); 
decided,  even  as  to  an  indorser.  Kilpatrick  v.  Home  Building  Ass'n, 

15  See  §  262  et  seq.,  post.  119  Pa.  30  (solicitor  of  payee);  Wag- 

16  Nat.  State  Bank  v.  Weil,  4  Pa.  ner  v.  Crook,  167  Pa.  259  (drawer). 
Co.  Ct.  R.  346,  141  Pa.  457  (delay  of  See  Nebraska  Nat.  Bank  v.  Logan, 
three  days).    Compare  Woodruff  v.  29  Neb.  278. 

Plant,  41  Conn.  344;  Industrial  Co.  18Fernald  v.  Bush,  131  Mass.  591. 

v.  Weakley,  103  Ala.  458  (six  days'  And  see  the  case  of  Anderson  v. 

delay);  N.  W.  Coal  Co.  v.  Bowman,  Gill,  79  Md.  312,  in  the  next  note. 

69  Iowa,  150  (seven  days'  delay);  Contra,  First  Nat  Bank  v.  Fourth 

Veazie  Bank  v.  Winn,  40  Ma  60  Nat  Bank,  77  N.  Y.  320. 


§  2 


EXCHANGES,  SECURITIES,  ETC. 


435 


son  acting  as  collection  agent,  which  takes  a  check  for  a 
collection  it  is  making,19  and  when  the  collecting  agent  is 
being  held  by  the  person  for  whom  the  collection  is  being 
made;  but  one  court  mistakenly  applies  this  rule  as  between 
the  drawer  and  payee  of  the  check,  and  holds  that  without 
instant  diligence  the  original  claim  is  lost.20  But  other  courts 
do  not  admit  this  rule.21  "We  have  already  discussed  the 
rule  that  applies  where  a  check  or  draft  is  sent  directly  to 
the  payee.22  Such  conduct  is  prima  facie  negligent,23  and 
the  holder  becomes  responsible  for  the  drawee's  negligence.24 
The  rule  that  we  have  been  considering  applies  to  the 
drawer  only  when  he  can  show  an  injury.  Generally  speak- 
ing, he  can  show  an  injury  when  the  bank  fails  during  the 
time  of  delay,25  provided  it  appears  that  the  bank  failed 
with  funds  to  the  amount  of  the  check  to  the  drawer's 
credit.26  It  will  not  be  enough  for  the  drawer  to  show 


19  Morris  v.  Eufala  Bank,  106  Ala. 
383;  Smith  v.  Miller,  43  N.  Y.  171. 
See  Anderson  v.  Gill.  79  Md.  312. 
This  case  is  as  follows:  A  check 
was  deposited  for  collection  with 
hank  A.,  which  presented  it  to  the 
drawee  bank  next  day,  and  took 
the  drawee  bank's  check  on  bank 
C.,  which  was  a  few  blocks  distant; 
the  check,  being  received  from  the 
drawee  bank  about  eleven  o'clock, 
was  presented  to  bank  C.  before 
three  o'clock  of  the  same  day,  but 
the  drawee  bank  became  insolvent 
at  one  o'clock,  and  hence  the  check 
taken  in  payment  was  not  paid, 
whereupon  bank  A.  obtained  the 
original  check,  of  which  it  was 
owner,  and  protested  it,  and  the 
holder  of  the  check  sued  the  drawer 
of  the  original  check.  It  was  held 
the  holder  could  not  recover  from 
the  drawer,  because  her  agent  had 
delayed  two  hours.  The  case  is 
undoubtedly  wrong,since  the  payee 
was  suing  the  drawer,  not  the  payee 


suing  her  agent.  The  court  dis- 
covered that  fact  in  First  Nat.  Bank 
v.  Buckhannon,  80  Md.  475,  and  en- 
tered upon  one  of  those  efforts  to 
distinguish,  which  are  so  pathetic. 
Smith  v.  Miller,  43  N.  Y.  171,  sup- 
ports the  rule  as  it  is  stated  in  the 
text.  See  First  Nat.  Bank  v.  Fourth 
Nat.  Bank,  77  N.  Y.  320;  Kobbi  v. 
Underbill,  3  Sandf.  Ch.  277;  John- 
son v.  Bank  of  North  America,  5 
Robt.  554. 

20  See  last  nota 

21  See  last  note. 

22  See  §181,  ante,  note  1. 

23  See  last  note  and  note  17,  supra, 
and  Anderson  v.  Rogers,  53  Kan. 
542.    But  Nebraska  Bank  v.  Logan, 
29  Neb.  278,   must  be  contra,  al- 
though it  was  a  question  of  hold- 
ing the  drawer. 

24  See  note  17,  supra. 
25Holmer  v.  Roe,  62  Mich.  199; 

Edwards  v.  Moses,  2  Nott  &  McC. 
433;  Case  v.  Morris,  31  Pa.  100. 
26  Kenyon  v.  Stanton,  44  Wis.  479; 


436  BANKS   AND   BANKING.  '  [§  254 

that  his  check  would  probably  have  been  paid,  unless  he  go 
further  and  show  that  he  had  an  obligatory  arrangement 
with  the  bank  whereby  his  check  would  have  been  paid, 
and  in  that  way  had  in  the  bank  sufficient  funds  to  pay 
the  check,  and  that  he  lost  those  funds  entirely.27  The  rea- 
son of  this  rule  is  plain.  If  he  drew  out  all  his  money, 
he  lost  nothing  by  the  delay.  The  bank  would  not  have 
been  required  to  make  a  partial  payment  on  the  check,  and 
hence  the  drawer  cannot  claim  an  injury.28  If  he  has  drawn 
his  funds  out  of  the  bank,  even  though  the  check  would 
have  been  paid  if  presented  at  a  proper  time,  he  has  suffered 
no  injury,  because  the  non-presentment  of  the  check  did  not 
affect  him  in  the  least;29  nor  will  it  be  an  injury  to  him  that 
although  he  drew  out  his  funds,  the  assignee  of  the  bank 
recovered  from  him  the  money  drawn  out.30  Nor  will  the 
loss  of  a  secret  equity  between  the  drawer  and  the  payee  of 
the  check  release  the  drawer  as  against  an  assignee  of  the 
check  who  has  failed  to  make  a  due  presentment  at  the 
bank.*1  "Where  a  man  has  a  special  kind  of  money  deposited 
which  depreciates  in  value  pending  the  holder's  delay,  the 
drawer  will  be  released  pro  tanto.32 

Lowenstein  v.  Bresler,  109  Ala.  826;  81  Stewart  v.  Smith,  17  Ohio  St  82. 

Lawrence  v.  Schmidt,  85  HI.  440;  This  decision  is  put  upon  a  wrong 

Fletcher  v.  Pierson,  69  Ind.  281.  ground.    The  real  ground  is  that 

But  this  rule  seems  to  be  denied  in  the  check  is  not  dishonored  so  as 

the  two  last  cases  cited  in  the  pre-  to  become  subject  to  equities  be- 

ceding  note.    See  Culver  v.  Marks,  tween  drawer  and  payee  until  it 

122  Ind.  554  has  been  presented  and  dishonored. 

« Lowenstein  v.  Bresler,  109  Ala.  See  Bull  v.  First  Nat.  Bank,  12a 

826.    See  last  note.  U.  S.  205. 

»  Lowenstein  v.  Bresler,  109  Ala.  S2St.  John  v.  Homans,  8  Mo.  382; 

826.  but  see  Morrison  v.  McCartney,  30 

29  See  cases  in  note  26;  Industrial  Mo.  183.    These  cases  show  the  ab- 

Co.  v.  Weakley,  103  Ala.  458.  surdity  of  the  old  paper  currency. 

so  Kenyon  v.  Stanton,  44  Wis.  479;  The  case  of  Willets  v.  Paine,  43  111. 

but  see  Industrial  Co.  v.  Weakley,  432,  attempts  to  decide  this  point, 

103  Ala.  458.    The  drawer  had  not  but  since  the  drawer  had  a  general 

sufficient  funds,  but  he  had  a  credit  credit,  not  a  credit  of  particular 

with  the  bank  to  the  amount  of  the  money,  the  decision  is  absurd, 
check. 


§§  255,  256.]  EXCHANGES,  SECURITIES,  ETC.  437 

§  255.  Demand  upon  bank  checks  and  certified  checks* 

Bank  checks  are  sometimes  considered  as  drafts,  but  they 
are  in  fact  checks.1  No  reason  can  be  seen  why  a  bank  as 
well  as  any  other  depositor  cannot  draw  a  check  upon  a 
bank  where  it  has  money  deposited  to  its  general  credit.2 
It  may  be,  however,  that  the  check  will  be  so  drawn  as  to 
be  a  bill  of  exchange,  but  any  other  drawer  may  draw  such 
a  check.3  The  rule  as  to  presentment  of  bank  checks  is  pre- 
cisely the  same  as  that  applied  to  other  checks 4  if  they  are 
not  put  into  circulation.  As  to  certified  checks,  the  rule  of 
law  varies  as  to  the  party  obtaining  the  certification.  If 
certified  to  the  holder,  the  check  becomes  the  bank's  obliga- 
tion, and  the  drawer  and  indorsers  before  certification  are 
released  because  the  check  is  paid.5  If  the  drawer  of  a  check 
obtains  a  certification  and  then  delivers  it,  he  becomes  re- 
leased in  the  same  way  he  would  become  released  upon  an 
uncertified  check,8  and  the  same  rule  would  apply  to  an  in- 
dorser.7  But  the  case  of  an  indorser  of  a  check  certified  to 
the  holder  does  not  seem  to  have  arisen.  But  upon  principle 
such  an  indorser  is  the  indorser  of  a  demand  note  or  an  ac- 
ceptance put  into  circulation,  and  his  rights  are  governed  by 
the  rules  heretofore  given.8 

§  256.  Holidays  and  Sundays. —  If  an  instrument  be  en- 
titled to  days  of  grace,  and  the  last  day  of  grace  falls  upon 
Sunday  or  a  holiday,  demand  should  be  made  upon  Satur- 
day, which  would  be  the  second  day  of  grace;1  but  if  that 

1  See  §  206,  note  3.  of  an  ordinary  check  put  into  cir- 

2  It  is  a  common  custom.  culation.    See  note  6  to  the  preced- 
*The  bank  draft  upon  another    ing  section. 

bank  may  be  a  sight  draft,  but  no  8See  note  6  to  the  preceding  sec- 
business  man  would  take  such  a  tion.  Roberts  v.  Wold,  61  Minn.  291. 
draft  if  he  had  looked  at  the  face  !Kuntz  v.  Temple,  48  Mo.  71; 
face  of  the  draft.  It  would  be  en-  Brennan  v.  Vogt,  97  Ala.  647.  See 
titled  to  days  of  grace.  Doremus  v.  Benton,  5  Biss.  57.  In 

4  See  note  6  to  the  preceding  sec-  computing  time  by  days,  the  day 

tion.  of  making  either  of  note,  bill  or 

8  See  §  150,  ante.  acceptance  is  excluded.    Fisher  v. 

"See  §  150,  ante.  State  Bank,  7  Blackf.  610;  Broddie 

7  He  would  be  simply  the  indorser  v.  Searcy,  7  Tenn.  183;  Bradley  v. 


438  BAKES   AND   BANKING.  [§  256. 

Saturday  is  also  a  holiday,  demand  should  be  made  upon 
Friday.2  If  the  third  day  of  grace  falls  upon  Saturday,  and 
there  is  a  banking  custom  known  to  the  parties  that  allows 
demand  on  the  fourth  day  of  grace,  and  if  that  fourth  day 
should  be  Sunday  allows  demand  upon  Monday,  such  cus- 
tom, it  appears  to  be  inferentially  held  in  one  case,  would 
be  valid,  although  it  was  held  in  the  particular  case  that 
there  was  no  sufficient  proof  of  the  custom.3  But  instru- 
ments that  are  not  entitled  to  grace,  which  fall  due  upon 
Sunday,  may  be  demanded  upon  the  following  day.4  If  the 
instrument  is  entitled  to  grace,  and  the  day  of  its  maturity 
without  allowing  grace  is  Sunday,  it  is  demand  able  upon 
"Wednesday,  the  third  day  of  grace  after  the  date  it  is  made 
due.  It  cannot  be  demanded  upon  Tuesday.5  Statutes  are 
now  very  common  upon  the  subject  of  holidays,  but  those 
statutes  govern,  of  course,  only  instruments  made  after  the 
passage  of  the  act.6  These  statutes  are  sometimes  declar- 
atory of  the  common  law  and  sometimes  change  that  rule.7 
Cases  will  be  found  in  the  note ;  a  discussion  of  them  would 
simply  be  confined  to  questions  of  statutory  construction. 
It  should  be  remembered  that  holidays  may  exist  by  custom 
as  well  as  by  law.8 

Northern  Bank,  60  Ala.  253.    In  Salter  v.  Burt,  20  Wend.  205  (post- 
adding  by  months  the  rule  is  to  dated  check).     Contra,  Barker  v. 
use  calendar  months.    Roehner  v.  Parker,  6  Pick.  80. 
Knickerbocker    Life    Ins.   Co.,  63  5  Bartlett  v.  Leathers,  84  Me.  241 ; 
N.  Y.  160.    But  February  29th  is  a  Roberts  v.  Wold,  61  Minn.  291. 
day  when  it  comes  into  the  compu-  6  Toothaker  v.  Cornwall,  3  Cal. 
tation.    Helphenstine  v.  Vincennes  144.    This  decision  is  wrong  on  the 
Nat  Bank,  65  Ind.  582.    See  Wag-  main  point, 
ner  v.  Kenner,  2  Rob.  (La.)  120.  7  Homes  v.   Smith,  20   Me.  264; 

2  Sasscer  v.  Farmers'  Bank,  4  Md.  First  Nat.  Bank  v.  McAllister,  33 
409.    This  must  not  be  confused  Neb.  646;  Hagerty  v.  Engle,  43  N. 
with  the  rule  as  to  notice    See  J.  Law,  299;    Hershfield   v.   Fort 
Hitchcock  v.  Hogan,  99  Mich.  124  Worth  Nat  Bank,  83  Tex.  452.   And 

3  Adams  v.  Otterback,  15  How.  see  note  1,  supra. 

539.  Compare  Thornton  v.  Stod-  8City  Bank  v.  Cutter,  3  Pick.  414; 
dert,  1  Cranch,  C.  C.  534.  Dabney  v.  Campbell,  9  Humph.  680. 

« Sanders  v.  Ochiltree,  5  Port  73; 


§  257.]  •     EXCHANGES,  SECURITIES,  ETC.  439 

§  257.  Time  of  demand  as  affected  by  sickness  or  death 
of  party. —  The  time  of  demand  upon  negotiable  paper  may 
be  affected  either  by  the  death  of  the  holder  or  the  death  of 
the  obligor  upon  whom  demand  is  to  be  made.  The  death 
of  the  holder  excuses  a  presentment  until  within  a  reason- 
able time  after  the  appointment  of  a  personal  representative 
who  is  the  proper  party  to  make  the  demand.  But  as  soon 
us  the  personal  representative  is  appointed  a  demand  should 
be  made  at  the  earliest  practicable  time  thereafter.1  A  case 
which  in  its  decision  presents  an  exceedingly  reasonable 
view  of  the  law  arose  on  account  of  the  death  of  the  holder. 
The  executor  appointed  by  the  will  of  the  deceased  found 
the  note  three  days  before  its  maturity  and  thereupon  re- 
quested the  indorsers  to  waive  demand  and  notice,  but  they 
refused  to  do  so.  The  executor  proved  the  will  afterwards 
within  a  month,  but  immediately  relinquished  his  executor- 
ship  and  never  qualified.  Thereupon  an  administrator  was 
appointed.  He  found  the  note  within  a  week  after  his  ap- 
pointment and  presented  it  for  payment  the  next  day,  and 
the  demand  was  considered  to  be  seasonable.2  The  same 
indulgence  is  shown  in  case  the  agent  of  the  holder  should 
die,  such  as  a  notary.3  If  the  delay  be  caused  by  the  death 
of  the  agent  alone,  and  the  agent  was  not  guilty  of  negli- 
gence in  improperly  delaying  the  demand  before  his  death, 
the  holder  is  not  prejudiced  unless  he  was  himself  charge- 
able with  a  want  of  diligence.  This  rule  is  eminently  reason- 
able, for  there  is  no  negligence  of  any  agent;  the  agent  has 
ceased  to  exist.  Sickness  of  the  holder,  in  order  to  excuse 
delay,  must  have  been  so  severe  as  to  have  prevented  the  em- 
ployment of  another  to  make  demand.4  It  has  been  suggested 

1  Jex  v.  Tureaud.  19  La.  Ann.  64;  demic  exists  or  a  state  of  war,  pre- 
Wilson  v.  Senier,  14  Wis.  380.  venting  demand,  the  presentation 

2  White  v.  Stoddard,  11  Gray,  258.  should  be  made  as  soon  as  prac- 

3  Duggan  v.  King,  1  Rice,  239.  ticable  after  the  removal  of  the 

4  Wilson  v.  Senier,  14  Wis.  880.  obstacle  to  demand.    See  Harp  v. 
The  notice  should  be  given  as  soon  Kenner,  19  La.  Ann.  63,  where  the 
as  a  recovery  is  had,  just  as  in  all  delay  was  about  six  months  and 
other  cases;  such  as  when  an  epi-  was  unreasonable. 


440  BANKS    AND   BANKING.  [§  257. 

in  the  last  case  cited  that  the  sickness  must  have  been  also 
sudden,  but  this  is  to  be  taken  to  mean  simply  that  a  man 
who  has  been  guilty  of  a  want  of  diligence,  when  he  was  not 
too  sick  to  take  thought  of  his  business  affairs,  cannot  justify 
the  delay  by  the  fact  that  he  afterwards  became  incapaci- 
tated. It  certainly  cannot  mean  that  a  man  who  is  ill  is 
bound  to  anticipate  that  he  will  become  worse.  A  like  rule 
ought  to  be  applied  to  the  illness  of  the  holder's  agent,  such 
as  a  notary ;  but  so  far  as  the  cases  show,  notaries  public  are 
a  remarkably  healthy  and  vigorous  set  of  public  officials. 

In  case  of  death  of  the  obligor  or  party  to  whom  present- 
ment should  be  made,  the  general  rule  is  that  presentment 
should  be  made  to  the  personal  representative  of  the  deceased 
where  the  death  is  known  to  the  holder.5  A  diligent  search 
should  be  made  in  the  proper  places  to  ascertain  the  personal 
representative.6  If  no  personal  representative  can  be  found 
after  such  diligent  search,  the  presentment,  it  seems,  ought 
not  to  be  delayed  awaiting  the  appointment  of  a  personal 
representative,7  but  should  be  made  on  the  widow 8  or  per- 
haps upon  some  member  of  the  family9  at  the  late  residence 
of  the  deceased.10  But  it  may  well  be  that  the  house  may 
be  closed  up  and  no  one  there;  in  such  case  demand  is  not 
necessary,  the  paper  is  dishonored,  and  notice  should  be  given 
accordingly.11  One  court,  which  seems  to  have  supposed  that 
delicacy  or  even  common  decency  has  no  part  in  the  law, 
has  held  that  the  demand  should  be  made  at  the  dwelling- 
house  even  on  the  day  of  the  deceased's  death,  or,  we  may 

8  Blake  v.  McMillan,  33  Iowa,  150.  on  the  indorser  to  show  that  there 

6Gower    v.    Moore,    25    Me.    16;  was  a  personal  representative.   One 

Frayzer  v.  Dameron,  6  Mo.  App.  course  to  pursue  would  be  for  the 

153.    Contra,  Hale  v.  Burr,  12  Mass,  creditor  to  have  an  administrator 

86.    See  Burrill  v.  Smith,  7  Pick,  appointed,  but  that  cannot  be  con- 

291,  where   no  demand  could  be  sidered  necessary, 

made.  9See  cases  in  note  7.    And  see 

7  Huff  v.  Ashcroft,  1  Disn.  277:  Juniata  Bank  v.  Hale,  16  S.  &  R. 
Price  v.  Young,  1  Nott  &  McC.  438.  157;  Johnson  v.  Harth,  1  Bailey,  482. 

8  Bank  of  Washington  v.  Reynolds,  10See  cases  in  note  7  and  8,  supra. 
2  Cranch,  C.  C.  289.    But  burden  is  »  Haslett  v.  Kunhardt,  1  Rice,  189. 


§  258.]  EXCHANGES,  SECURITIES,  ETC. 

suppose,  of  the  funeral.12  If  authority  were  required  for  such 
a  ruling  it  could  only  be  found  in  a  misapplication  of  the 
Scriptural  injunction  that  it  is  better  to  go  to  the  house  of 
mourning  than  to  the  house  of  feasting.  If  the  demand  is 
made  upon  the  personal  representative,  it  seems  that  it  must 
be  a  demand  of  payment  and  not  a  presentation  of  the  paper 
as  a  claim  for  allowance ; 13  yet  how  the  administrator  can 
pay  the  paper  without  allowance  is  problematical,  to  say  the 
least  of  it.  It  has  been  held  that  if  the  note  was  indorsed 
after  the  death  of  the  maker,  no  demand  is  necessary  as  to 
the  indorser;14  and  there  was  once,  for  a  short  time,  author- 
ity for  saying  that  if  the  personal  representative  is  the  in- 
dorser, no  demand  is  necessary  to  charge  him  as  indorser,15 
but  the  contrary  rule  is  established.  Such  a  fact  might  per- 
haps excuse  notice  of  dishonor  to  himself  if  he  were  both 
indorser  and  executor,16  but  not  a  demand ;  but  the  decision 
upon  the  subject  does  not  bear  out  this  statement. 

§  258.  Demand  where  place  stipulated, — The  paper  may 
be  made  payable  at  a  particular  place  by  being  expressly 
made  so  payable  either  in  the  paper  or  by  parol  agreement, 
and  by  naming  a  particular  place,  in  the  case  of  a  bill  of  ex- 
change, for  presentment  and  payment,  and  by  an-acceptance 
payable  at  a  particular  place.  To  fall  within  the  description 
of  a  particular  place  the  place  designated  must  be  some  par- 
ticular counting  room,  place  of  business,  office,  or  business 

12  Huff  v.  Ashcroft,  1  Disn.  277.  14  Da  vis  v.  Francisco,  11  Mo.  572. 
Stover,  J.   (see  his   decision   at  1  See  Pickler  v.  Harlan,  75  Mo.  678. 
Disn.  60),  seems  to  have  had  the  15Magruder    v.    Union  Bank,    2 
decency  of  feeling  which  the  other  Cranch,  C.  C.  687  (reversed,  3  Pet. 
judges  lacked.  87).    See  Groth  v.  Gyger,  31  Pa.  271, 

13  Chase  v.  Evoy.  49  CaL  467.  This  and  Alton  v.  Robinson,  2  Humph, 
decision  is  a  curious  one.    If  the  341. 

demand  be  made  on  the  personal  16  But  Schumacher  v.  Quaritius,  5 
representative,  it  can  only  be  to  Red.  Sur.251,isccm£raastodemand, 
allow  the  claim;  he  has  no  authority  where  the  holder  was  executor  of 
to  do  anything  else.    Payment  is  the  indorser.    A  demand  was  nee- 
incidental  to  the  allowance  of  the  essary.    See  the  last  note, 
claim.    See  Pickler  v.  Harlan,  75 
Mo.  678. 


442  BANKS   AJTD    BANKING.  [§  258, 

house.1  The  mere  designation  of  some  town  or  city  is  not  a 
designation  of  a  particular  place.  It  is  possible,  through  in- 
advertence or  ignorance,  that  the  place  designated  might  be 
one  of  the  large  modern  office  buildings.  Such  buildings- 
contain  frequently  as  many  business  places  as  ordinary  small 
towns.  What  construction  would  be  put  upon  such  a  stipu- 
lation is  not  easy  to  determine.  The  reasonable  construction 
would  be  that  if  the  person  to  whom  presentment  was  to  be 
made  had  an  office  or  place  of  business  in  the  building,  the 
'stipulation  would  be  construed  to  mean  that  office,  on  account 
of  the  ease  with  which  the  office  could  be  ascertained;  but 
if  he  had  not  at  the  time  of  making  the  paper,  then  the  stipu- 
lation would  mean  no  more  than  if  the  city  generally  were 
designated.  Again,  it  has  sometimes  happened  or  has  been 
a  custom  that  paper  should  be  made  payable  at  any  bank  or 
at  more  than  one  particular  place  in  a  city.  Such  a  stipula- 
tion justifies,  it  seems,  a  presentment  at  any  bank  in  the  city, 
if  the  stipulation  is  for  any  bank,  or  at  either  of  the  places- 
named,  if  more  than  one  place  be  named.2  The  holder  is  not 
required  to  give  the  party  any  notice  that  he  has  selected 
either  of  the  places  for  payment;3  but  if  he  does  give  such 

1  Montross  v.  Doak,  7  Rob.  (La.)  Bradw.  671.    The  decision  is  a  mis- 

170.    The  designation  of  the  house  guided  but  well-meant  attempt  to- 

of  the  drawee  is  nothing  more  than  do  substantial  justica 
surplusage.    It  means  nothing  as        2  Langley  v.  Palmer,  30  Me.  467; 

to  demand.   Frost  v.  Stoke,  55  N.  Y.  Allen  v.  A  very,  47  Ma  287;  Brickett 

Super.  Ct.  76.    But  it  seems  that  in  v.  Spaulding,  33  Vt.  107;   Maiden 

one  state  the  practice  of  the  parties  Bank  v.  Baldwin,  13  Gray,  154;  Boit 

to  the  paper  can  control  the  written  v.  Corr,  54  Ala.  112.    Contra,  North 

stipulation  as  to  the  place  of  pay-  Bank  v.  Abbott,  13  Pick.  465,  over- 

ment.    Thus  where  the  paper  desig-  ruled. 

nated  a  particular  place  of  pay-       3  See  cases  cited,  and  Page  v.  Web- 

ment,    but  payments   of   interest  ster,  15  Me.  249.  Compare  Cecil  Nat. 

were  received  at  another  place  con-  Bank  v.  Holt,  7  Pa.  Co.  Cfc.  R.  485. 

tinuously  for  some  length  of  time  A  private  banker  is  not  a  banker, 

before  payment  could  be  demanded  it  seems,   under  the  rule  (Way  v. 

at  the  place  designated,  it  was  held  Butterworth,  106  Mass.  75),  nor  a 

that  notice  of  the  change  to  the  trust  company  (Nash  v.  Brown,  165 

place  designated  in  the  paper  should  Mass.  384),  without  evidence  of  a 

be  given.    Kounsa veil  v.  Crofott,  4  custom  to  so  treat  it  under  this  rule. 


258.] 


EXCHANGES,  SECUEITIES,  ETC. 


443 


notice  he  will  be  bound  by  his  notice,4  and  the  other  parties 
to  the  paper  will  be  bound  by  the  notice.5 

Where  a  particular  place  is  designated  as  the  place  of  pay- 
ment it  negatives  all  other  places,  and  presentment  is  not 
required  at  any  other  place.6  And  it  makes  no  difference 
whether  the  place  be  an  office,  counting  room  or  bank,  the 
rule  is  the  same.7  The  stipulation  obviates  the  necessity  for 
any  personal  demand,8  or  any  demand  at  the  office,  business 
house,  or  residence 9  of  the  party  upon  whom  demand  is  to 
be  made.  Where  the  place  stipulated  for  is  a  bank,  it  is  a 
sufficient  demand  for  the  holder  to  be  at  the  bank,  ready  to 
receive  payment,  or  to  leave  the  paper  at  the  bank  for  col- 
lection prior  to  the  maturity,  or  so  that  it  be  there  at  the 
date  of  maturity.10  But  it  has  been  wrongly  held  that  if  the 


4  Pearson  v.  Bank  of  Metropolis, 
1  Pet.  89,  in  principle;  State  Bank 
v.  Hurd,  12  Mass.  172;  Whitwell  v. 
Johnson,  17  Mass.  449,  and  Meyer  v. 
Hibsher,  47  N.  Y.  265,  state  the  gen- 
eral rule  as  to  fixing  a  place  of  pay- 
ment by  parol.  And  see  North  Bank 
v.  Abbott,  13  Pick.  465. 

8  This  ought  to  be  the  rule  under 
such  a  provision  in  the  paper,  since 
it  is  really  for  the  benefit  of  all  par- 
ties that  the  place  should  be  fixed. 
But  a  notice  upon  paper,  not  pay- 
able at  a  particular  place,  that  it 
has  been  left  at  a  certain  place  for 
payment,  is  not  a  demand.  Barnes 
v.  Vaughan,  6  R.  I.  259,  refusing  to 
follow  the  Massachusetts  rule. 

6  Shaw  v.  Reed,  12  Pick.  132;  Ap- 
person  v.  Bynum,5  Cold.  341;  Bank 
of  State  v.  Bank  of  Cape  Fear,  13 
Ired.  75;   Lawrence  v.  Dobyns,  30 
Mo.  196;  Moore  v.  Britton,  22  La. 
Ann.  64;  Wild  v.  Van  Valkenburgh, 
7  Cal.  166.    But  see  Herring  v.  San- 
ger,  3  Johns.  Cas.  71;  Rounsaveil  v. 
Crofott,  4  Bradw.  671. 

7  Goodloe  v.  Godley,  13  Smedes  & 


M.  233;  Woodin  v.  Foster,  16  Barb, 
146. 

8  Bank  of  U.  S.  v.  Carneal,  2  Pet 
543;   Eason  v.  Isbell,  42  Ala,  456; 
Townsend  v.  Heer  Dry  Goods  Co., 
85  Mo.  503 ;  Guignon  v.  Trust  Co.,  156 
111.  135 ;  Bank  of  Metropolis  v.  Brant, 
2  Cranch,  C.  C.  530;  Bank  of  U.  & 
v.  O'Neale,  2  Cranch,  C.  C.  466. 

9  Barker  v.  Fullerton,  11  La.  Ann. 
25;  People's  Bank  v.  Keech,  26  Md, 
521;  Jenks  v.  Doylestown  Bank,  4 
Watts  &  S.  505. 

10Rahm  v.  Philadelphia  Bank,  1 
Rawle,  335;  Britton  v.  Doylestown 
Bank,  5  Watts  &  S.  87;  Hallowell 
v.  Curry,  41  Pa,  322;  Ogden  v. 
Dobbin,  2  N.  Y.  Super.  Ct.  112;  State 
Bank  v.  Napier.  6  Humph.  270; 
Bank  of  U.  S.  v.  Carneal,  2  Pet.  543; 
Merchants'  Bank  v.  Elderkill,  25 
N.  Y.  178;  Remington  v.  Harring- 
ton, 8  Ohio.  507.  It  is  certain  the 
demand  is  sufficient  if  the  note  i» 
at  the  bank  for  collection.  But  sup- 
pose the  note  is  not  there  at  matu- 
rity, and  the  maker  does  not  come 
there  to  pay,  and  makes  no  deposit 


444  BANKS   AND   BANKING.  [§  258. 

paper  be  there  for  collection,  but  the  fact  be  unknown  to 
the  bank  officers,  there  is  no  sufficient  demand.11  Referring 
again  to  the  hour  of  demand,  we  will  not  repeat  what  has 
been  already  said  as  to  the  hour  of  demand,  where  the  place 
of  payment  is  an  office  or  bank.12  As  we  have  seen,  also, 
the  acceptor  may  make  his  acceptance  payable  at  a  partic- 
ular place,  and  demand  at  that  place  is  all  that  is  required.18 
If  the  bill  is  addressed  to  the  drawer  at  a  certain  place  and 
is  accepted  generally,  a  demand  at  that  place  of  address  is 
sufficient,  unless  the  holder  knows  that  it  is  a  wrong  address 
or  could  have  so  learned  while  he  was  presenting  the  bill.14 
The  converse  of  the  preceding  rules  is  also  settled,  and  there- 
fore, if  the  place  of  payment  be  designated  in  any  of  the 
ways  indicated  heretofore,  demand  to  hold  an  indorser  or 
drawer  must  be  made  at  that  particular  place.15 

A  misnomer  of  the  particular  place  that  does  not  mislead 
does  not  vitiate  in  any  way  the  binding  force  of  the  stipu- 
lation.16 But  it  may  happen  that  the  particular  bank  or 
counting-room  or  place  of  business  has  ceased  to  exist  or  is 
closed.  Yet  it  seems  that  a  demand  there  is  sufficient;17 

or  has  no  deposit  there  to  pay  the  an  acceptance,  and  the  acceptors 

note,  he,  of  course,  is  not  released,  were  insolvent  at  maturity.    The 

Dockray  v.  Dunn,  37  Me.  442;  Carter  suit  was  by  the  holders  against  the 

v.  Smith,  9  Cush.  321;   Nichols  v.  collecting  bank  for  damages. 

Pool,  47  N.  C.  23.    But  need  a  suffi-  12  See  §  250,  ante. 

cient  demand  be  shown  as  against  13  See  §  233,  ante,  note  2. 

the  indorser  ?  The  authority  is  that  14  Struthers  v.  Kendall,  41  Pa.  214; 

it  must.    Nichols  v.  Pool,  47  N.  C.  Pierce  v.  Struthers,  27  Pa,  249.  But 

23;    Shaw  v.  Reed,  12  Pick.  132;  the  qualification  in  the  last  case  is 

Magoun  v.  Walker,  49  Me.  419;  Pea-  wrong.    A  demand  at  such  place  is 

body  Ins.  Co.  v.  Wilson,  29  W.  "Va.  all  that  is  necessary.    McClane  v. 

528;    Middleton    v.   Boston    Loco.  Fitch,  4  B.  Mon.  599. 

Works,  26  Pa.  257.    In  the  absence  18  See  cases  cited  in  note  10,  supra, 

of  proof  the  note  will  be  presumed  and  Smith  v.  McLean,  4  N.  C.  509, 

to  be  at  the  bank.    Folger  v.  Chase,  and  §  233,  ante,  note  2. 

18  Pick.  63.  I6poweii  v.  State  Bank,  1  Disney, 

11  Chicopee  Bank  v.  Philadelphia  260;  Worley  v.  Waldron,  3  Sneed, 

Bank,  8  Wall.  641.    The  decision  548. 

was  made  in  a  case  where  the  bill  17  Central  Bank  v.  Allen,  16  Ma 

had  slipped  into  a  drawer  for  waste  41 ;  Spann  v.  Baltzell,  1  Branch,  301 ; 

papers  in  the  cashier's  desk.    It  was  Roberts  v.  Mason,  1  Ala.  373.    But 


§  258.]  EXCHANGES,  SECURITIES,  ETC.  445- 

but  it  is  doubtful  on  the  authorities  whether  it  would  be 
necessary.  The  rule  ought  to  be  that  if  the  bank  is  closed 
and  out  of  business,  no  demand  at  all  is  necessary.  A  per- 
sonal demand,  however,  under  such  circumstances  ought  to 
be  considered  proper.  The  place  of  business  may  be  occu- 
pied by  the  successor  of  the  particular  business  house  or 
bank  caused  by  its  merger  with  another  business.  A  de- 
mand at  the  place  would  still  be  sufficient.18  If  another 
bank  is  occupying  the  premises  designated,  demand  upon  it 
is  good ; 19  but  a  better  rule  would  be  that  if  the  bank  were 
named  as  a  place  of  payment,  and  were  still  in  business  in 
the  same  city,  the  name  of  the  bank  would  control  the  prem- 
ises where  it  did  business.  If  there  be  another  bank,  not 
necessarily  at  the  same  premises,  which  is  closing  up  the- 
affairs  of  the  bank  designated,  a  demand  at  such  bank  would 
be  good.20  There  is  some  authority,  too,  for  the  statement 
that  if  the  paper  is  "  negotiable  "  at  a  particular  bank,  where 
nothing  is  said  as  to  the  place  of  payment,  it  is  equivalent 
to  the  statement  that  the  paper  is  payable  at  that  bank,21 
and  there  is  authority  to  the  contrary.22  The  second  rule 
stated  is  the  better  one.  The  place  of  payment  designated 
need  not  appear  on  the  paper.  It  is  sufficient  if  the  parties 
agree  upon  it;23  but  such  an  agreement  between  maker 
and  holder,  or  drawer  and  holder,  could  hardly  be  binding 
on  an  indorser;24  yet,  as  between  acceptor  and  holder,  the 

Purcell  v.  Allemong,  22  Gratt.  739,  22  Seeding  v.  Thornton,  3  Cranch, 

holds  that  if  the  bank  has  been  re-  C.  C.  698.    But  if  the  note  is  nego- 

moved,  notice  of  that  fact  must  be  tiable  at  another  bank  than  where 

given  to  the  drawer.  it  is  payable,  the  bank  where  nego- 

18  Sanderson  v.  Oakley,  14  La.  373;  tiated  is  not  made  the  place  for 
Roberts  v.  Mason,  1  Ala.  373;  but  demand.    Watkins   v.    Crouch,    5 
not  necessary,  it  seems.  Leigh,  522. 

19  Faulkner  v.  Faulkner,  73  Mo.  23  Pearson  v.  Bank  of  Metropolis, 
827;  Lane  v.  Bank  of  West  Tennes-  1  Pet.  89;  State  Bank  v.  Hurd,  12 
see,  9  Heisk.  419.  Mass.   172;   Whitwell  v.  Johnson, 

20  Roberts  v.  Mason,  1  Ala.  373;  17  Mass.  449;  Meyer  v.  Hibsher,  47 
Gelpecke  v.  Lovell,  18  Iowa,  17.  N.  Y.  265;  Apperson  v.  Bynum,  5 

21 A  reference  to  a  case  has  been    Cold.  341. 

lost  by  the  author,  hut  there  is  one  24  Meyer  v.  Hibsher,  47  N.  Y.  265; 
such  decision.  Smith  v.  McLean,  4  N.  C.  509,  where 


446  BANKS   AND   BANKING.  [§  259. 

agreement  binds  the  drawer  and  indorser.25  But  if  the  in- 
dorser  of  the  note  puts  upon  it  the  maker's  residence,  when 
he  indorses,  or,  on  principle,  at  any  other  time,  he  ought  to 
be  bound  by  a  demand  at  that  place,26  unless  the  holder  as- 
certains or  ought  to  have  ascertained  that  the  address  was 
a  mistake,  or  unless  the  maker  had  changed  his  residence 
afterward  to  the  knowledge,  actual  or  imputed,  of  the  holder. 
Where  the  place  of  demand  is  provided  for  as  herein  stated, 
presentation  there  is  sufficient  whether  the  person  upon  whom 
demand  is  to  be  made  is  found  there  or  not.27  But  it  should 
be  remembered  that  if  demand  is  made  at  a  bank  it  must 
be  during  business  hours,  or  if  thereafter  upon  some  officer 
competent  to  answer  while  in  the  bank,28  and  if  at  any  other 
business  house  it  must  be  during  business  hours.29 

§  259.  Demand  where  no  place  stipulated. —  Where  the 
paper  itself  does  not  provide  for  the  place  of  its  presentation, 
as  explained  in  the  preceding  section,  the  general  rule  is  that 
the  demand  must  be  a  personal  demand.  This  personal 
service  of  a  demand  may  be  actual  or  constructive.  If  it  is 
actually  personal,  it  is  made  wherever  the  person  upon  whom 
the  demand  is  made  may  be  found.  It  is  immaterial  where 
this  may  be,  whether  at  his  office  or  place  of  business; l  at 
his  residence;2  or  upon  the  street,  if  not  objected  to;3  and 
it  is  immaterial  at  what  time  the  demand  is  made,  provided  it 

the  agreement  dispensed  with  the  29  See  §  250,  ante. 

place  designated  in  the  paper.    See  l  See  cases  in  note  5,  infra.- 

Herring  v.  Sanger,  3  Johns.  Cas.  71,  *  See  cases  in  note  5,  infra. 

and  Nugent  v.  Mazange,  2  Mart.  3King  v.   Crowell,  61   Me.  244; 

(O.  S.)  264.  Townsend  v.  Heer  Dry  Goods  Co., 

25  See  §  233,  ante,  note  2,  and  notes  85  Mo.  503;  Parker  v.  Kellogg,  158 

14  and  15,  supra.  Mass.  90  (the  demand  was  not  ob- 

^Farnsworth  v.  Mullen,  164  Mass,  jected  to);  but  King  v.  Holmes,  11 

112;  Nugent  v.  Mazange,  2  Mart  Pa.  456,  holds  the  demand  not  good 

(O.  S.)  264    The  limitation  is  made  if  the  person  had  a  place  of  busi- 

on  the  authority  of  a  similar  prin-  ness.    A  barnyard  may  be  consid- 

ciple.    Pierce  v.  Struthers,  27  Pa.  ered  a  proper  place  for  demand,  no 

249.  objection  being  made.    Baldwin  v. 

27  See  cases  in  notes  8  and  9,  supra.  Farnsworth,  10  Me.  414. 

28  See  §  250,  ante. 


§  259.]  EXCHANGES,  SECURITIES,  ETO.  447 

be  at  some  reasonable  hour; 4  but  this  proposition  is  disputed. 
But  the  demand,  where  it  is  not  actually  personal,  but  merely 
constructively  so,  is  the  one  that  causes  the  most  difficulty. 
The  person  making  the  demand  may  know  or  may  not  know 
the  residence  or  place  of  business  of  the  party  upon  whom 
a  demand  is  to  be  made.  The  most  general  proposition  that 
may  be  advanced,  assuming  the  demandant  to  know  the  facts, 
is  that  the  person  making  the  demand,  where  no  place  of  de- 
mand is  provided  for,  may  select  either  the  place  of  business 
or  the  residence,  if  the  maker,  drawee  or  acceptor,  as  the 
case  may  be,  has  both  a  residence  and  a  place  of  business.5 
And  a  good  demand  at  either  place  is  sufficient;  the  demand- 
ant is  not  required  to  resort  to  the  residence  if  he  does  not 
find  the  party  at  his  place  of  business,  or  vice  versa.6  But 
if  the  party  has  a  place  of  business  the  preferable  practice 
will  be  to  make  the  demand  at  that  place,  whether  -it  be  an 
office  or  a  business  house.  The  demand  should  be  made 
during  business  hours  if  the  party  be  not  found  there;  other- 
wise a  demand  there  is  not  good.7  If  business  hours  are 
over  and  the  place  of  business  closed,  or  the  party  not 
therein,  the  alternative  remaining  is  to  resort  to  the  resi- 

4  See  §  250,  ante.  Fields  v.  Mallet,  10  N.  C.  465  (but 

5  Bateson    v.   Clark,  37  Mo.   31 ;  in  this  case  the  indorser  said  the 
Winans  v.  Davis,  18  N.  J.  Law,  276;  maker  was  not  at  home).    At  resi- 
•Otsego    Co.   Bank    v.   Warren,   18  dence  sufficient.  Wiseman  v.  Chia- 
Barb.  290  (a  partnership);   Arnold  pella,  23  How.  368.    See  the  cases 
v.  Dresser,  90  Mass.  435;   Estes  v.  in  note  5,  supra,  and  Ashton  v. 
Tower,  102   Mass.   65;    Barnes    v.  Dull,  31  Leg.  Int.  61.    But  if  the 
Vaughan,  6  R.  I.  259;  Burrows  v.  place   of  business    is   abandoned, 
Hannegan,  1  McLean,  309;   Hart-  the  residence  must  be  sought  for. 
ford  Bank  v.  Greene,  11  Iowa,  476;  Granite  Bank  v.  Ayres,  16  Pick. 
People's  Nat.  Bank  v.  Luttertoh,  95  392.    See  Demond  v.  Burnham,  133 
N.  C.  495;  Holtz  v.  Boppe,  37  N.  Y.  Mass.  339.    Goldsborough  v.  Jones, 
634;  Adams  v.Leland,  30  N.Y.  309;  2  Cranch,  C.  C.  305,  holds  that  if 
Simmons  v.  Belt,  35  Mo.  461.  the  maker  is  absent  from  his  place 

6  At  place  of  business  sufficient,  of   employment    during    business 
Wallace    v.   Crilley,  46  Wis.  577;  hours,  demand  must  be  made  at 
Wiseman  v.  Chiapella,  23  How.  368;  his  dwelling-house.    The  decision 
Shedd  v.  Brett,  1  Pick.  413;  Baum-  was  a  very  palpable  blunder, 
gardner    v.    Reeves,    35    Pa.    250;        7  See  §  250,  ante. 


448  BANKS   AND   BANKING.  [§  259. 

dence.8  The  preliminary  question  to  be  determined  in  serv- 
ing at  a  place  of  business  is  whether  or  no  it  be  the  party's 
place  of  business.  If  the  place  has  been  his  place  of  busi- 
ness, but  is  abandoned,  the  demand  should  be  made  at  the 
residence.9  So  it  seems  to  have  been  held  where  the  makers 
had  failed  and  an  assignee  was  in  possession.10  If  the  party 
has  led  the  public  to  suppose  that  he  has  a  place  of  business, 
that  place  will  be  considered  his  place  of  business  for  a  de- 
mand.11 A  comparison  of  cases  upon  the  subject  of  service 
of  notice  of  non-payment  will  be  found  instructive 12  as  to 
determining  what  is  a  place  of  business.  If  the  demand  is 
made  at  the  place  of  business  during  business  hours,  the 
place  of  business  may  be  closed.  If  so,  the  demand  is  com- 
plete and  the  paper  is  dishonored,  just  as  it  is  dishonored  if 
the  residence  is  closed.13  But  in  the  latter  contingency  the 
rule  ought  to  be  that  if  the  person  has  a  well-known  place 
of  business  in  the  city  where  he  resides,  a  demand  should 
be  made  there  if  the  residence  is  closed.  If  there  be  some 
one  in  the  place  of  business,  if  he  states  that  he  is  the  person 
named  his  answer  may  be  relied  upon.14  If  the  person 
wanted  is  not  there,  demand  should  be  made  upon  the  clerk 
or  one  apparently  in  charge,  and  it  will  be  sufficient.  If 
the  place  of  business  is  open,  but  no  one  there,  the  author's 
opinion  is  that  the  situation  is  the  same  as  if  the  office  were 
closed.  Certainly,  after  waiting  a  reasonable  time,  a  writ- 
ten demand  left  there  designating  some  place  to  come  and 
pay  ought,  in  common  sense,  to  be  sufficient;  but  it  has 
been  held  that  a  notification  to  a  party  to  come  to  a  certain 

8  See  notes  5  and  6,  supra.  place  of  business);  Wiseman  v.  Chi- 

9  Granite  Bank  v.  Ayres,  16  Pick,  apella,  23  How.  368  (for  residence). 
392.    Compare    Demond  v.  Burn-  But  compare  Bank  of  Red  Oak  v. 
ham,  133  Mass.  339,  and  Talbot  v.  Orvis,  42  Iowa,  691;  Apperson  v. 
Nat.  Bank  of  Com.,  129  Mass.  67.  Bynum,  5  Cold.  341. 

10 Benedict  v.  Gaffe,  5  Duer,  226.  "Hunt  v.  Maybee,  7  N.  Y.  266. 

11  McHenry  v.  Kellar,  6  La.  Ann.  And  for  the  propriety  of  making  a 
326.  demand  upon  the  clerk  or  other 

12  See  §§  274,  280,  post.  person  in  the  office,  see  §  248,  ante, 

13  Baumgardner  v.  Reeves,  35  Pa.  notes  19-24. 
250;  Shedd  v.  Brett,  1  Pick.  413  (for 


§  259.]  EXCHANGES,  SECURITIES,  ETC. 

place  and  pay  a  note  was  not  a  sufficient  demand,15  but  it 
did  not  appear  in  that  case  that  any  attempt  at  an  actual 
demand  had  been  made.  Certainly  the  person  ought  not  to 
be  expected  to  wait  an  unreasonable  length  of  time  until 
some  one  came  in,  and  if  necessary  to  wait  until  business 
hours  were  over.  Caution  probably  would  dictate  a  search 
for  the  residence  of  the  party.  But  it  is,  not  infrequently 
the  case  with  men  of  business  in  large  cities  that  their  resi- 
dences are  many  miles  away  and  a  demand  there  would  be 
impracticable.  Therefore  the  rule  ought  to  be  that,  if  a  de- 
mandant goes  to  an  office  or  place  of  business  of  a  party 
and,  finding  no  one  there,  leaves  a  notice  in  some  proper 
place  in  the  office,  as  upon  the  desk  of  the  party,  if  he  can 
determine  it,  such  a  demand  is  sufficient.  It  is  certainly 
sufficient  in  any  place  where  the  custom  obtains  and  is  so 
general  that  every  one  is  supposed  to  have  knowledge  of  it. 
But  it  may  be  that  the  person  upon  whom  the  demand  is  to 
be  made  has  no  place  of  business.  In  that  case  his  residence 
must  be  sought  and  a  demand  made  there.  The  law  appli- 
cable to  a  demand  at  the  residence  is  the  same  for  whatever 
reason  the  demand  is  made  there,  whether  it  be  because 
the  demandant  chooses  the  residence  because  he  prefers  it 
to  the  place  of  business,16  or  because  it  is  too  late  to  make 
demand  at  the  place  of  business,  or  because  there  is  no 
place  of  business,17  or  because  the  residence  is  designated  as 
the  place  of  payment.  In  this  latter  case  it  is  to  be  observed 
that  the  designation  of  the  dwelling-house  of  the  party 
upon  whom  demand  is  to  be  made,  as  the  place  of  payment 
amounts  to  nothing  more  than  a  giving  on  the  paper  of  the 
place  of  residence.  The  demand  nevertheless  can  be  made 
at  the  person's  place  of  business,  if  he  has  one.18  The  ques- 

15  Barnes  v.  Vaughan,  6  R.  I.  259.  case  by  the  editor  of  the  edition  of 

And  see  Farmers'  Bank  v.  Duvall,  1864,  Benjamin  Rand,  Esq. 

7  Gill  &  J.  78.    Banks  are  permit-  16  See  note  6,  ante,  as  to  this  right, 

ted  to  do  this  by  a  custom  in  New  "  Bank  of  Red  Oak  v.  Orvis,  42 

England.    Whitwell  v.  Johnson,  17  Iowa,  691 ;  Apperson  v.  Bynum,  5 

Mass.  449.    The  best  commentary  Cold.  341. 

upon  this  rule  is  the  note  6  to  this  18  Frost  v.  Stokes,  55  N.  Y.  Super. 
29 


450  BANKS   AND   BANKING.  [§  259. 

tion  of  residence  must  be  determined  preliminarily.  A  man 
may  be  fortunate  enough  to  have  two  residences,  a  town 
house  and  a  country  house.  If  the  city  house  is  kept  open 
or  has  some  one  in  charge  competent  to  receive  the  demand, 
such  as  a  servant,  or  even  if  it  be  shut  up,  the  demand  made 
there  upon  such  person  is  good.19  If  the  place  is  closed  up 
and  no  one  there,  a  search  showing  due  diligence  must  be 
made  to  ascertain  the  present  residence  of  the  person  sought.20 
If  the  new  place  of  business  or  present  residence  of  the 
party  is  found  to  be  in  another  state,  demand  ought  to  be 
made  at  the  former  residence  or  place  of  business,21  although 
this  cannot  be  considered  necessary. 

If  the  residence  is  occupied  by  the  party,  family  or  serv- 
ants, demand  may  be  made  there  although  the  person  sought 
is  temporarily  absent.22  The  time  of  demand  must  be  within 
reasonable  hours,  but  what  they  are  has  not  been  accu- 
rately determined.23  If  the  residence  is  no  longer  occupied 
by  him  but  by  some  one  else,  further  search  must  be  made 
for  his  residence,  in  accordance  with  the  rules  as  to  reason- 
able diligence.  It  is  to  be  noted  that  in  questions  of  demand, 
the  holder,  if  he  employs  an  agent,  must  give  the  agent  all 
the  information  which  he  possesses,  for  it  must  be  shown  not 
only  that  the  agent  exercised  due  diligence,  but  that  the 
holder  did  also.24  But  it  is  a  reasonable  qualification  to  this 

Ct  76;  Miller  v.  Henner,  3  Mart.  Washington,  9  Wheat.  598;  Gist  v. 

(N.  S.)  587.    The  demand  may  be  Lybrand,  3  Ohio,  307;   Wheeler  v. 

made  at  the  place  of  business  as  Field,  6  Met.  290;  Graf  ton  Bank  v. 

well                                                    '  Cox,  13  Gray,  503;  Sanford  v.  Nor- 

19  Stewart  v.  Eden,  2  Caines,  121  ton,   17  Vt  285;  Herrick  v.  Bald- 

(a  case  as  to  notice).    See  Goodwin  win,  17  Minn.  209;  Foster  v.  Julien, 

v.  McCoy,  13  Ala.  271,  and  Runyon  24  N.  Y.  28.    But  not  if  the  removal 

v.  Montfort,  44  N.  C.  871,  which  is  in  the  same  state.    Bigelow  v. 

were  also  cases  as  to  notice.  Keller,  6  La.  Ann.   59;  Reinke  v. 

2»Stayler  v.  Ball,  24  Md.  18a    If  Wright,  93  Wis.  368. 

known,  demand  must  be  there.  La.  n  Levy  v.  Drew,  14  Ark.  334    See 

Ins.   Co.    v.    Shamburgh,  2  Mart.  Shamburghv.  Commagere,  10  Mart 

(N.  S.)  511.  (O.  S.)  18;  Farley  v.  Hewson,  10  La. 

21  Adams  v.  Leland,  30  N.  Y.  309;  Ann.  783. 

Central  Bank  v.  Allen,  16  Me.  41.  2»  See  §  250,  ante. 

A  removal  to  a  new  state  excuses  24  Haly  v.  Brown,  5  Pa.  178. 
a  demand.    Magruder  v.  Bank  of 


§  200.]  EXCHANGES,  SECURITIES,  ETO.  451 

statement  that  the  holder  is  to  be  considered  any  person  or 
corporation  which  has  the  paper  indorsed  to  it  or  transferred 
to  it,  though  solely  for  collection;25  and  such  a  holder  is  not 
an  agent  in  the  sense  that  the  person  who  transfers  must 
communicate  his  knowledge  as  to  the  residence  of  the  per- 
son upon  whom  demand  is  to  be  made,  although  reasonable 
diligence  may  require  an  inquiry  to  be  made  of  such  trans- 
ferrer  or  indorser.  The  demandant  must  take  notice,  of 
course,  of  addresses  upon  the  paper  itself.28 

§  260.  Demand  where  residence  or  place  of  business 
unknown. —  If  the  person  sought  for  is  not  known  to  the 
holder  to  have  a  residence  or  place  of  business,  various  con- 
tingencies may  arise.  Thus,  the  city  or  town  where  he  re- 
sides may  be  known  or  it  may  not  be  known.  If  the  city 
or  town  or  other  locality  be  known  to  the  holder  or  be  ascer- 
tained, or  if  a  former  residence  or  place  of  business  be  known, 
an  earnest  attempt  should  be  made  to  ascertain  either  his 
residence  or  his  place  of  business.  The  sufficiency  of  this 
attempt  is  always  a  question  of  reasonable  diligence  under 
the  circumstances.1  There  are  various  cautions  to  be  sug- 
gested, such  as  a  consultation  of  the  directory,2  inquiries  at 
the  postoffice,3  inquiries  in  the  neighborhood  of  the  former 
residence  or  place  of  business,4  inquiry  at  these  latter  places.5 
A  number  of  cases  will  be  found  in  the  notes  upon  this  sub- 
ject, and  the  authorities  upon  the  subject  of  notice  should  be 
consulted.6  There  are  certain  presumptions  that  may  be 

25  This  is  the  rule  as  to  notice,    this  is    sometimes  not   necessary 
Bartlett  v.  Isbell,  31  Conn.  296.  (Holtz  v.  Boppe,  37  N.  Y.  634),  if  the 

26  Nicholson  v.  Barnes,  11  Neb.  452.    removal  be  recent. 

The  change  in  the  address  of  the  8  Tate  v.  Sullivan,  30  Md.  464. 

maker  made  by  the  indorser  upon  4  Ellis  v.    Commercial   Bank,  7 

transferring  is  binding  upon  him.  How.  (Miss.)  294.   . 

Nugent  v.  Mazange,  2  Mart.  (O.  S.)  5Paton  v.  Lent,  4  Duer,  231;  Peet 

264.  v  Zanders,  6  La.  Ann.  364.    Inquiry 

1  Holtz  v.   Boppe,  37  N.  Y.  634;  of  other  parties  to  the  paper.   Pack- 
Taylor  v.  Snyder,  3  Denio,  145.  ard  v.  Lyon,  5  Duer,  82. 

2  Tate  v.  Sullivan,  30  Md.  464;  « Spencer  v.  Bank  of  Salina,  3 
Jar  vis  v.  Garnett,  39  Mo.  268.    See  Hill,  520;  Bank  of  Utica  v.  Phillips, 
Packard  v.  Lyon,  5  Duer,  82.    But  3  Wend.  408;  Farnsworth  v.  Mul- 


452 


BANKS   AND   BANKING. 


[§  260. 


indulged,  such  as  that  the  place  of  the  making  of  a  note  is 
presumably  the  place  where  the  maker  resides,  unless  the 
note  is  dated  at  some  other  place,  when  the  presumption  is 
that  the  maker  resides  there.7  Some  courts  hold  that  nothing 
as  to  the  residence  of  the  maker  appearing,  a  presentment 
for  payment  at  the  place  of  date  of  the  note  is  sufficient.8 
But  this  does  not  mean  that  the  holder  is  absolved  from  due 
diligence  in  inquiring  as  to  the  residence  of  the  maker.9  If 
the  maker  reside  in  another  state,  a  demand  at  the  place  of 
execution  has  been  held  sufficient,10  but  this  rule  is  not  true 
stated  in  this  way.11  It  is  true,  however,  where  after  execu- 
tion the  maker  has  removed  to  another  state.12  In  such  a 
case  a  demand  at  the  former  residence  is  sufficient.13  The 
residence  known  or  stated  in  the  note  of  the  drawee  is,  with- 
out doubt,  the  proper  place  to  make  a  demand,14  as  we  have 
seen,  and  if  the  bill  is  drawn  and  dated  at  the  business  domi- 


len,  164  Mass.  112;  Tarlton  v.  Miller, 
1  III  39.  la  order  to  understand 
this  decision  it  would  be  well  to 
consult  the  preface  to  the  report, 
which  apologizes  for  the  decisions 
therein  by  saying  that  the  judges 
had  no  library,  were  compelled  to 
perform  circuit  court  duties  and  to 
act  as  a  part  of  the  council  of  revis- 
ion. And  see  §§  280  and  281,  post. 

fHerrick  v.  Baldwin,  17  Minn.  209. 

8  White  v.  Wilkinson,  10  La.  Ann. 
394;  Smith  v.  Philbrick,  10  Gray, 
253.  But  see  Hart  v.  Wills,  52  Iowa, 
56.  A  bill  made  and  dated  at  the 
business  domicile  of  the  drawer  is 
payable  there,  wherever  it  be  ne- 
gotiated. Ex  parte  Heidelback,  2 
Low.  526. 

9Galpin  v.  Hard,  3  McCord,  394; 
Mason  v.  Pritchard,  9  Heisk.  793; 
Haber  v.  Brown,  101  CaL  445;  Ox- 
nard  v.  Varnum,  111  Pa.  193.  See 
Burrows  v.  Hannegan,  1  McLean, 
309. 

10  Hepburn  v.  Toledano,  10  Mart. 


(O.  S.)  643.    See  note  21  to  last  sec- 
tion, and  note  13,  supra. 

11  If  the  person  dated  the  note  in 
a  state  where  he  had  no  residence, 
a  demand  in  the  state  of  date  is 
permissible,  if  diligence  to  find  the 
address  is  used. 

12  See  cases  cited  in  note  21  to  last 
section.    Demand  is  then  excused 
altogether. 

13  See  cases  cited  in  note  21  to  last 
section.     But  Taylor  v.  Snyder,  3 
Denio,  145,  shows  what  the  rule  is 
where   the  maker  resides  in  an- 
other state  at  the  time  of  the  mak- 
ing  of  the    note.    Demand  upon 
him  is  not  excused,  and,  if  his  resi- 
dence is  known,  demand  must  be 
made   upon  him  at  his  place  of 
domicile.    Mason  v.  Pritchard,    9 
Heisk.  79a 

14  Glaser  v.  Rounds,  16  R.  I.  235; 
Nicholson  v.  Barnes,  11  Neb.  452. 
If  the  holder  has  reason  to  think 
he  knows  the  residence,  he  is  not 
negligent  for  failing  to  make  in- 


§  261.]  EXCHANGES,  SECURITIES,  ETC.  453 

cile  of  the  drawee  it  is  payable  there,  although  it  may  have 
been  negotiated  elsewhere.15  Where  no  result  is  attained 
by  reasonable  diligence  in  inquiring,  the  bill  is  dishonored 
and  notice  must  be  given.16  If  the  holder  or  his  agent  after 
inquiring,  or  from  the  paper  itself,  believes  in  good  faith 
that  he  has  ascertained  the  place  of  residence  of  the  party 17 
or  his  place  of  business,  he  is  not  wanting  in  diligence  if  he 
acts  upon  his  knowledge  and  makes  demand  accordingly.18 
Where  a  demand  is  made  upon  a  personal  representative 
after  death  of  the  party  liable,  the  demand  as  to  place  is 
governed  by  the  foregoing  rules.19 

§  261.  Customs  and  usages  upon  demand. —  General  busi- 
ness customs  of  notoriety  are  presumed  to  be  known  to  the 
business  community.1  Such  a  custom  not  to  do  business  on  par- 
ticular days  has  made  Harvard  commencement  day  a  holiday 
in  a  portion  of  Massachusetts  ;2  but  a  custom  not  to  do  business 
on  New  Year's  day  must  be  brought  home  to  a  party  by  actual 
or  constructive  knowledge.3  The  half-holiday  on  Saturday 
may  become  another  instance  of  such  business  usage.4  Again, 
upon  notes  made  payable  or  negotiable  at  a  bank,  the  usages 
of  that  bank  are  a  part  of  the  contract,  such  as  to  demand  pay- 
ment on  the  fourth  day  of  grace,5  or  to  send  notes  for  col- 
lection in  packages  once  a  week,6  or  to  allow  days  of  grace 

quiries.    Bank  of  Utica  v.  Phillips,  See  Sylvester  v.  Crohan,  138  N.  Y. 

3  Wend.  408.  494 

15  Ex  parte  Heidelback,  2  Low.  5  Renner  v.  Bank  of  Columbia,  9 
526.  Wheat.  581;  Mills  v.  Bank  of  U.  S., 

16  Wolf  v.  Jewett,  10  La.  384  11  Wheat.  431;  Bank  of  Washing- 

17  Farnsworth  v.  Mullen,  164  Mass,  ton  v.  Triplett,  1  Pet.  25.     Contra, 
112.  custom  does  not  bind  an  indorser 

18  See  also  Bank  of  Utica  v.  Phil-  unless  he  knows  of  it.    Pierce  v. 
lips,  3  Wend.  408  (as  to  notice).  Butler,  14  Mass.  303.  But  see  Blanch- 

"See  §  257,  ante.  ard  v.  Hilliard.  11  Mass.  85;  Whit- 

1  See  g§  113-117,  ante,  well  v.  Johnson,  17  Mass.  449.    The 

2  City  Bank  v.  Cutter,  3  Pick.  414  rule  does  not  apply  without  knowl- 

3  Dabney  v.  Campbell,  9  Humph,  edge  as  to  note  merely  left  there 
680.    This  decision  is  wrong.    The  for  collection.     Hill  v.  Norvel,  3 
custom  was  notorious.  McLean,  583. 

4  But  the  cases  are  on  statutes.  6  Bridgeport    Bank   v.  Dyer,   19 

Conn.  136. 


BANKS   AND   BANKING.  [§  261. 

on  post-dated  checks  where  the  law  of  the  jurisdiction  does 
not  forbid,  but  would  not  otherwise  allow  them,7  or  to  allow 
a  demand  upon  a  note  due  upon  Sunday  upon  Monday; 8  but 
the  proof  of  a  custom  to  allow  demand  on  Monday,  where 
the  customary  fourth  day  of  grace  fell  upon  Sunday,  failed 
in  another  case,  but  the  case  impliedly  holds  that  such  a 
custom  would  be  valid.9  But  a  custom  contrary  to  express 
statute  is  not  good,  such  as  not  to  allow  days  of  grace  upon 
a  post-dated  check,10  though  in  the  same  case  proof  was  al- 
lowed of  a  contrary  rule  of  law  in  a  foreign  jurisdiction;11 
and  a  custom  not  to  allow  days  of  grace  upon  bankable 
paper  of  any  kind,12  or  upon  a  bank's  post-notes,13  has  been 
held  invalid  as  contrary  to  law  where  the  statutory  law 
gave  days  of  grace.  The  true  rule  is  that,  where  days  of 
grace  are  merely  given  as  a  part  of  the  law  merchant,  a 
custom  may  destroy  them,  because  the  parties  may  waive 
them,  as  they  do  by  agreeing  to  the  custom;  but  where  days 
of  grace  are  settled  by  a  statute,  the  custom  cannot  abolish 
them,  because  the  parties  themselves  will  not  be  held  to 
have  waived  the  statute,  even  if  they  could  do  so,  except  by 
an  express  agreement.  A  usage  to  give  notice  to  the  maker 
of  the  maturity  of  the  note  and  the  place  where  it  is  de- 
posited for  collection  cannot  be  substituted  for  a  demand  so 
as  to  bind  an  indorser,14  but  in  other  jurisdictions  the  custom 
has  been  allowed  to  prevail.15  Other  courts  have  held  that 
the  custom  of  a  bank,  to  be  binding  upon  a  party  to  the 

'  Bowen  v.  Newell,  13  N.  Y.  290.       13  Mechanics'  Bank  v.  Merchants' 

8  Patriotic    Bank    v.    Farmers'    Bank,  6  Met.  13. 

Bank,  2  Cranch,  C.  C.  560.  "Barnes  v.  Vaughn,  6  R  L  259; 

9  Adams  v.  Otterback,  15  How.    Moore  v.  Waitt,  13  N.  H.  415.   And 
539.  see  Farmers'  Bank  v.  Duvall,  7  Gill 

10  Bowen  v.  Newell,  8  N.  Y.  190;  &  J.  78.    So  of  a  usage  to  take  a 
Woodruff  v.  Merchants'  Bank,  25  check  in  payment  of  a  collection 
Wend.  673,  6  Hill,   174     For  the  by  the  collecting  bank,  and  to  pro- 
principle  see  Otsego  Co.  Bank  v.  test  the   collection  if  the   check 
Warren,  18  Barb.  290.  should  be  dishonored.    Strong  v. 

"Bowen  v.  Newell,  13  N.  Y.  290.    King,  35  I1L  9. 
12  Morrison  v.  Bailey,  5  Ohio  St      ^Whitwell  v.  Johnson,  17  Mass. 
13.  449. 


§  262.]  EXCHANGES,  SECURITIES,  ETC.  455 

paper,  must  have  been  known  to  him,  even  though  the  paper 
was  made  payable  at  the  particular  bank.16  But  under  no 
circumstances  ought  a  custom  varying  from  the  law  to  be 
permitted  on  paper  not  payable  at  the  bank,  unless  he  had 
actual  notice  of  the  custom  17  or  such  constructive  notice  as 
would  amount  to  actual  notice.18 

§  262.  Excuses  for  failure  to  make  demand. — "We  have 
already  considered  the  excuse  of  ignorance  of  the  address 
of  the  person  to  whom  presentment  for  payment  is  to  be 
made  as  a  defense,  when  due  diligence  has  been  used  in 
searching  for  the  address; 1  and  the  excuse  of  a  prior  pre- 
sentment for  acceptance  and  the  refusal  of  acceptance; 2  and 
the  excuse  of  no  injury  done  to  the  drawer  of  the  check3  or 
of  a  non-negotiable  order4  by  the  failure  to  make  a  demand; 
and  the  excusing  of  demand  as  to  a  guarantor  or  a  party  who 
stands  in  relation  to  the  paper  as  a  guarantor,5  and  the  ex- 
cusing of  demand  as  to  forged  paper;8  paper  that  has  been 
fraudulently  transferred  to  the  holder  will  be  considered  in 
this  section ;  and  the  cases  already  considered  where  no  de- 
mand is  necessary 7  may  be  considered  in  the  light  of  excuses 
for  failure  to  make  demand.  There  are  other  matters  which 
have  been  urged  as  excusing  a  demand,  such  as  the  insolv- 
ency of  the  drawee  or  maker,  the  want  of  funds  of  the  drawer 
in  the  hands  of  the  drawee,  a  change  of  residence  on  the  part 
of  the  drawee  or  maker,  an  absconding  of  the  drawee  or 
maker,  the  existence  of  a  pestilence  or  the  prevalence  of  a 
malignant  disease,  and  the  interruption  of  commercial  inter- 
course by  a  state  of  war.  These  various  conditions  of  fact 
will  be  considered  in  the  succeeding-  sections.  There  are  cer- 


o 


1 6  Bank  of  Alexandria  v.Deneale,  2  Fales,  4  Mass.  245;  North  Bank  v. 
Cranch,  C.  C.  488  (no  longer  author-  Abbott,  13  Pick.  465. 

ity .;  Moore  v.  Waitt,  13  N.  H.  415.        1  See  §  260,  ante. 

17  Bridgeport    Bank    v.   Dyer,   19        2  See  §  233,  ante. 
Conn.  136;  Marrett  v.  Brackett,  60        3  See  §  237,  ante. 
Ma  524  «  See  §242,  ante. 

18  Citizens'  Bank  v.   Graffin,  '31        5  See  §  241,  ante. 
Md.  507.    See  also  Bank  of  IT.  S.  v.        •  See  §  244,  ante. 
Norwood,  1  Har.  &  J.  423;  Jones  v.        7  See  §  260,  ante,  notes  8  to  16. 


456  BANKS   AND   BANKING.  [§  262. 

tain  miscellaneous  excuses  which  will  be  grouped  together 
here.  In  some  instances  a  demand  has  been  dispensed  with 
by  statute.8  "Where  the  indorser  has  discharged  the  maker 
of  the  note  no  demand  is  necessary  upon  the  maker 9  for  rea- 
sons that  are  obvious.  In  another  case  showing  a  peculiar 
situation,  the  distance,  the  inclemency  of  the  season  and  the 
lateness  of  the  hour  were  held  to  be  an  excuse  for  not  de- 
manding payment.10  But  the  infancy  of  the  maker  is  no  excuse 
for  failure  to  demand  payment  from  him.11  The  fact  that 
suit  was  pending  on  the  note  at  maturity  or  at  the  date  of 
its  transfer  is  no  excuse  for  want  of  demand,12  but  the  ruling 
as  to  a  suit  pending  at  maturity  will  not  bear  scrutiny;  it 
is  certainly  a  wrong  decision.  In  another  case  the  deprecia- 
tion of  money  was  considered  to  justify  a  failure  to  make 
demand;13  and  where  an  injunction  had  been  served  upon  a 
bank  suspending  its  business,  the  fact  was  necessarily  an  ex- 
cuse for  a  failure  to  present  a  check  upon  the  bank  for  pay- 
ment.14 The  intimation  is  that  if  due  diligence  were  not 
used  in  presenting  the  check  before  the  injunction  was 
granted,  the  drawer  would  have  been  released  if  he  had  funds 
in  the  bank.  It  should  be  remembered  that  in  no  case  can 
a  suit  be  brought  against  the  drawer  upon  the  check,  unless 

8  Upon  notes,  except  those  pay-  dorsement  was  after  suit  brought, 
able  at  a  bank.    Hoadley  v.  Bliss,  But  the  first  case  is  wrong  because 
9  Ga.  303;  Cothran  v.  Cunningham,  the  note  was  in  suit  to  the  knowl- 
28  Ga.  177.    The  statute  applied  to  edge  of  the  indorser  when  the  note 
paper  payable   at  private   banks,  matured. 

Banks  v.  Bessler,  56  Ga.  199.    See  13Fowl  v.  Todd,  1  Bay,  176.    The 

Falk  v.  Rothschild,  61  Ga.  595,  as  absurdity  of  a    currency  that  is 

to  national  banks.     See  also  a  pri-  worthless  never  received  a  more 

vate  charter,  Central  Bank  v.  Whit-  vivid    commentary   than    in    this 

field,  1  Ga.  593;  a  general  statute,  case.    The  worthless  currency  was 

Pococke  v.  Blount,  6  Mo.  338;  Sny-  a  legal  tender.     If  the  bills  had 

der  v.  Gascoigne,  11  Tex.  449.  been  presented  they  would  have 

9  Burke  v.  McKay,  2  How.  66.  been  paid  in  worthless  legal  ten- 

10  Farley  v.  Hewson,  10  La.  Ann.  ders.     Hence  the  court  achieved 
783.  the  unique  distinction  of  holding 

11  Wyman  v.  Adams,  12  Gush.  210.  that  the  holder  need  not  present 

12  Grant  v.  Strutzel,  53  Iowa,  712;  the  bills,  but  should  sue  the  drawer. 
Bishop  v.  Dexter,  2  Conn.  419.   The  "  Lovett  v.  Cromwell,  6  Wend, 
second  case  is  right  because  the  in-  369. 


§  203.]  EXCHANGES,  SECURITIES,  ETC.  457 

a  demand  of  payment  has  been  made,  or  unless  the  demand 
is  excused.15  Fraud  in  the  indorser  or  usury  in  the  note  in- 
dorsed may  under  some  circumstances  dispense  with  notice 
as  to  the  indorser.  Thus  where,  by  reason  of  the  fraud  of  the 
indorser,  no  consideration  passed  to  the  indorsee,16  or  where 
fraudulent  representations  were  made  as  to  the  note  which 
was  indorsed  in  payment,17  or  where  the  note  was  paid 18 
when  indorsed,  no  demand  as  to  the  indorser  is  necessary. 
If  the  notes  of  a  suspended  bank  are  passed  with  a  promise 
to  take  them  back,  or  where  they  are  passed  fraudulently,  no 
demand  is  needed  as  to  the  transferrer.19  The  rule  is  the 
same  where  the  indorser  has  prevented  the  necessary  steps 
being  taken  to  charge  him ;  he  is  of  course  estopped  to  in- 
sist upon  demand  or  notice.20  But  if  the  fraud  is  immaterial 
as  to  the  maker  as  against  a  bonafide  indorsee,  demand  and 
notice  are  said  not  to  be  excused.21 

§  263.  Insolvency  of  maker  or  drawee. —  The  rule  is  set- 
tled that  although  the  maker  of  a  note  has  become  abso- 
lutely and  notoriously  insolvent,  a  demand  must  be  made 
upon  him  for  the  payment  of  the  note.1  This  rule  seems  to 
be  supported  by  no  very  sufficient  reason,  for  (to  quote  a 
morsel  of  that  species  of  ingenious  Latinity  which  is  the  pe- 
culiar glory  of  the  law)  lex  non  cogit  ad  vana  (the  law  does 
not  require  a  vain  and  useless  act).  The  indorser  ought  not 
to  require  such  an  act  to  be  performed.  But  the  law  has 
been  settled  by  very  high  authority,2  although  the  decisions 
which  so  rule  do  not  display  any  background  of  thought. 

lsSee  §  149,  ante,  and  §  349,  post.      2iperkins  r.  White,  36  Ohio  St. 

16  Gee  v.  Williamson,  1  Port.  313.    530.    For  usury  see  Copp  v.  Mc- 

17  Alexander   v.   Dennis,   9  Port.    Dougall,  9  Mass.  1 

174.  i  Oliver  v.  Munday,  3  N.  J.  Law, 

18Bissell  v.  Bozman,  2  Dev.  Eq.  982;  Manning  v.  Lyon,  70  Hun,  345. 

154.  Contra,  Kiddell  v.  Ford,  3  Brev. 

19Hellings  v.  Hamilton,  4  Watts  178. 

&  S.  462.  2  French  v.  Bank  of  Columbia,  4 

20  Bruce  v.  Lytle,  13  Barb.  163;  Cranch,  141. 

Boyd  v.  Bank  of  Toledo,  32  Ohio  St 

526. 


458  BANKS   AND   BANKING.  [§  264 

The  fact  that  the  maker  was  insolvent  at  the  date  of  the  in- 
dorsement is  no  excuse  for  a  failure  to  demand  payment  of 
the  note.3  The  courts  seem  to  have  considered  that  a  man 
can  pass  from  insolvency  to  solvency  with  facile  celerity. 
Even  if  the  fact  of  insolvency  were  known  to  the  indorser 
and  he  indorsed  the  paper  when  overdue,  he  has  yet  been 
considered  entitled  to  a  demand,4  but  this  proposition  is  de- 
nied.5 If  the  indorser  was  merely  an  accommodation  indorser 
for  the  benefit  of  the  maker,  the  latter's  insolvency  was  no 
excuse  for  a  want  of  a  demand.6  If  the  indorser  of  the  in- 
solvent's paper  is  a  guarantor  he  is  not  entitled  to  notice,7 
but  he  would  not  be  even  though  the  maker  were  not  insolv- 
ent, by  the  better  rule.  The  insolvency  of  the  acceptor  does 
not  excuse  presentment  for  payment  under  this  rule,8  nor 
does  the  insolvency  of  the  drawee,9  even  though  the  drawer 
had  reason  to  think  the  drawee  was  insolvent.10  As  to  a 
check,  the  insolvency  of  the  bank  ought  to  seem  sufficient 
reason  to  any  court  for  not  making  a  demand,11  either  as  to 
the  drawer  or  the  indorser.  The  assignment  of  the  drawer 
of  a  check  must  excuse  demand  upon  the  bank,12  or  if  the 
drawer  tells  the  payee  that  he  has  withdrawn  his  funds  from 
the  bank.13  There  is  no  difference  between  the  two  cases. 

§  264.  Failure  to  provide  funds. —  A  man  who  draws  a 
bill  of  exchange  upon  another  without  any  authority  to  do 

3Phipps  v.  Harding,  70  Fed.  R.  7  Lewis  v.  Brewster,  2  McLean, 
468;  Hightower  v.  Ivy,  2  Port.  308;  21;  contra,  Ehett  v.  Poe,  2  How. 
Farnum  v.  Fowle,  12  Mass.  89;  Bar-  457,  semble;  or  an  assignor,  Hawk- 
ton  v.  Baker,  1  S.  &  Pu  334;  Wilson  inson  v.  Olsen,  48  I1L  277,  under  a 
v.  Senier,  14  Wis.  380;  Groton  v.  statute. 

Dallheim,  6  Ma  476.     Contra,  Rid-       8  Hunt  v.  Wadleigh,  26  Me.  271. 
die  v.  Mott,  2  Cranch,  C.  C.  73.  ^Hawley  v.  Jett,  10  Oreg.  31. 

«Adains  v.  Torbert,  6  Ala  865;       w  Cedar  Falls  Co.  v.  Wallace,  83 

Greeley  v.  Hunt,  21  Me.  455;  Colt  v.  N.  C.  225. 
Bernard,  18  Pick.  260.   Contra,  Mor-      H  See  §  166,  ante. 
ris  v.  Gardner,  1  Cranch,  C.  C.  213;       12  Syracuse  Co.  v.  Collins,  57  N.  Y. 

Stothart  v.  Parker,  1  Overt  260.  641.    The  assignee  becomes  owner 

5  See  last  nota  of  the  deposit 

6  Holland  v.  Turner,  10  Conn.  308;       M  Sutcliffe  v.  McDowell,  2  Nott  & 
Reynolds  v.  Douglas,  12  Pet  49a  McC.  251. 


§  264:.]  EXCHANGES,  SECURITIES,  ETC.  459" 

so,  without  any  reasonable  expectation  that  his  draft  will  be 
honored,  certainly  cannot  have  the  hardihood  to  pretend  that 
his  draft  should  be  presented  to  the  drawee,  either  for  ac- 
ceptance or  for  payment,  unless  he  provides  funds  before 
maturity.1  But  the  indorser  of  the  draft  may  stand  in  a  dif- 
ferent position.  If  he  does  not  know  the  fact  and  is  not 
otherwise  precluded  from  claiming  a  demand,  he  is  still  en- 
titled to  a  demand  upon  the  drawee  as  a  condition  precedent 
to  his  liability.2  But  if  he  knew  the  fact,  some  authority 
holds  that  he  cannot  pretend  to  any  such  right,3  but  the  great 
weight  of  authority,  as  we  have  seen,  seems  to  be  otherwise. 
The  indorser  of  a  note  is  not  in  an  analogous  position.  Where 
the  note  is  made  payable  at  a  bank  or  other  particular  place,, 
he  can  require  a  formal- demand  or  the  depositing  of  the  note 
or  inquiry  on  the  day  at  the  bank,  though  no  funds  have 
been  provided  for  the  payment  of  the  note  at  the  place.* 
But  if  the  drawer  had  a  reasonable  expectation  that  his  draft 
would  be  paid,5  or  if  the  drawee  was  indebted  to  him  upon 
an  account  payable  in  money,6  but  not  upon  an  account  pay- 
able in  something  else  than  money,7  he  is  entitled  to  claim  a 
demand  of  the  drawee  on  the  part  of  the  holder.  This  rule 
has  not  been  carried  so  far  as  to  hold  that  where  the  drawer 
has  promised  his  accommodation  acceptor  to  furnish  funds 
to  pay  the  bill  and  does  not  do  so,  he  is  yet  entitled  to  have 

1  Dickens   v.  B-al,  10  Pet.   572;  16La.276;Gillettv.  Averill,  5  Denio, 
Rhett  v.  Poe,  2  How.  457;  Kinsley  85.    See  Sherer  v.  Easton  Bank,  33 
v.  Robinson,  21  Pick.  827,  and  many  Pa.  134.    It  is  enough  if  an  inquiry 
other  cases.  be  made  there  and  the  fact  of  the 

2  Ramdulollday     v.    Darieux,    4  non-presence  of  funds  ascertained. 
Wash.  C.  C.  61 ;  Slack  v.  Longshaw,  Bank  v.  Lea,  7  Rob.  (La.)  75.    Nor 
8  Ky.  Law  R.  166;  Mohawk  Bank  can  he  require  a  demand  if  he  is- 
v.  Broderick,  10  Wend.  304;  Denny  the  party  benefited.    Reed  v.  Mor- 
v.  Palmer,  27  N.  C.  610.  rison,  2  Watts  &  S.  401. 

3  Farmers'  Bank  v.  Van  Meter,  4  6  Dickens  v.  Beal,  10  Pet  572.  The 
Rand.  553.  Compare  Ramdulollday  rule  was  applied  in  favor  of  an  ao 
v.  Darieux,  4  Wash.  C.  (J.  61.  commodation  drawer  of  a  check. 

4  Allen  v.  Smith,  4  Har.  234;  Nich-  Mackall  v.  Gozler,  2  Cranch,  C.  C^ 
ols  v.  Goldsmith,  7  Wend.  160;  Huf-  240. 

faker  v.  National  Bank  of  Monti-       6  Walker  v.  Rogers,  40  111.  278. 
cello,  13  Bush,  644;  Maurin  v.  Perot,        7  Kimball  v.  Bryan,  56  Iowa,  632. 


460  BANKS   AND   BANKING.  [§  264:. 

the  demand  made  upon  the  acceptor.8  And  this  must  be  the 
law,  for  he  is  not  authorized  to  anticipate  that  he  will  be 
successful  in  a  dishonest  attempt  to  appropriate  the  accept- 
or's property.  Nor  can  the  drawer  require  an  absolute  de- 
mand where  the  drawee  upon  presentation  of  the  bill  cred- 
its upon  it  the  whole  balance  of  the  drawer's  account  at  the 
date  the  bill  or  order  was  drawn.9  Or  where  there  was  an 
account  between  the  drawer  and  drawee  and  the  account 
had  been  settled  in  the  drawee's  favor  without  making  any 
allowance  for  the  draft,  the  drawer  is  not  entitled  to  claim 
a  demand.10  The  reason  for  the  rule  is  that  the  drawer  could 
have  no  reasonable  expectation  that  his  draft  would  be  paid. 
This  reasonable  expectation  depends  upon  circumstances, 
such  as  a  dra wing  against  a  consignment,  even  though  a  bill 
of  lading  failed  through  inadvertence  to  be  sent  or  the  goods 
were  subsequently  lost,  or  where  there  was  a  state  of  fluctu- 
ating accounts  between  drawer  and  drawee,  or  any  other 
reasonable  expectation  founded  on  a  previous  honoring  of 
drafts.11  This  rule  has  not  been  applied  by  the  courts  to 
checks  as  well  as  bills  drawn  against  a  balance  to  the  draw- 
er's credit,  so  as  to  hold  that  if  the  drawer  had  funds  when 
he  drew  the  check  any  subsequent  shifting  of  the  balance 
will  dispense  with  the  necessity  of  a  demand  as  to  him  and 
notice  of  non-payment.12  The  true  rule  is  as  to  checks  that 
there  is  no  particular  time  required  for  a  demand  upon  a 
check,  and  the  drawer  is  prejudiced,  if  the  bank  fails,  only 
if  he  then  had  funds  to  his  credit  sufficient  to  pay  the  check." 

8  Harrison  v.  Trader,  29  Ark.  85.    funds  at  the  date  of  the  check,  the 

9  Blankenship  v.  Rogers,  10  Ind.    evidence  that  the  bank  would  have 
333.  paid    is    inadmissible    (Culver   v. 

10 Stewart  v.  Millard,  7  Lans.  373.  Marks,  supra);  but  if  an  overdraft 

11  Dickens  v.  Beal,  10  Pet.  572.  had  been  arranged  for  under  such 

12  Richie  v.  McCoy,  13  Smedes  &  circumstances  that  the  bank  was 
M.  541,  as  to  a  bill.    For  the  con-  compelled  to  pay  the  check,  he  is 
trary  rule  as  to  checks,  see  Fletcher  entitled.    See  §  160,  ante.    The  in- 
v.  Pierson,  69  Ind.  281 ;  Culver  v.  dorser,  however,  should  be  notified 
Marks,  122  Ind.  554;  Armstrong  v.  of  the  dishonor. 

Brolaski,  46  Fed.  R  903;   Case  v.       13  See  §  237,  ante,  and  next  note. 
Morris,  31!  Pa.  100.    If  he  had  no 


§  20  Jr.]  EXCHANGES,  SECURITIES,  ETC.  4G1 

And  if  he  has  no  credit  when  the  drawer  made  up  his  mind 
to  present,  he  is  not  entitled  to  any  demand,  for  he  has  drawn 
out  all  the  funds.14  The  correct  rule  as  to  bills  of  exchange 

O 

is  that  the  drawer  of  a  bill,  who  has  himself  taken  his  funds 
out  of  the  drawee's  hands  prior  to  the  date  of  proper  pre- 
sentment, cannot  claim  that  a  demand  should  have  been 
made;15  but  an  exception  is  hinted  at  to  the  effect  that  if 
the  accounts  were  so  fluctuating  that  it  might  reasonably 
have  been  presumed  that  the  draft  would  have  been  paid, 
then  a  demand  should  have  been  made.  But  no  demand  is 
necessary  as  to  the  drawer  if  he  has  assigned  the  funds 16  or 
has  told  the  holder  that  he  has  withdrawn  his  funds  from 
the  drawee.17  But  if  the  drawer,  although  having  no  funds 
in  the  hands  of  the  drawee  when  he  draws,  provides  funds 
to  meet  the  draft  before  the  date  when  it  should  have  been 
accepted,  or,  if  accepted,  provides  them  before  the  date  of 
maturity  of  the  draft,  or,  if  the  draft  be  not  required  to  be 
accepted  and  not  in  fact  accepted,  provides  funds  prior  to 
maturity,  he  is  entitled  to  have  demand  of  payment  made ; 18 
he  is  not,  however,  so  entitled  if  he  fails  to  provide  funds  up 
to  the  maturity  of  the  bill.19  If  the  maker  and  indorser  upon 
a  note  enjoin  the  collection  of  it  before  maturity,  it  is  need- 
less to  say  that  no  demand  is  necessary  in  order  to  charge 
the  indorser.20  But  unless  the  indorser  upon  a  bill  or  check 
is  in  some  way  a  party  to  the  failure  to  provide  funds,  or  is 

14  See  §  237,  ante.    But  as  to  the    manding  draft,  Need  erer  v.  Barber, 
indorser  the  strict  rule  as  to  de-    Fed.  Cas.  10,079;  Manning  v.  Ma- 
mand  is  eminently  proper,  for  he    roney,  87  Ala.  563. 

indorses  on  the  present  status  of  16  Syracuse  Co.  v.  Collins,  57  N.  Y. 
the  drawer's  account.  641.  Notice  should,  however,  be 

15  See  note  12,  supra,  and  the  cases    given  to  the  indorser. 

cited  in  the  next  two  notes,  and  17  Sutcliffe  v.  McDowell,  2  Nott  & 

Dallfus  v.  Frosch,   1    Denio,  367;  McC.  251.    Notice  should  be  given 

llopkirk    v.    Page,  Fed.  Cas.  6697  to  the  indorser. 

(notification  that  drafts  would  not  18  This  is  admitted  to  be  the  rule 

be  accepted);    countermanding  by  all  the  authorities.    See  cases 

order,  see  Child  v.  Moore,  6  N.  H.  cited  in  this  section  passim. 

33;  stopping  check,  Jacks  v.  Dar-  19  Kinsley  v.  Robinson,  21  Pick. 

rin,  3  E.  D.  Smith,  557;  Purchase  327;  Foard  v.  Womack,  2  Ala.  368. 

v.  Mattison,  6  Duer,  587;  counter-  20  Williams  v.  Bartlett,  4  Lea,  620. 


4G2  BANKS  AND   BANKING.  [§  265. 

the  real  party  benefited  by  the  bill  or  check,  he  is  entitled 
to  claim  a  demand. 

§  265.  Change  of  residence. —  If  the  maker  of  a  note  or 
the  drawee  or  acceptor  of  a  bill  changes  his  residence  after 
the  note  is  made  or  the  bill  is  drawn  or  accepted,  what  must 
be  done  by  the  holder  depends  upon  the  place  to  which  he  has 
removed.  If  the  removal  is  to  a  place  within  the  same  state, 
we  have  already  considered  the  question  of  what  is  due  dili- 
gence in  the  holder  by  way  of  inquiry  for  the  new  residence 
and  a  demand  there,1  as  to  paper  not  made  payable  at  a 
particular  place;  upon  paper  so  payable,  the  change  of  resi- 
dence, whether  in  the  state  or  out  of  it,  is  perfectly  imma- 
terial. The  demand  is  still  to  be  made  at  the  place  desig- 
nated in  accordance  with  the  rules  heretofore  given.2  If 
that  particular  place  of  business  has  been  removed,  no  de- 
mand is  necessary,3  or  at  any  rate  is  necessary  only  under 
peculiar  circumstances.4  But  as  to  a  note  not  made  so  pay- 
able, a  removal  out  of  the  state  by  the  maker  dispenses  with 
the  necessity  of  a  demand  upon  the  maker.5  The  holder  is 
not  compelled  to  follow  the  maker  out  of  the  state ;  but  if 
the  absence  is  temporary,  service  of  demand  is  necessary  at 
his  residence  or  place  of  business,  or  due  diligence  should 
be  shown  in  an  attempt  to  find  the  residence6  or  place  of 
business.  The  same  will  be  the  rule  as  to  one  of  the  joint 
makers  of  a  note.7  But  the  maker  may  have  left  an  agent 

1  See  §  259,  ante.  7  McClelland  v.  Bishop,  42  Ohio 

2  Shaw  v.  Reed,  12  Pick.  132;  Far-  St.   113.    See   Smith  v.   Little,  10 
well  v.  St.  Paul  Trust  Co.,  45  Minn.  N.  H.  526,  a  case  of  non-residence 
495.  at  the  time  of  making  of  the  note 

3  Smith  v.  Poillon,  87  N.  Y.  590;  and  not   of  removal  from   state, 
and  see  g  258,  ante.  The  decision  is  wrong,  for  the  rule 

4  See  §  258,  ante.  differs  where,  at  the  time  the  note 

5  See  g  259,  ante,  note  21.  was  made,  the  maker  lived  out  of 

6  Taylor  v.  Snyder,  3  Denio,  145;  the  state.    In  the  latter  case  de- 
McClelland  v.  Bishop,  42  Ohio  St  mand  upon  him  is  necessary.   Spies 
113.    If  a  sailor  is  on  the  sea  de-  v.  Gilmore,  1  N.  Y.  321;  Bradley  r. 
mand  upon  him  is  excused.    Moore  Patton,  51  Ala.  108.     Contra,  Rick- 
v.  Coffield,  12  N.  C.  247.    See  also  etts  v.  Pendleton,  14  Md.  320;  and 
McKee  v.  Bos  well,  33  Mo.  567.  see  note  9,  infra. 


§  266.]  EXCHANGES,  SECURITIES,  ETC.  463 

in  the  state,  and  inquiry  should  be  made  for  one  at  least  at 
the  place  of  former  residence.8  But  if  the  maker  was  a  non- 
.  resident  at  the  time  the  note  was  made,  the  fact  that  it  is 
dated  in  the  state  does  not  excuse  a  demand  upon  the  maker.9 
The  maker,  upon  his  removal,  may  leave  a  deposit  in  the 
state  to  pay  the  note,  but  he  should  so  inform  the  holder;  for 
if  the  holder  has  no  knowledge  of  the  fact,  a  demand  will 
not  be  necessary,10  presupposing,  however,  due  inquiry  for  an 
agent  on  the  part  of  the  holder.  If  the  acceptor  of  a  bill 
changes  his  residence,  the  same  rule  ought  to  govern  a  de- 
mand upon  him  as  upon  the  maker  of  a  promissory  note.11 
And  as  to  the  drawee  of  a  bill,  it  is  conceived  that  the  same 
rules  ought  to  be  applied  to  his  change  of  residence.12 

§  266.  Absconding  of  maker  or  drawee. —  "Where  the 
maker  of  the  note  absconds  before  the  maturity  of  the  note,1 
or  where  the  drawee  of  a  bill  absconds,2  or  where  the  acceptor 
absconds,3  no  demand  is  necessary  upon  him  unless  the  paper 
is  payable  at  a  particular  place.  The  word  "  absconding  " 
means  that  the  person  so  conceals  his  whereabouts  that  he 
cannot  be  found.4  If  he  has  actually  absconded,  inquiry  for 
him  would  seem  to  be  supererogatory;  yet  one  case  wrongly 
holds  that  inquiry  should  be  made  even  though  the  indorser 

knew  the  fact 5  that  he  had  absconded. 

i 

8  Williams   v.   Bank   of  United    Cord,    503;    Ratcliff    v.    Planters' 
States,  2  Pet.  96,  as  to  service  of    Bank,  2  Sneed,  425;  McClelland  v. 
notice.  Bishop,  42  Ohio  St.  113. 

9  Taylor  v.  Snyder,  3  Denio,  145;        2Madderson  v.  Heath  Mfg.  Co.,  35 
Spies  v.  Gilmore,  1  N.  Y.  321;  Brad-    111.  App.  588. 

ley  v.  Patton,  51  Ala.  108.    Contra,  3  The  same  rule  as  to  the  maker 

Ricketts  v.  Pendleton,  14  Md.  320.  of  a  note. 

10  Walton   v.   Henderson,  Smith,  <See  the  cases  in  note  1.    This 
168.  rule  as  to  absconding  has  no  appli- 

11  See  the  preceding  notes  to  this  cation  to  paper  payable  at  a  par- 
section,  ticular  place.    Shaw   v.  Reed,  13 

12  See  the  preceding  notes  to  this  Pick.  132;  Farwell  v.  St.  Paul  Trust 
section.  Co.,  45  Minn.  495. 

1  Taylor  v.  Snyder,  3  Denio,  145;  &  Pierce  v.  Cate,  12  Gush.  190. 
Duncan  v.  McCullough,  4  S.  &  R.  Contra,  Lehman  v.  Jones,  1  Watts 
480;  Gillespie  v.  Hannehan,  4  Me-  &  S.  126. 


461  BANKS   AND   BANKING.  [§§  267,  268. 

§  267.  Pestilence  and  disease. —  The  prevalence  of  a 
malignant  disease  or  of  a  pestilence  that  suspends  the  func- 
tions of  commerce  ought  to  be  an  excuse  for  a  failure  to 
make  a  demand  upon  the  person  to  be  charged,  if  the  pesti- 
lence prevails  either  at  the  place  where  the  person  re- 
sides or  at  the  place  where  the  holder  resides.  A  decent 
regard  for  the  public  health  would  preclude  the  holder 
either  going  himself  or  sending  an  agent  from  the  infected 
locality  into  a  place  where  the  pestilence  did  not  prevail, 
even  if  public  precaution  should  permit  it;  perhaps  the  per- 
son to  be  charged  would  refuse  all  personal  communication 
with  him ;  and  if  the  pestilence  prevailed  in  the  place  where 
the  person  to  be  charged  lived,  it  is  asking  too  much  of  any 
one  to  make  a  demand  at  the  peril  of  his  life,  even  if  he 
could  expect  to  find  the  porson  there.  If  the  parties  live  in 
the  same  place  where  the  disease  is  prevalent,  all  business 
will  be  suspended  by  people  of  even  rudimentary  intelli- 
gence.1 But  the  demand  will  be  excused  no  longer  than  the 
pestilence  prevails,  which  is  a  limitation  that  is  reasonable, 
because  demand  should  not  be  excused  altogether.2  It  is 
reasonable  to  suppose  that  the  person  who  ought  to  pay 
would  do  so  as  soon  as  business  was  resumed. 

§  268.  War  and  interdiction  of  intercourse.— The  ex- 
istence of  a  state  of  war  between  the  country  of  the  maker 
of  a  note  or  the  drawee  of  a  bill  and  that  of  the  holder, 
or  the  interdiction  of  commercial  intercourse  between  the 
places  where  the  holder  and  where  the  person  upon  whom 
demand  is  to  be  made  resides,  excuses  a  delay  in  the  demand, 
but  not  a  total  failure  to  make  a  demand.1  The  demand  must 
be  made  as  soon  as  it  is  reasonably  and  conveniently  pos- 
sible after  the  commercial  relations  have  been  resumed.2 

1  See  Tunno  v.  Lague,  2  Johns.  Union  Bank  v.  Robertson,  19  La. 
Gas.  1;   Hanauer  v.   Anderson,  16  Ann.  72;  Korris  v.  Despard,  38  Md. 
Lea,  340;   Roosevelt  v.  Woodhull,  487;  Dunbar  v.  Tyler,  44  Miss.  1; 
Anth.  N.  P.  50.  Hardin  v.  Boyce,  59  Barb.  425.    See 

2  See  note  7  to  the  next  section  Ford  v.  McClung,  5  W.  Va.  156. 
for  the  rule  as  to  a  state  of  war.  2  Lane  v.  Bank  of  West  Tennessee, 

1  Jex  v.  Tureaud,  19  La.  Ann.  64;    9  Heisk.  419,  and  cases  in  last  note 


§  269.]  EXCHANGES,  SECURITIES,  ETC.  405 

The  extent  of  the  interruption  to  excuse  delay  in  a  demand 
is  either  a  matter  of  proof  or  a  fact  of  which  the  court  takes 
judicial  knowledge.3  The  cases  are  not  clear  upon  this 
point,  but,  on  principle,  the  question  ought  to  be  one  solely 
for  the  court.4  But  the  existence  of  a  state  of  war  will  not 
excuse  a  demand,  if  a  demand  would  have  been  legal  and 
could  have  been  made  by  the  use  of  reasonable  diligence.5 
One  case  went  so  far  as  to  hold  that  the  interruption  of  the 
mail  was  not  sufficient  to  excuse  a  transmission  of  notice 
where  other  means  that  were  practicable  were  not  used,6 
and  a  number  of  other  cases  as  to  transmission  of  notice  in 
time  of  war  will  be  found  under  the  head  of  notice  to  a 
drawer  or  indorser.7  But  the  reason  of  those  cases  cannot 
apply  to  a  demand  where  the  demand  must  be  made  within 
hostile  lines.  It  would  ba  illegal  for  the  holder  to  venture 
into  the  hostile  country,  and  it  would  be  equally  illegal  to 
require  him  for  the  purposes  of  demand  to  send  his  property 
into  a  belligerent's  territory  to  some  agent  therein,  or  by 
some  agent  who  penetrates  into  the  hostile  territory.  The 
making  of  any  contract  between  alien  enemies  is  inhibited 
by  the  accepted  rules  of  law.  Therefore  a  demand  must,  in 
such  cases,  be  excused  until  the  obstacles  to  making  a  demand 
have  ceased  to  exist.8  But  if  the  parties  live  in  the  same 
section  and  there  be  no  hostile  occupation  therein,  the  delay 
in  demand  is  not  excusable,9  unless  the  war  has  demoralized 
and  obstructed  the  ordinary  regulations  of  trade.10 

ARTICLE  IY. —  NOTICE  OF  NON-PAYMENT. 

"  §  269.  Notice  of  dishonor  in  general. —  Where  a  demand 
has  been  made  upon  a  promissory  note  or  due  diligence  has 

3  Proof  may  be   offered,  but  it        7See  §  291,  post. 

should  be  for  the  court.  8  Berry  v.  Southern  Bank,  2  Duv. 

4  The  existence  of  a  state  of  war    379;   Gayarre  v.  Sabatier,  24  La. 
is  necessarily  a  question  of  law.          Ann.  358. 

8  See  the  cases  in  note  1,  and  the  9  Lane  v.  Bank  of  West  Tennessee, 

first  case  cited  in  the  next  note.  9  Heisk.  419.    But  compare  Petera 

6  United  States  v.  Barker,  Fed.  v.  Hobbs,  25  Ark.  67. 

Gas.  No.  14,519.    See  Citizens'  Bank  10See  last  case  in  last  note, 
v.  Pugh,  19  La.  Ann.  43. 
30 


466  BANKS   AND   BANKING.  [§  269. 

been  used  in  trying  to  make  a  demand,  and  the  note  has  not 
been  paid,  or  where  a  bill  of  exchange  or  a  check  has  been 
presented  for  acceptance  and  an  acceptance  has  been  refused, 
or  where  a  bill  has  been  presented  for  payment  or  due  dili- 
gence shown  in  the  attempt  to  present,  and  the  bill  has  not 
been  paid,  the  indorser  of  the  note  and  the  drawer  and  in- 
dorser  of  the  bill  or  the  indorser  of  a  check  are  entitled  to 
notice  of  the  dishonor,  and  a  failure  to  use  due  diligence  in 
order  to  give  such  notice  discharges  the  drawer  and  indorser 
of  a  bill  or  the  indorser  of  a  check  or  note  except  in  those 
cases  which  will  be  hereinafter  noticed.  The  anomalous  case 
of  an  indorser  of  a  certificate  of  deposit  has  been  already 
noticed.1  This  discharge  that  results  from  a  failure  in  due 
diligence  in  giving  notice  of  dishonor  is  as  absolute  as  the 
discharge  that  results  from  a  failure  in  due  diligence  in  mak- 
ing a  demand.  As  it  has  been  pointed  out,  certain  bills  of 
exchange  require  no  demand  of  payment  as  against  the 
drawer,  because  they  are  the  drawer's  promissory  notes.2  But 
the  indorser  upon  such  bills  is  in  the  attitude  of  an  indorser 
upon  a  promissory  note  as  to  notice.3  Again,  certain  kinds 
of  indorsers  stand  in  the  position  either  of  drawers  of  bills  or 
makers  of  notes.4  Their  right  to  notice  of  dishonor  is  to  be 
determined  as  to  bills  by  the  fact  as  to  whether  they  have 
the  right  to  claim  a  demand.5  As  to  such  indorsers  of  notes 
they  are  as  makers  not  entitled  to  notice  of  dishonor.6  Cer- 
tain other  indorsers  are  treated  as  guarantors.7  Not  being 
entitled  to  claim  a  demand,  such  indorsers  are  not  entitled 
to  notice  of  dishonor.8  Therefore  the  rule  may  be  said  to 
be  that  Avhoever  is  entitled  to  claim  that  a  demand  of  pay- 
ment should  be  made  or  due  diligence  shown  therefor,  on 
penalty  of  his  discharge,  is  entitled  to  claim  that  notice  of 
dishonor  should  be  given  to  him  or  due  diligence  shown 
therefor,  on  penalty  also  of  his  discharge ; 9  and  the  converse 

1  See  §  243,  ante.  6  See  §§  236,  240,  ante. 

2  See  §  208,  ante.  «  See  §  240,  ante. 
8  He  is  the  indorser  of  an  accepted       7  See  §  241,  ante. 

bill  or  a  promissory  note.  8See  §  241,  ante, 

4  See  §§236,  240,  ante.  9Thus    if   the    maker   has    ab- 


§  270.]  EXCHANGES,  SECURITIES,  ETC.  467 

of  the  rule  is  also  true,  except  that  if  a  demand  is  actually 
made  and  payment  refused  notice  must  be  given.  The  drawer 
of  a  check  can  only  object  for  want  of  notice  where  the 
failure  to  notify  him  of  the  dishonor  causes  him  actual  in- 
jury, and  then  to  the  extent  of  his  injury.  Subject  to  the 
foregoing  qualifications,  we  proceed  to  discuss  the  rules  of 
law  as  to  notice  of  dishonor. 

§  270.  Form  and  recitals  of  the  notice. —  The  notice  may 
be  either  oral  or  written.1  This  is  true  even  as  to  the  notice 
of  dishonor  upon  a  foreign  bill ; 2  and  a  copy  of  the  certificate 
of  protest,  either  upon  non-acceptance  or  non-payment,  need 
not  accompany  the  oral  or  written  notice  of  such  dishonor.3 
The  notice  is  sufficient  if  it  informs  the  party,  either  expressly 
or  irapliedly,  that  the  paper  has  been  dishonored  and  that 
he  will  be  looked  to  for  payment.4  Thus  a  verbal  notice  is 
good,  though  the  note  or  bill  is  not  described  or  produced,  if 
the  indorser  knows  what  paper  was  meant.5  And  so  of  writ- 
ten notices;  any  notice  is  sufficient  if  it  informs  the  party, 
either  expressly  or  impliedly,  that  the  paper  has  been  pre- 
sented for  payment  and  payment  refused.6  The  conclusion 

sconded,  notice    should  be  given  oral  notice  ought  to  be  personal 

(Hilborn  v.  Artus,  4  I1L  344,  under  notice. 

a  statute).    Michaud  v.  Legarde,  4  2  Linville  v.  Welch,  29  Mo.  203. 

Minn.  43;  Williams  v.  Matthews,  3  3  Wallace  v.  Agry,  4  Mason,  336; 

Cow.  252.    If  he  has  changed  his  Cowperthwaite  v.  Sheffield,  1  Sandf. 

residence  out  of  the  state  or  so  that  146;   Atwater  v.  Streets,  1  Doug, 

he  cannot  be  found,  notice  should  455;  Linville  v.  Welch,  29  Mo.  203. 

be  given.    Wolfe  v.  Jewett,  10  La.  4  Bank  v.  Norwood,  1  Har.  &  J. 

384    Or  if  he  be  insolvent  or  had  423;  Snow  v.  Perkins,  2  Mich.  238; 

no  funds  notice  should  be  given.  Burkham  v.  Trowbridge,  9  Mich. 

French  v.   Bank    of    Columbia,  4  209;  Stoughton  v.  Swan,  4  Cal.  213; 

Cranch,  141;  Rhett  v.  Poe,  2  How.  Legg  v.  Vinal,  165  Mass.  555;  Solo- 

457;  Mohawk  Bank  v.  Broderick,  10  mon  v.  Pfeister  Leather  Co.  (N.  J.), 

Wend.  304.  31  AtL  R.  602.  But  a  statement  that 

1  Cuyler  v.  Stevens,  4  Wend.  566;  the  paper  is  unpaid  does  not  show 

First  Nat.  Bank  v.  Hatch,  78  Mo.  13;  a  demand.     Townsend  v.  Lorain 

Teconic  Bank  v.  Stackpole,  41  Me.  Bank,  2  Ohio  St.  345. 

321;  Pierce  v.  Schaden,  55  CaL406;  8  Thompson  v.  Williams,  14  Cal. 

Martin  v.  Brown,  75  Ala.  442;  Hig-  160. 

gins  v.  Morrison,  4  Dana,  100.    But  6Platt  v.  Drake,   1    Doug.   296; 


468  BANKS   AND   BANKING.  [§  270. 

need  not  be  added  that  the  holder  looks  to  him  for  payment, 
for  that  is  the  irresistible  and  necessary  conclusion  from  the 
act  of  giving  notice.7  Thus  notice  to  the  indorser  of  the 
commencement  of  an  action  upon  an  overdue  note  is  notice 
of  non-payment,8  or  service  of  process  on  the  maker  notified 
to  the  indorser  is  sufficient  in  form,9  or  the  presentation  of 
the  dishonored  draft  for  payment,10  or  the  presenting  of  an 
account  charging  the  person  to  whom  notice  is  to  be  given, 
with  the  amount  of  the  paper,  protest  fees  and  interest.11 
The  notice  may  be  printed  or  written ; l-  the  signature  of 
the  notary  may  be  written  or  printed.13  The  notice  itself 
need  not  be  addressed  if  the  envelope  in  which  it  is  con- 
tained is  addressed.14 

The  person  to  whom  notice  is  being  given  should  be  ad- 
dressed by  his  true  name;  but  mere  inaccuracies  in  the  name 
do  not  vitiate  the  notice,  where  the  person  to  whom  the 
notice  is  sent  is  not  thereby  misled.15  A  mistake  in  the 
name  which  is  caused  by  the  illegibility  of  the  person's  sig- 
nature on  the  dishonored  paper  will  not  affect  the  notice.16 

Newberry  v.  Trowbridge,  4  Mich,  must  be  given.    Keater  v.  Hock,  11 

391;  Fisk  v.  Morse,  16  N.  H.  271;  Iowa,  536. 

Armstrong  v.  Thruston,  11  Md.  148;  9  Chad  wick    v.  Jeffers,   1    Rich, 

Littlehale  v.  Mayberry,  43  Me.  264.  Law,  397. 

A  statement  that  the  note  is  due  10  Bull  v.  Hoge,  2  Hilt.  81.    See 

and  unpaid  is  not  sufficient.    Pink-  Hirschfelder  v.  Manufacturing  Co., 

ham  v.  Macj',  9  Met.  174;  Arnold  v.  17  N.  Y.  Supp.  726. 

Kinloch,  50  Barb.  44    Contra,  Wolf  "  De  Wolf  v.  Murray,  2  Sandf. 

v.  Lauman,  34  Mo.  575.    See  as  to  166. 

paper  payable  at  a  particular  place,  12  Bank  v.  Woods,  28  N.  Y.  561. 

the  opposite  rule,  Clark  v.  Eldridge,  w  Fulton  v.   McCracken,  18  Md. 

13  Met  96;  Hunter  v.  Van  Bom-  528,  signature  put  on  by  his  clerk; 

horst,  1  Md.  504.  Sussex  Bank  v.  Baldwin,  17  N.  J. 

7  Graham  v.  Sangston,  1  Md.  59;  Law,  487;  Bank  v.  Woods,  28  N.  Y. 

Shrieve  v.  Duckham,  1  Litt.  194;  561;  Spalding  v.  Krutz,  1  Dili  414. 

Townsend  v.  Lorain  Bank,  2  Ohio  14  Denegre  v.  Hiriart,  6  La.  Ann. 

St.  345;  Warren  v.  Oilman,  17  Me.  100;  Glicksman  v.  Earley,  78  Wis. 

360;  Cowles  v.  Harts,  3  Conn.  517.  223. 

*Chadwick   v.   Jeffers,  1    Rich.  i»  Carter  v.  Bradley,  19  Me.  62. 

Law,  397;  Gray  v.  Bell,  3  Rich.  w  Manufacturers'  Bank   v.  Haz- 

Law,  71;  Benton  v.  Gibson,  1  Hill  ard,  30  N.  Y.  226. 
(S.  C.),  56.    But  notice  of  the  suit 


§  270.]  EXCHANGES,  SECURITIES,  ETC.  469 

The  notice  should  be  signed,  a  mere  unsigned  notice  being 
worthless ; n  but  the  notary's  signature  to  a  notice  which  is 
unsealed  is  good.18  The  notice  need  not  be  dated,19  or  the 
date  may  be  indicated  by  any  of  the  usual  abbreviations.20 
The  notice,  however,  will  not  be  destroyed  as  a  notice,  even 
if  it  be  post-dated  or  ante-dated.21 

In  regard  to  its  contents  and  recitals,  it  need  not  state 
who  is  the  owner  and  holder  of  the  note,  nor  upon  whose 
behalf  the  notice  is  given,22  and  ne'ed  not  state  where  the 
paper  may  be  found.23  The  particular  paper  should  be  de- 
scribed in  such  a  way  as  to  indicate  what  paper  it  refers  to, 
but  a  mistake  as  to  the  date  does  not  invalidate  the  notice,24 
except  where  the  error  would  mislead  by  showing  protest 
before  maturity.25  Mistakes  in  the  description  of  the  note, 
such  as  an  error  as  to  the  name  of  a  subsequent  indorser  to 
the  one  to  whom  notice  is  being  given,26  a  mistake  as  to  the 
name  of  the  drawer  or  day  of  maturity,27  a  mistake  as  to  the 
amount  of  the  note 28  or  its  date,29  or  a  mistake  as  to  an  in- 
dorser's  name,30  do  not  destroy  the  efficacy  of  the  notice. 
Omissions  of  date  of  the  note,31  or  name  of  the  maker,32  or 

17 People's  Nat.  Bank  v.  Dibrell,  91  date  of  maturity  was  given);  and 

Tenn.  301;  Walmsley  v.  Acton,  44  see  next  two  cases  cited. 

Barb.  312;  Walker  v.  State  Bank,  25  Mills  v.  Bank  of  U.  S.,  11  Wheat. 

8  Mo.  704.  431;  Bank  of  U.  S.  v.  Watterson,  4 

18  Crawford  v.   Branch   Bank,    7  Cranch,  C.  C.  445;  De  La  Hunt  v. 
Ala.    205;   Huffaker   v.    National  Higgins,  9  Abb.  Pr.  422;,  Ross  v. 
Bank,  12  Bush,  287.  Planters'  Bank,  5  Humph.  335. 

19  Artisans'  Bank  v.  Backus,  36  26  Meyers  v.  Bank  of  Tenn.,3  Head, 
N.  Y.  100.  330. 

20  Brown  v.  Jones,  125  Ind.  375  « Smith  v.  Whiting,  12  Mass.  6. 
(indicating  month  by  number).  28Snow  v.  Perkins,  2  Mich.  238; 

21  Lennig  v.  Tobley,  4  Clark,  275;  Rowan  v.  Odenheimer,  5  Smedes  & 
8.  c,  14  Pa.  483;  Journey  v.  Price,  M.  44. 

2  Houst.  176.  29  See  note  24. 

2-  Coff  man  v.  Bank  of  Ky.,  41  Miss.  30  Moorman  v.  Bank  of  Alabama, 

212;  Mills  v.  United  States  Bank,  3  Port.  353  (it  was  a  subsequent  in- 

11  Wheat.   431;  Brown  v.  Jones,  dorser);  Gill  v.  Palmer,  29  Conn.  54 

125    Ind.   375;   Shedd  v.  Brett,  1  (indorser  described  as  drawer). 

Pick.  401.  si  Cayuga  Co.  Bank  v.  Warden,  1 

23  Howe  v.  Bradley,  19  Me.  31.  Comst.  4ia 

24  Tobey  v.  Lennig,  14  Pa.  483  (the  32Howland  v.  Adrian,  80  N.  J.  Law, 


4:70  BANKS    AND   BANKING.  [§  270. 

date  of  maturity,33  or  of  the  name  of  an  indorser,34  or  of  the 
number  of  the  note,35  or  an  omission  or  mistake  in  any  other 
particular,  does  not  vitiate  the  notice,  unless  by  reason  of 
the  fact  that  there  were  more  than  one  note  to  answer  the 
description,36  or  by  reason  of  the  fact  that  the  person  receiv- 
ing the  notice  has  been  misled  to  his  injury.37 

The  notice  should  contain  some  statement  either  directly 
made  or  inferable  by  necessary  result  that  the  paper  has 
been  presented  for  payment  and  payment  has  been  refused.38 
But  equivocal  statements,39  or  a  statement  to  the  indorser 
that  the  note  is  due  and  unpaid,40  if  not  payable  at  a  partic- 
ular place,  or  a  verbal  notice  given  the  next  day  after  ma- 
turity stating  that  payment  had  been  demanded  on  the  last 
day  of  grace  and  if  note  was  not  paid  on  the  day  of  the 
verbal  statement  notice  would  be  given,41  cannot  be  con- 
sidered as  statements  of  a  demand  and  non-payment.  But 
a  statement  that  the  paper  was  "  duly  protested  "  or  "  pro- 
tested" for  non-payment  is  a  complete  recital  of  present- 
ment for  payment,  refusal  of  payment,  and  notice  of  dishonor 
to  the  indorser,  for  the  meaning  of  the  word  "  protested  " 
includes  both  the  formal  act  of  the  notary  and  the  informal 
act  of  a  third  party.42  There  were  once  decisions  of  author- 

41.  But  see  Home  Ins.  Co.  v.  Green,  fied  was  not  misled.  Bank  of  Alex- 

19  N.  Y.  518.  andria  v.  Swann,  9  Pet  33;  Cooper 

33  Gates  v.  Beecher,  60  N.  Y.  518;  v.  Gibbs,  4  McLean,  396;  Reedy  v. 

Saltmarsh  v.  Tuthill,  13  Ala.  390.  Seixas,  2  Johns.  Gas.  337;  Beals  v. 

84  Moorman  v.  Bank  of  Alabama,  Peck,  12  Barb.  245. 

8  Port,  353;  King  v.  Hurley,  85  Me.  38See  note  6,  supra. 

525.  39  Klockenbaum  v.  Pearson,  16  Cal. 

35  Hodges  v.  Shuler,  22  N.  Y.  114  875;  Townsend  v.  Lorain  Bank,  2 

36  Cook  v.  Litchfleld,  9  N.  Y.  279.  Ohio  St.  345. 

See  Bank  of  Cooperstown  v.  Woods,  4<>Pinkham.  v.  Macy,  9  Met.  174. 

28  N.  Y.  561,  and  Davenport  v.  Gil-  But  see  Clark  v.  Eldridge,  13  Met. 

bert,  4  Bosw.  532.  96. 

"  Manchester  Bank  v.  White,  30  «  Bank  of  U.  S.  v.  Barry,  2  Cranch, 

N.  H.  456.    Any  notice  is  sufficient  C.  C.  307;  Union  Bank  v.  Fonte- 

if  the  instrument  dishonored  was  neaux,  12  Rob.  (La.)  120. 

intended  to  be  described  and  such  42  Wheaton  v.  Wilmarth,  13  Met. 

details  are  given  as  will  put  upon  422;  Cook  v.  Litchfield,  5  Sand.  330, 

inquiry,  and  the  person  to  be  noti-  9  N.  Y.  279;  Burgess  v.  Vreeland,  24 


§  2 TO.]  EXCHANGES,  SECURITIES,  ETC.  471 

ity  contra,  but  they  are  overruled.43  The  mode  of  demand 44 
or  the  time  of  demand  need  not  be  stated,45  but  if  the  time  is 
stated  it  must  be  correctly  stated,  for  notice  of  the  naked 
fact  of  non-payment,  if  accompanied  by  a  demand  on  the  in- 
dorser,  is  sufficient.46  If  the  paper  is  payable  at  a  particular 
place,  notice  that  it  is  due  and  unpaid  is  sufficient.47  But 
notice  of  demand  and  non-payment  is  something  that  can 
be  given  so  easily  in  proper  form,  or,  if  not  given,  the  ex- 
cuse can  be  given  in  so  few  words,  that  no  one  ought  to 
have  difficulty  in  following  a  form;  approved  ones  may  be 
found  in  the  note.48  The  difficulty  is  that  a  holder  never 
thinks  of  consulting  a  lawyer  until,  by  his  ignorance,  he  has 
plunged  himself  into  a  difficult  position. 

Notice  should  be  given  upon  the  first  dishonor.49  A  holder 
cannot  redeem  himself  for  his  failure  by  making  a  second 
demand  and  giving  notice  of  that,50  although  if  what  took 
place  was  not  in  legal  contemplation  a  demand,  he  may 
make  a  good  demand.  If  acceptance  is  refused,  notice  of 

N.  J.  Law,  71;  Glicksman  v.  Earley,  paper  is  dishonored  by  the  refusal 

78  Wis.  223;  Selden  v.  Washington,  of    payment,    the    clearing-house 

17  Md.  379.  paper  is  not  to  be  protested,  but 

43  See  Burkham  v.  Trowbridge,  9  the  original  check  should  be  ob- 
Mich.  209;  Cromer  v.  Platt,  37  Mich,  tained  from  the  bank  refusing  the 
132.  clearing-house  paper,  and  demand 

44  Sanger  v.  Stimpson,  8  Mass.  260.  should  be  made  on  that  original 

45  See  Tevis  v.  Wood,  5  Cal.  393;  paper,  and  the  check  protested  for 
Reynolds  v.  Appleman,  41  Md.  615.  non-payment.  Notice  is  to  be  given 
But  see  Stephenson  v.  Dickson,  24  upon  this  demand,  not  upon  any 
Pa.  148.  provisional    presentation    through 

46  Mills  v.  United  States  Bank,  11  the  clearing-house.  Merchants' Nat 
Wheat.  431.  Bank  v.  Procter,  1  Cin.  R  1. 

47  See  note  40  and  note  6,  supra,  «  Reynolds  v.  Appleman,  41  Md. 
and  Sasscer  v.  Farmers'  Bank,  4  615;  Stephenson  v.  Dickson,  24  Pa. 
Md.  409.    But  where  a    clearing-  148. 

house  is  in  operation,  the  exchange  49  See  casss  in  the  following  notes, 

of  checks  at  the  clearing-house  is  50Rice   v.  Wesson,   11  Met.  400; 

not  a  demand;  and  if  the   bank  Stanley  v.  Farmers'  Bank,  17  Kan. 

presenting  the  check  receives  the  592.    But  this  rule  ought  not  to 

clearing-house     paper    upon    the  preclude  a  good  demand  on  the 

drawee  bank  for  the  check,  which  same  day. 


472  BANKS   AND   BANKING.  [§§  271,  272. 

dishonor  must  be  given,81  whether  presentation  for  accept- 
ance was  needed  or  not ;  if  demand  is  made  upon  demand 
paper  before  there  is  any  necessity  for  it,  and  payment  re- 
fused, notice  should  be  given.52  If  the  paper  does  not  re- 
quire any  demand  whatever,  but  a  demand  is  made,  notice 
need  not  be  given ; M  but  the  party  to  be  charged  by  notice 
cannot  object  that  a  demand  upon  such  paper  was  made.54 

§  271.  Mode  of  serving  notice. —  The  methods  of  giving 
notice  are  by  personal  service,  either  actual  or  constructive, 
corresponding  to  an  actual  or  constructive  personal  demand, 
by  service  at  a  place  designated  as  the  place  of  serving  no- 
tices, or  by  mail,  which  is  another  kind  of  constructive  per- 
sonal service.  Oral  notices  of  dishonor  can  only  be  served, 
of  course,  in  the  first  two  methods.  The  cases  in  which  no- 
tices can  be  served  by  mail  are  dependent  upon  the  resi- 
dences of  the  parties,  unless  the  rule  has  been  changed  by 
statute.  The  natural  order  to  consider  the  question  is  to 
first  determine  when  notices  can  be  served  by  mail,  then 
the  sufficiency  of  the  service  by  mail,  and  then  the  cases  of 
personal  service. 

§  272.  When  service  by  mail  permitted, —  The  propriety 
of  a  service  by  mail  is  dependent  upon  the  residence  of  the 
parties.  It  is  allowable  in  all  cases,  except  when  the  party 
giving  the  notice  and  the  one  receiving  the  notice  reside  in 
the  same  place.  It  will  be  advantageous  to  consider  the 
various  situations  that  may  arise.  The  holder  may  serve  the 
notices  himself  or  he  may  serve  them  through  an  agent.  The 
agent  may  reside  in  the  same  place  as  the  holder,  or  in  the 

"United     States    v.    Barker,    4  '  Adams,  48  Pa.  261.    See  Austin  v. 

Wash.   C.  C.  464,   12  Wheat.  559;  Rodman,  8  N.  C.  194. 

Smith  v.  Roach,  7  B.  Mon.  17;  Pen-  »2Rice  v.  Wesson,  11  Met.  400. 

dleton  v.  Knickerbocker  Life  Ins.  53This    is   non-negotiable    paper. 

Co.,  5   Fed.   R.  238;   Landrun     v.  Some  courts,  as  we  have  seen,  allow 

Trowbridge,  2  Met.  (Ky.)  281;  Car-  the  drawer  or  indorserto  claim  de- 

michael  v.  Pennsylvania  Bank,  4  mand. 

How.  (Miss.)  567.    Contra,  House  T.  54  Central    Bank    v.  St  John,   17 

Wis.  157. 


§272.]  EXCHANGES,  SECURITIES,  ETC.  473 

same  place  as  the  party  to  be  charged  by  notice,  or  he  may 
reside  in  a  different  place  from  either.  The  holder  serving 
may  receive  the  notices  from  his  agent  in  another  place,  or 
he  may  make  them  out  himself.  A.11  the  parties  —  holder, 
agent  and  party  to  be  charged — may  reside  in  the  same  place. 
Confining  ourselves  first  to  a  case  where  an  agent  does  not 
supervene,  if  the  holder  giving  notice  and  the  party  receiv- 
ing notice  reside  in  the  same  city  or  town,  service  by  mail  is 
not  permissible;  the  service  must  be  personal,1  except  where 
there  is  a  free  delivery  system  covering  the  indorser's  resi- 
dence, and  the  notice  is  mailed  so  that  it  will  be  delivered 
on  the  same  day  that  it  is  mailed.2  In  other  cases  the  serv- 
ice must  be  personal,  if  the  parties  reside  in  the  same  town.8 
But  nevertheless  if  the  mail  is  used,  and  the  person  to  be 
charged  is  shown  to  nave  received  the  notice  on  the  same 
day  that  he  would  have  been  entitled  to  receive  it  by  per- 
sonal service,4  but  not  later,5  the  service  is  good;  and  a  per- 
son may  have  a  place  of  business  in  the  city  where  service 
is  being  made  and  reside  outside  of  the  city.  In  such  a  con- 
tingency the  service  must  be  personal  upon  him,  either  act- 
ually or  constructively  so,6  and  some  authority  holds  that 
the  service  must  be  personal  even  though  he  have  no  place 
of  business  in  the  city.7  But  if  he  have  no  place  of  business 

1  Williams  v.  Bank  of  U.  S.,  2  Pet.  Bank  v.  Warner,  92  Mass.  522;  Hen- 
96;  Bowling  v.  Harrison,  6  How.  dershot  v.  Nebraska  Nat.  Bank,  25 
248;  Spalding  v.  Krutz.  1  Dili  414;  Neb.   127;  Grinman  v.  Walker,  9 
Curtis  v.  State  Bank,  6  Blackf.  312,  Iowa,  426;  Foster  v.  Sineath,  2  Rich. 
and  many  other  cases.    The  case  of  Law,  338. 

Farmers'  Bank  v.  Battle,  4  Humph.  5See  cases  in  last  note  and  Ter- 

85,  extends  the  rule  as  to  the  sams  bell  v.  Jones,  15  Wis.  253;  Nevins  v. 

place  to  a  neighborhood  using  the  Bank  of  Laningsburgh,  10  Mich, 

same  postoffice.  547;   Gordon  v.  Pedrick,  6  Phila. 

2  Morton  v.  Cammack,  4  Me  A.  22 ;  254. 

Bell  v.  Hagerstown  Bank,  7  Gill,  6  Vowell  v.  Patton,  2  Cranch,  C.  C. 

216;  Walters  v.  Brown,  15  Md.  285;  312;  Patrick    v.   Beasley,  6   How. 

Shoemaker  v.  Mechanics'  Bank,  59  (Miss.)   609;    Brown    v.    Bank    of 

Pa.  79.  Abingdon,  85  Va.  95. 

3  See  cases  in  note  1,  supra.  7  Louisiana  State  Bank  v.  Rowel, 
<Hyslop  v.  Jones,  3  McLean,  96;  6  Mart.  (N.  S.)  506;  Nashville  Bank 

Spalding  v.  Krutz,  1  Dill.  414;  Cabot    v.  Bennett,  1  Yerg.  166;  Davis  v. 


BANKS   AND   BANKING. 


[§  272. 


in  the  city  where  service  is  being  made  and  reside  outside 
of  the  city,  having  his  mail  delivered  at  the  city  postoffice,. 
the  better  authority  is  that  he  may  be  served  by  mail; 8  but 
some  authority  seems  to  suggest  the  use  of  special  messenger 
or  a  personal  delivery  in  that  casa.9  Therefore  a  notice 
mailed  to  a  person  in  the  same  place,10  or  by  a  drop  letter,11 
is  prim  a  facie  bad  without  more  appearing,  unless  the  rule 
is  changed  by  statute,  as  it  is  in  many  instances,12  or  unless- 
the  rule  be  changed  by  a  banking  custom,  as  to  a  bank  giv- 
ing notices  upon  paper  payable  at  the  bank,13  but  not  upon 
other  paper,  even  though  the  custom  be  known  to  the  person 
to  be  charged.14  In  case  the  notices  are  served  by  an  agent, 
the  residence  of  the  agent  may  be  regarded  in  order  to  de- 
termine the  propriety  of  the  mailing  of  the  notice.15  But 
even  if  the  agent  sending  the  notices  to  the  holder  lives  in 


Bank  of  Tennessee,  4  Sneed,  390. 
See  Ireland  v.  Kip,  10  Johns.  490, 
11  Johns.  231,  and  compare  Ransom 
v.  Mack,  2  Hill,  587;  Paton  v.  Lent, 
4  Duer,  231. 

8  Forbes  v.  Omaha  Nat.  Bank,  10 
Neb.  338;  Carson  v.  State  Bank,  4 
Ala.  148;  Fisher  v.  State  Bank,  7 
Blackf.  610;    Barret  v.  Evans,  28 
Mo.  331;  Bank  of  Columbia  v.  Law- 
rence, 1  Pet.  578;  Walker  v.  Bank 
of  Augusta,  3  Ga.  486;  Bondurant 
v.  Everett,  1  Met  (Ky.)  660;  West- 
fall  v.  Farwell,  13  Wis.  504;  Sander- 
son v.  Reinstadler,  31  Mo.  483;  Jones 
v.  Lewis,  8  Watts  &  S.  14;  Foster  v. 
Sineath,  2  Rich.  Law,  338;  Timms 
v.  Delisle,  5  Blackf.  447;  Bell  v. 
State  Bank,  7  Blackf.  456.    The  dis- 
tances from  the  city  in  these  cases 
vary  from  one  and  a  half  miles 
from  the  city  to  nine  miles  there- 
from.   Bird  v.  McCalop,  2  La.  Ann. 
351.     Contra,  Power  v.  Mitchell,  7 
Wis.  161  (under  statute). 

9  Fish  v.  Jackman,  19  Me.   467. 
See  cases  in  note  7  and  Van  Vech- 


ten  v.  Pruyn,  9  How.  Pr.  222,  13 
N  Y.  549.  Where  the  indorser  re- 
sides at  the  place,  it  seems  that  he 
must  be  served  there  personally 
and  cannot  be  served  by  mailing  to 
his  place  of  business  elsewhere. 

10  Clay  v.  Oakley,  5  Mart  (N.  S.) 
137,  and  cases  in  note  1. 

11  Newberry  v.  Trowbridge,  4  Mich. 
391. 

i2Peet  v.  Zanders,  6  La.  Ann.  364; 
Jameson  v.  Pothaus,  26  La.  Ann.  63;. 
McNatt  v.  Jones,  52  Ga.  473;  Glicks- 
man  v.  Earley,  78  Wis.  223;  Brennan 
v.  Vogt,  97  Ala.  647;  Isbell  v.  Lewis, 
98  Ala.  550;  Kern  v.  Von  Plml,  7 
Minn.  426,  are  cases  under  statutes. 

13Gindrat  v.  Mechanics'  Bank,  7 
Ala.  324;  Chicopee  Bank  v.  Eager, 
9  Met.  583;  Carolina  Nat  Bank  v. 
Wallace,  13  S.  C.  347. 

14  Lime  Rock  Bank  v.  Hewett,  52 
Me.  531. 

15  Greene  v.  Farley,  20  Ala.  322. 
Contra,  Foster  v.  McDonald,  5  Ala. 
376. 


§  273.]  EXCHANGES,  SECURITIES,  ETC.  475 

the  same  town  with  the  party  to  whom  notice  is  being  given, 
the  residence  of  the  holder  may  govern  as  to  mailing ; 16  ify 
however,  the  notary  sends  the  notices  to  the  town  where  the 
person  to  be  charged  lives,  for  the  purpose  of  having  the 
proper  address  inserted,  the  notice  may  be  mailed.17  It  may 
happen  that  the  notary  or  agent  will  make  demand  in  the 
place  where  the  indorser  resides,  but  where  the  agent  does 
not  reside.  In  such  cases  the  notices  may  be  mailed.18  But 
the  agent  is  acting  for  the  holder  and  he  may  therefore 
govern  his  actions  by  the  residence  of  the  holder;  and  if  the 
agent  living  in  the  same  town  with  the  indorser  mails  the 
notices  to  the  holder,  and  if  the  holder  does  not  reside  in 
the  same  place  with  the  party  to  be  charged,  the  notice  may 
be  mailed  whatever  the  residence  of  the  notary.19  But  al- 
though a  service  by  mail  is  permitted  it  is  not  compulsory, 
and  if  a  special  messenger  is  used  for  the  purpose  of  "making 
a  personal  service,  the  service  is  none  the  less  good,20  provided 
the  messenger  exercises  due  diligence.21 

§  273.  Sufficiency  of  mailing. —  If  notice  by  mail  be  per- 
missible, a  proper  notice,  mailed  at  a  proper  time,  and  prop- 
erly stamped  and  addressed,  is  a  good  service  of  notice, 
whether  the  person  ever  received  it  or  not.1  But  a  letter 
addressed  to  a  place  where  there  is  no  postoffice  is,  generally 
speaking,  not  good.2  If  the  place,  however,  has  another 

16  Bibb  v.  McQueen,  42  Ala.  408;  service    ought   to    be    permitted, 
Duncan  v.  Young,  1  Mart.  (O.  S.)  32.  Shelburne  Falls  Bank  v.  Townsley, 

17  Hartford  Bank  v.  Stedman,  3  102  Mass.  177;  Warren  v.  Oilman^ 
Conn.  489.  17  Me.  860. 

18  The  place  of  residence  governs,  20  Bank  of  Columbia  v.  Lawrence* 
not  the  place  of  presentment.  West  1  Pet.  578;   Hazelton  Coal  Co.  v. 
River  Bank  v.  Taylor,  7  Bosw.  466,  Ryerson,  20  N.  J.  Law,  129. 

84  N.  Y.  128.    See  Fahnestock  v.  21  Jarvis  v.  St.  Croix  Mfg.  Co.,  23 

Smith,  14  Iowa,  561.  Me.  287. 

19  Foster  v.  McDonald,  5  Ala.  376;  l  Harris  v.  Robinson,  4  How.  836; 
Gindrat  v.  Mechanics'  Bank,  7  Ala.  Sanderson  v.  Reinstadler,  31  Mo.  483; 
324     But   the   agent  forwarding  Smyth  v.  Hawthorn,  8  Rawle,  855; 
ought  to  be  treated  as  a  holder,  and  Walworth  v.  Seaver,  80  Vt.  728,  and 
if  the  agent  lives  in  another  place,  many  other  cases. 

although  the  holder  resides  in  the       2  See  case  cited  in  note  4 
same  place  as  the  indorser,  mail 


476  BANKS   AND   BANKING.  [§  274. 

place  for  the  receipt  of  mail,  where  its  mail  is  regularly  re- 
ceived, there  seems  to  be  no  good  reason  for  saying  that  the 
letter  is  not  properly  mailed.3  But  if  the  postoffice  at  a 
place  has  been  discontinued  for  a  considerable  period  of 
time,  a  letter  put  into  the  mail  addressed  to  such  a  post- 
office  would  not  constitute  a  service.4  A  letter  is  mailed 
when  it  reaches  any  portion  of  the  postoffice,  as  a  street  or 
building  letter-box,5  any  branch  postoffice,6  or  a  room  in  the 
postoffice  where  mail  is  received  by  one  acting  in  the  post- 
office,  although  it  may  not  be  the  regular  postoffice  room, 
and  though  it  is  received  by  an  unsworn  assistant.7  A 
letter  delivered  to  a  mail  carrier  on  his  route  is  mailed.8 
A  letter  properly  folded  and  addressed  is  no  less  a  letter, 
because  it  is  not  inclosed  in  an  envelope.9  It  is  immaterial 
whether  or  not  the  letter  is  regularly  put  into  the  mail  by 
the  postmaster.10  But  a  letter  put  into  a  private  letter-box 
not  under  government  control  is  not  mailed ; u  nor  was  a 
letter  deposited  in  the  Confederate  mail  service.12  The  per- 
son giving  the  notice  by  mail  is  not  responsible  for  any  mis- 
carriage in  the  postoffice,  and  this  rule  applies  where  the 
mailing  is  done  under  a  banking  custom,13  or  under  a  free- 
delivery  system,14  or  under  a  statute,  as  well  as  under  the 
law  merchant. 

§  274.  Personal  service  of  notice. — Personal  service  is 
required  only  in  the  case  mentioned  in  the  preceding  sec- 

» First   Nat   Bank  v.   Owen,  23  « Pierce  v.  Langfit,  101  Pa.  507; 

Iowa,  185.    The  letter  would  be  cer-  Wynen  v.  Schappert,  6  Daly,  558. 

tain  to  be  received  in  due  course  of  9  Kern  v.  Von  Phul,  7  Minn.  426. 

mail  10  Sasscer  v.  Farmers'  Bank,  4  Md. 

4  Davis  v.  Beckham,  4  Humph.  53.  409. 

But  see  case  in  note  3.  n  Townsend   v.  Quid,  31   N.   Y. 

8  Casco  Nat.  Bank  v.  Shaw,  79  Ma  Supp.  29. 

376;  Johnson  v.  Brown,  154  Mass.  12Todd  v.  Neal,  49  Ala.  266  (ques- 

105;  Wood  v.  Callaghan,  61  Mich,  tionable). 

402.    The  letter  chute  of  a  large  "Lincoln  Bank  v.  Hammatt,  9 

building  is  a  part  of  the  letter-box.  Mass.  159;  Chicopee  Bank  v.  Eager, 

6  The  branch  postoffice  is  a  reg-  9  Met.  583;    Benedict  v.  Rose,  16 

ular  postoffice.  8.  C.  629. 

7Mt.  Vernon  Bank  v.  Holden,  2  14  Shoemaker  v.  Mechanics'  Bank, 

R.  L  467.  59  Pa.  79. 


§  274-.]  EXCHANGES,  SECURITIES,  ETC.  4:77 

tion,  to  wit,  that  where  the  party  serving  notice  and  the 
party  to  be  served  reside  in  the  same  place.  This  personal 
service  may  be  actual  or  constructive.  An  actual  personal 
service  may  be  made  at  any  hour  or  at  any  place  if  it  be  not 
otherwise  too  late.1  The  service  is  equally  personal  whether 
served  upon  the  person  himself  or  served  by  leaving  the  notice 
with  some  one  in  his  place  of  business,  or  some  proper  person 
at  his  house.2  The  preliminary  question  to  be  determined 
is  whether  the  service  needs  be  made  at  the  place  of  business 
or  the  residence.  If  the  place  of  business  is  in  the  same 
town  or  city,  but  the  residence  is  outside  of  the  city,  the 
service  must  be  made  at  the  place  of  business  unless  it  is 
personal  at  the  residence  and  not  by  mail.3  But  where  the 
residence  and  the  place  of  business  are  in  the  same  place, 
and  there  has  been  no  direction  as  to  service,  the  notice  may 
be  given  at  either  place,4  and  the  person  charged  by  notice 
has  no  right  to  complain  that  either  place  has  been  chosen. 
If  the  person  to  be  served  is  actually  found  at  his  residence 
or  place  of  business  the  hour  of  service  makes  no  difference. 
But  where  the  service  is  made  by  a  constructively  personal 
service  the  hour  is  a  matter  of  importance.  If  served  at  the 
place  of  business  the  hour  of  service  must  be  during  business 
hours.5  In  order  to  determine  what  are  the  hours  of  busi- 
ness the  rules  stated  in  a  preceding  section 6  as  to  demand 
should  be  consulted.  If  the  constructive  personal  service  is 
had  at  the  residence,  the  hour  is  not  a  matter  of  much  im- 
portance 7  because  the  occupant  of  the  domicile  is  expected 

]Atanyplac&  Hyslop  v.  Jones,  Wis.  390  (under  a  statute).  This  rule 

3  McLean,  96.  At  any  hour.  Adams  applies  to  a  partnership.  Fourth 

v.  Wright,  14  Wis.  408.  See  Hal-  Nat.  Bank  v.  Altheimer,  91  Mo.  190. 

lowell  v.  Curry,  41  Pa.  322,  service  8  John  v.  City  Nat.  Bank,  57  Ala. 

at  12  P.  M.  96;  Stephenson  v.  Primrose,  8  Port. 

2Isbell  v.  Lewis,  98  Ala.  550;  155.  In  Alabama  an  attorney's 

West  fall  v.  Far  well,  13  Wis.  504  business  hours  include  the  even  ing. 

3  See  cases  cited  in  note  6,  §  272,  Stanley  v.  Bank  of  Mobile,  23  Ala, 
ante.  652. 

4  Bank  of  Columbia  v.  Lawrence,  6  See  §  250,  ante, 

1  Pet.  578;  Phillips  v.  Alderson,  5       7See  note  1  to  this  section. 
Humph.  403;  Simms  v.  Lasken,  19 


4TS 


BANKS   AND    BANKING. 


[§ 


to  return  there  after  business  hours.  A  service  as  late  as 
12  o'clock  at  night  at  the  residence  has  been  approved,8  as 
well  as  a  service  at  an  early  hour  in  the  morning.9  In  order 
to  determine  whether  or  not  the  place  is  actually  the  place 
of  business  for  service,  the  person  serving  may  rely  upon 
appearances,10  upon  signs  and  notices,11  or  upon  what  he  is 
told  by  any  one  in  the  place  of  business.12  If  the  place  of 
business  is  closed,  and  no  one  there,  the  notice  may  be  left 
under  the  door.13  If  it  is  open,  but  no  one  there,  the  notice 
may  be  left  on  the  desk  of  the  person  to  be  charged,14  or  at 
the  person's  desk  in  the  office  where  he  was  employed,15  or 
in  the  particular  room  of  the  party  to  be  served  in  a  build- 
ing.16 If  there  be  some  one  there,  such  as  the  wife,  the 
person  in  charge,17  a  bookkeeper,  the  private  secretary,18  em- 
ployee or  slave,19  or  one  who  is  not  shown  to  be  connected 


8  Hallowell  v.  Curry,  41  Pa.  322. 
The  rule  would  be  different  as  to  a 
demand,  and  properly  so.    A  no- 
tice does  not  require  affirmative 
action  upon  the  spot,  but  a  demand 
does. 

9  But  see  Dufour  v.  Morse,  9  La. 
333. 

10  Lamkin  v.  Edgerly,  151  Mass. 
348  (a  statute);   Libby  v.  Adams, 
32  Barb.  542.    It  has  been  held  that 
the  place  where  the  indorser   is 
employed  is  his  place  of  business. 
Bank  of  West  Tenn.  v.   Davis,  5 
Heisk.  436.    But  notice  to  a  son-in- 
law,  at  the  latter's  office,  for  the 
indorser,  is  not  good;  the  indorser 
was  away  from  home,  but  his  fam- 
ily remained.     Bank  of  New  Or- 
leans v.  Millaudon,  25  La.  Ann.  280. 
On  postmaster  at  postoffice.    Cook 
v.  Renick,  19  111.  598. 

11  See  cases  in  last  note 

12  Libby  v.  Adams,  32  Barb.  543. 

13  Jones   v.  Mansker,  15    La.  51. 
Or    not  given   at    all     Howe   v. 


Bradley,  19  Me.  31;  Union  Bank 
v.  Fowlkes,  2  Sneed,  555;  Bowie  v. 
Blacklock,  2  Cranch,  C.  C.  265. 

"Hobbs  v.  Straine,  149  Mass.  212. 
And  see  Commercial  Bank  v.  Gove, 
15  La.  113. 

15  Bank  of  Commonwealth  v.  Mud- 
gett,  45  Barb.  663. 

16  Bank  of  U.  S.  v.  McDonald,  4 
Cranch,  C.  C.  624 

17  Mercantile  Bank  v.  McCarthy, 
7  Mo.  App.  318;  Edson  v.  Jacobs,  14 
La.  494;  Lord  v.  Appleton,  15  Me. 
270.    Left  with  mate  on  board  ship 
commanded  by  indorser.    Austin 
v.  Latham,  19  La.  88.    Left  with 
wife  or  person  in  charge  of  place 
of   business.     Aurianne   v.   Esch- 
backer,  28  La.  Ann.  48. 

18  Jones  v.  Mansker,  15  La.   51; 
Merz  v.  Kaiser,  20  La.  Ann.  377. 
But  see  Paine  v.  Edsell,  19  Pa.  17a 
This  case  also  decides  that  if  the 
direction  given  to  the  clerk  is  not 
to  open  the  letter  the  notice  is  bad. 

19  Bank  of  U.  S.  v.  Merle,  2  Rob. 


§  274.]  EXCHANGES,  SECURITIES,  ETC.  479 

with  the  proprietor,20  the  notice  may  be  left  with  him.  The 
temporary  absence  of  the  person  from  his  place  of  business,21 
even  though  it  be  for  a  period  of  some  length  of  time,22  does 
not  prevent  service  there.  A  bank  is  properly  served  at  its 
banking-house,23  a  corporation  at  its  office,  even  though  it  had 
no  right  to  maintain  one  at  the  place,24  and  a  suspended 
bank  or  other  corporation  is  properly  served  where  its  busi- 
ness is  being  wound  up.25  Partnerships  are  served  by  leav- 
ing the  notice  at  their  places  of  business 26  or  at  the  residence 
of  one  of  the  partners.27  The  dissolution  of  the  partnership 
does  not  prevent  the  service  of  notice  upon  either  of  the 
partners28  or  a  surviving  partner,29  whether  the  fact  be 
known  to  the  holder  or  not.30  But  if  an  office  is  in  a  build- 
ing, the  service  must  be  made  at  the  particular  office,  not  in 
the  building  generally.31  The  place  of  business  may  be  a 
desk  in  some  other  person's  office,32  or  even  a  place  where 
the  person  is  accustomed  to  go  for  the  purpose  of  receiving 
mail  but  not  attending  to  business ; 33  but  a  room  where  the 
person  to  be  served  was  accustomed  to  resort,  but  not  for 

(La.)  117.    The  opinion  recognizes  Bros.  Co.,  94  Tenn.  624;  Crews  v. 

that  a  slave  is  a  human  being;  its  Farmers'  Bank,  31  Grat.  348. 

date  is  1842.  26  Hubbard  v.  Matthews,  54  N.  Y. 

20  Mechanics'    Banking   Ass'n  v.  43.    Here  the  firm  was  dissolved. 
Place,  4  Duer,  212;  Curtis  v.  State  "Fourth Nat. Bank  v.  Altheiiner, 
Bank,  6  Blackf.  312.  91  Mo.  190. 

21  See  next  note.  28  Coster  v.  Thomason,  19  Ala.  717. 

22  Walker  v.  Stetson,  14  Ohio  St.  And  see  last  note. 

S9.    For  residence,  see  Fisher  v.  29  Dabney  v.  Stidger,  4  Smedes  & 

Evans,  5  Bin.  541.  M.  749;  Slocomb  v.  De  Lizardi,  21 

23  Aiken  v.  Marine  Bank,  16  Wis.  La.  Ann.  355.    And  see   note  17, 
679.    The  delivery  should  be  to  a  §  276,  post. 

proper  officer,  such  as  a  cashier;  but  30  See  the  cases  in  last  two  notes, 

the  notice  may  be  directed  to  the  and  Nott  v.  Downing,  6  La.  680. 

cashier  (Coffman  v.  Bank  of  Ken-  81  Kleinmann  v.  Bormstein,  32  Mo. 

tucky,  41  Miss.  212)  or  the  presi-  311. 

dent.    See  first  case  in  this  note.  32  Williams  v.  Brailsford,  25  Md. 

2<  Merrick  v.  Plank  Road  Co.,  11  126. 

Iowa,  74.  33  People  v.  North  River  Bank,  63 

24  American  Nat.  Bank  v.  Junk  Hun,  484. 


480  BANKS   AND   BANKING.  [§  274. 

the  purpose  of  attending  to  any  regular  business,  was  not 
considered  a  place  of  business  for  him.34 

The  residence  of  a  person  at  a  particular  time  is  his  usual 
place  of  abode  at  that  time.35  It  may  be  a  residence,  a  boarding 
house  or  a  hotel.  If  the  residence  be  a  hotel,  the  notice  may  bo 
left  with  the  clerk  if  the  person  is  not  in  his  room,36  although 
in  Arkansas  there  has  been  some  doubt  thrown  upon  this, 
proposition  at  an  earlier  day,  owing  probably  to  the  ex- 
tremely barbarous  character  of  the  hotels  to  which  the  judges 
were  accustomed.37  "Where  the  person  to  be  served  lives  at 
a  boarding  house,  if  after  inquiry  he  be  found  not  to  be 
there,38  the  notice  may  be  left  with  a  fellow-boarder,  and 
for  the  same  reason  with  the  person  in  charge,  with  direc- 
tions to  deliver  it  to  him.39  Where  the  service  is  made  at  a 
residence  and  the  house  is  found  closed  with  no  one  there, 
the  notice  may  be  left  there; 40  but  if  the  indorser  has  a  place 
of  business  in  the  city,  perhaps  some  inquiry  should  be  made 
there.41  If  any  one  is  found  in  the  house,  even  a  slave  in 
old  days,42  the  notice  may  be  left  with  that  person,  with  di- 
rections to  deliver  it.43  "W  here  the  residence  has  been  changed, 
the  rule  to  follow  will  be  found  in  a  later  section.44 

"Stephenson  v.  Primrose,  8  Port  39Bank  of  U.  S.  v.  Hatch,  6  Pet. 

155.  250. 

saWachusset  Nat.  Bank  v.  Fair-  4°Isbell   v.  Lewis,  98   Ala.    550; 

brother,  148  Mass.  181.  Greatrake  v.  Brown,  2  Cranch,  C.  CL 

3«  Bradley    v.   Davis,   26   Me.   45.  541. 

The  case  shows  that  the  barkeeper  41  Commercial  Bank  v.  Strong,  28 

was  the  person  with  whom  left  Vt  316.    The  great  weight  of  au- 

87  Ashley  v.  Gun  ton,  15  Ark.  415.  thority  is  to  the  contrary. 

Any  judge  ought  to  be  willing  to  42  Colored    servant.      Coulon    v. 

concede  that  the  clerk  of  any  rea-  Champlin,  15  La.  544.    See  Bank  of 

sonably  kept  hotel  is  the  proper  U.  S.  v.  Merle,  2  Rob.  (La.)  117. 

person  with  whom  to  leave  a  no-  43See  Bank  of  U.  S.  v.  Hatch,  6 

tice  for  a  person  at  the  hotel  Pet  250.    Giving  the  notice  to  a 

88  See  the  next  note.    But  if  the  daughter  at  the  house  is  good,  the 
place  be  a  hotel  or  boarding  house  indorser  being  away,  although  it 
it  should  appear  that  the  person  to  was  shown  there  were  two  daugh- 
be  served  is  stopping  there.    Kerr  ters,  ene  quite  young.     Bank  of 
v.  Roberts,  5  Wkly.  Notes  Cas.  25.  Kentucky  v.  Duncan,  4  Bush,  294.. 

«<  See  §  281,  post. 


§  275.]  EXCHANGES,  SECURITIES,  ETC.  481 

§  275.  Service  at  a  place  designated. —  The  place  to  serve 
a  party  with  notice  may  be  designated  by  him,  and  such 
direction  remains  good  until  it  is  countermanded;1  and  a 
notice  left  at  that  place  will  be  good,  although  an  actually 
personal  service  would  be  equally  good.  And  where  the 
indorser  writes  his  address  upon  the  paper  under  his  name, 
this  will  be  an  implied  direction  as  to  the  place  of  giving 
notice,  and  a  notice  left  at  that  place  in  proper  manner  will 
be  sufficient.2  But  merely  finding  the  indorser's  address 
under  his  name  will  not  justify  a  notice  left  at  such  address, 
unless  it  is  shown  to  be  his  residence  or  place  of  business, 
and  that  the  notice  was  left  in  a  proper  manner  at  that 
place.3  If  the  note  has  been  negotiated  by  an  agent  for  the 
indorser,  the  directions  of  the  agent  as  to  the  indorser's  ad- 
dress will  be  binding  upon  the  indorser.4  This  rule  ought 
to  be  qualified,  however,  by  the  statement  that  if  the  holder 
knows  that  the  address  has  been  changed  and  the  person 
has  removed  from  the  place  designated,  he  ought  to  follow 
the  new  address  in  serving  the  notice.5  This  matter  of  the 
designation  of  the  place  of  address  will  be  further  considered 
under  the  head  of  the  proper  place  to  which  to  direct  no- 
tice by  mail.6  But  the  whole  subject  of  service  of  notice, 
both  as  to  place  and  time,  is  governed  by  the  general  con- 
sideration that  any  agreement  made  between  the  maker  of 

But  in  the  following  case  the  notice  l  Eastern  Bank  v.  Brown,  17  Me. 

was  held  bad.  The  server  called  at  356. 

the  house  quite  early  and  the  house  2  Baker  v.  Morris,  25  Barb.  138; 

was  closed,  but  he  handed  the  no-  Davis  v.  Bank  of  West  Tennessee,  4 

tice  to  a  servant  apparently,  who,  Sneed,  390;    Morris   v.  Husson,  4 

however,  was  not  connected  with  Sandf.  93;  Farmers'  Bank  v.  Battle, 

the  family.    Dufour  v.  Morse,  9  La.  4  Humph.  86. 

333.    The  person  to  be  served  was  3  Davenport  v.  Gilbert,  4  Bosw. 

not  shown  to  be  absent.    Adams  v.  532,  6  Bosw.  179. 

Wright,  14  Wis.  408  (given  to  boy  «  Catskill  Bank  v.  Stall,  15  Wend, 

in  yard  not  good).    Giving  a  notice  364. 

to  the  indorser's  son,  who  said  he  6  This  would  seem  to  be  the  proper 

was  going  home  and  would  deliver,  rule. 

is  not  good  unless  it  be  shown  to  6  See  §  279,  post. 
have    been     delivered.      Paterson 
Bank  v.  Butler,  12  N.  J.  Law,  26a 
81 


482  BANKS   AND   BANKING.  [§  276. 

the  note  or  the  drawer  of  the  bill  as  to  the  service  of  notice, 
known  to  tfie  indorser  at  the  time  he  indorses,  will  be  bind- 
ing upon  him  as  well.7 

§  276.  To  whom  notice  is  to  be  given. —  In  the  matter 
of  serving  notices,  the  notice,  however  it  comes  to  the  per- 
son to  be  charged,  whether  by  mail  or  by  messenger,  from 
the  holder  or  his  agent  or  from  other  prior  party,  must  be 
given  to  him  or  to  his  agent  duly  authorized  to  receive  no- 
tice, or  due  diligence  must  be  shown  in  trying  to  give  the 
notice.  The  result  of  the  death  of  the  one  to  be  served  upon 
the  serving  of  the  notice  will  be  considered  later.1  The 
cases  which  have  been  considered  of  service  by  leaving  the 
notice  with  some  person  at  the  house  or  place  of  business  of 
the  person  to  be  charged 2  are,  in  the  view  of  some  courts, 
cases  of  service  upon  agents  with  implied  authority,  or  per- 
haps agents  from  necessity.3  But  that  is  not  a  correct  view, 
for  it  does  violence  to  well-settled  rules  of  law  as  to  agency, 
to  hold  that  such  service  is  had  upon  an  agent.  Rather  are 
such  cases  simply  a  method  of  service  provided  by  the  law 
merchant  from  the  necessities  of  commerce,  just  as  statutes 
provide  for  constructive  service  of  process  by  leaving  it  at 
the  place  of  residence  of  the  defendant.  But  in  neither  case 
is  the  person  with  whom  the  notice  or  process  is  left  an 
agent.  Such  an  idea  requires  us  to  consider  the  desk  on 
which  the  notice  is  left,  the  door  under  which  it  is  pushed, 
or  the  letter-box  in  which  the  notice  is  mailed  as  an  agent. 
The  cases  of  service  upon  an  agent  are  always  cases  of  act- 
ual agency.  Service  upon  such  an  agent  is  good,  provided 
his  authority  be  shown.4  The  authority,  however,  to  draw 

7  Such  are  the  cases  of  customary  ant  does  not.    Therefore,  since  no 

service  by  mailing.   See  §  288,  post,  express  authority  exists  in  these 

note  5.  cases,  the  agency  must  arise  either 

1  See  §  287,  post.  by  estoppel  or  from  necessity. 

2  See  the  cases  cited  in  g  274.  Ja-  <  Edwards  v.  Thomas,  66  Mo.  468. 
cobs  v.  Turner,  2  La.  Ann.  964  This  would  have  been  a  good  case 

3  Strictly  an  agent  is  one  who  of  actual  agency  by  estoppel,  had 
brings  the  principal  into  contract-  the  holder  not    known   that  the 
ual  relations  with  another.   A  serv-  agency  no  longer  existed.   See  New 


§  276.]  EXCHANGES,  SECURITIES,  ETO.  483 

a  bill  will  not  imply,  it  is  said,  an  authority  in  the  agent  to 
receive  notice  of  dishonor,5  although  a  demand  on  such  an 
agent  who  made  a  note  has  been  held  good6  in  a  concurring 
opinion,  and  if  the  rule  is  sound  as  to  a  demand  it  is  sound 
as  to  the  notice.7 

In  the  case  of  joint  indorsers  or  joint  drawers,  not  part- 
ners, notice  in  order  to  hold  either  must  be  served  upon 
both,8  unless  the  case  has  been  modified  by  a  waiver,9  or  un- 
less the  common  law  as  to  the  release  of  all  joint  obligors 
by  releasing  one  of  them  has  been  modified  by  statute;  in 
which  latter  case,  the  reason  of  the  rule  failing,  the  rule  it- 
self ought  to  fail.10  But  it  is  needless  to  say  the  fact  of  a 
joint  indorsement  must  appear  upon  the  face  of  the  instru- 
ment itself,  unless  the  holder  had  notice  of  the  fact  of  joint 
indorsement;  but  even  then  he  would  not  be  bound  by  the 
fact  of  joint  indorsement  if  it  contradicted  what  appeared 
upon  the  instrument.11  The  notice  to  joint  indorsers  need 
not,  however,  be  addressed  to  both.12  Partnerships  are  not 
considered  cases  of  joint  obligation,  because  each  partner 

York  Contracting  Co.  v.  Selma  Sav.  Bank  of  Auburn  v.  Putnam,  1  Abb. 

Bank,  51  Ala.  805.    The  agency  in  Dec.  80  (here  there  was  an  estoppel), 

this  case  can  arise  by  estoppel  or  a  8  Gaunt  v.  Jones,  1  Cranch,  C.  C. 

holding  out.    See  Wilkins  v.  Com-  210;    State  Bank  v.  Slaughter,  7 

mercial  Bank,  6  How.  (Miss.)  217.  Blackf.  133.    See  Shepherd  v.  Haw- 

8Hockadayv.Skeggs,2Phila,268.  ley,  1   Conn.  367.    But  see  as  to 

6  Luning  v.  Wise,  64  Cal.  410.  anomalous  indorser,  Legg  v.  Vinal, 

7  The  theory  of  the  latter  case  165  Mass.  555. 

seems  the  best,  but  the  authority  9  One  joint  indorser  might  waive 

seems  to  be  to  the  contrary.    The  notice. 

authorities  are  cited  in  Hockaday  10  If  the  statute  provides  that  one 

v.  Skeggs,  supra.  Valk  v.  Galliard,  joint  obligor  can    be   released  it 

4  Strobh.  99;  La.  St.  Bank  v.  Ellery,  would  control.    Some  courts  per- 

4  Mart.  (N.  S.)  87,  where  the  author-  mit  the  obligee  to  reserve  his  right 

ity  given  was  to  indorse  and  to  do  to  hold  the  other  joint  obligor  not 

all  acts  necessary  in   connection  released. 

therewith;  De  Lizardi  v.  Pouverin,  1JTwo  men  who  sign  separately 
4  Rob.  (La.)  393.  But  a  notice  to  a  are  so  bound  regardless  of  their  in- 
general  agent  of  a  person  is  good  tention. 

{Hestres  v.  Petrovic,  1  Rob.  (La.)  119;  12  Cayuga  Co.  Bank  v.  Warden,  6 

Wilson  v.  Senier,  14  Wis.  380);  or  N.  Y.  19. 
general   agent    of   a   corporation. 


484:  BANKS   AND   BANKING.  [§  276. 

may  bind  his  firm  in  regard  to  a  transaction  which  is  truly 
a  partnership  transaction,13  and  some  courts  wrongly  regard 
all  joint  indorsements  as  partnerships  pro  hac  vice.14  Includ- 
ing these  last-named  cases  as  partnership  transactions,  the 
rule  is  general  that  notice  to  the  partnership  is  notice  to  all 
its  members.15  Notice  to  a  partnership  is  given  by  giving 
notice  to  any  one  of  the  general  partners.16  The  notice  may 
be  served  on  the  common  member  of  two  firms,  the  one 
being  indorser,  the  other  being  the  holder.17  But  in  case  the 
partnership  has  been  dissolved  the  agency  remains,  and  a 
notice  to  one  partner  binds  them  all;18  and  a  notice  accord- 
ing to  the  previous  directions  of  one  partner  binds  the  part- 
nership, certainly  before  and  on  principle  after  dissolution.19 
In  case  the  partnership  has  been  dissolved  by  death  the  no- 
tice will  be  good  served  upon  a  surviving  partner,20  but  it 
will  not  be  good  if  served  upon  the  personal  representative 
of  a  deceased  partner;21  for  the  notice  to  the  surviving  part- 
ner fixes  the  liability  of  the  firm,  and  hence  of  the  estate  of 
a  deceased  partner,  the  notice  to  the  administrator  being 
necessary  only  as  the  presentation  of  a  claim.22  But  where 
a  drawer  of  a  bill  upon  a  firm  was  once  a  member  of  that 
partnership,  although  at  the  time  he  drew  the  bill  he  was 

13  Wheeler  v.  Maillot,  20  La.  Ann.  the  agent  Bliss  v.  Nichols,  94  Mass. 

75.  443. 

H  Dodge  v.  Bank  of  Kentucky,  2  n  Riddle  v.  McBeth,  4  W.  L.  M. 

A.  K  Marsh.  610;  Higgins  v.  Mor-  153. 

rison,  4  Dana,  100.    But  this  is  not  18  Dabney  v.  Stidger,  4  Smedes  & 

the  correct  rule.    Say  re  v.  Frick,  7  M.  749;  Slocomb  v.  De  Lizardi,  21 

Watts  &  S.  383;  Boyd  v.  Orton,  16  La.  Ann.  355;  Coster  v.  Thomason, 

Wis.  495;  People's  Bank  v.  Keech,  19  Ala  717.    See  Nott  v.  Downing, 

26  Md.  521;  Willis  v.  Greene,  5  Hill,  6  La.  680,  and  Hume  v.  Watt,  5 

232.    In  fact,  if  the  joint  indorsers  Kan.  34.  And  see  notes  26-28,  §  274, 

were  actually  partners,  the  fact  ante. 

that  they  indorsed  as  individuals  19  Magee  v.  Dunbar,  10  La.  546. 

and  not  as  a  firm  ought  to  show  20  See  first  two  cases  in  note  18. 

their  intention  to   be   held   only  21  Locke  v.  Bank  of  Tennessee,  6 

jointly;  but  the  law  is  not  so.  Humph.  51.    See  the  cases  on  de- 

15  See  cases  in  note  18,  infra.  mand,  §  248,  ante. 

16  Dormant  partners  are  not  within  22  Locke  v.  Bank  of  Tennessee,  6 
the  rule,  but  the  service  is  good  on  Humph.  51. 


§  277.]  EXCHANGES,  SECURITIES,  ETC.  485 

no  longer  a  partner,  which  fact  was  not  known  to  the  holder, 
who  considered  the  drawer  still  one  of  the  firm,  and  there- 
fore not  entitled  to  notice  of  non-payment,  the  holder  was 
held  to  have  released  such  drawer  by  failing  to  give  him, 
notice.23 

Where  an  indorser,  after  making  the  indorsement,  has 
made  an  assignment  of  all  his  property  for  the  benefit  of 
creditors,  notice  of  dishonor  must  nevertheless  be  given  to 
him  and  not  to  the  assignee;24  but  there  is  authority  for  say- 
ing that  notice  to  the  assignee  will  bind  the  indorser  who 
is  assignor.25  But  a  reasonable  compromise  between  the  two 
positions  would  be  to  hold  that  the  assignee  is  agent  of  the 
assignor  to  wind  up  his  business  while  he  is  engaged  about 
that  matter,  and  if  notice  is  given  to  him  at  the  place  of  busi- 
ness where  the  assignor-indorser's  affairs  are  being  wound 
up,  it  would  be  a  good  notice  to  the  indorser.26  Yet  at  the 
same  time,  as  in  all  other  cases  of  agency,  notice  to  the  as- 
signor-indorser  himself  would  be  good  to  bind  the  assigned 
property;  but  this  is  wrongly  said  not  to  be  true,  unless  the 
holder  had  no  notice  of  the  assignment.27 


o 


'§277.  Notice  to  successive  obligors. —  The  question  of 
the  person  to  whom  notice  is  to  be  given  has  hitherto  been 
considered  as  if  the  holder  were  himself  giving  notice.  But 
the  theory  of  commercial  paper  is  that  it  is  a  succession  of 
contracts,  each  party  separately  putting  his  name  to  the 
paper  becoming  the  maker  of  a  new  contract,  all -of  which 
contracts  pass  to  the  holder  of  the  paper,  who  has  a  separate 
contract  with  each  party  to  the  paper,  and  each  holder  and 

23  Taylor  v.  Young,  3  Watts,  339.  OT  Donnell  v.  Lewis  Co.  Sav.  Bank, 

24  House  v.  Vinton  Nat.  Bank,  43  80  Mo.  165.    This  seems  to  be  the 
Ohio  St.  346.  conclusion  from  what  the   court 

25  American  Nat.  Bank  v.  Junk  holds  in  this  case.    The  statement, 
Bros.  Co.,  94  Tenn.  624;  Callahan  v.  however,  is  dictum,  because  the  no- 
Bank  of  Ky.,  82  Ky.  231.  tice  was  held  good,  the  holder  hav- 

26  See  Bliss  v.  Nichols,  94  Mass,  ing  no  knowledge  of  the  assign- 
443;  Casco  Nat.  Bank  v.  Shaw,  79  ment 

Me.  376;  Bank  of  America  v.  Shaw, 
142  Mass.  290. 


486  BANKS  AND  BANKING.  [§  277 

indorser  in  succession  is  bound  to  each  holder  subsequent  to 
himself  by  a  series  of  separate  contracts,  and  has  bound  to 
him  each  preceding  party  by  a  series  of  separate  contracts.1 
Each  party  to  the  paper  has  the  right  to  choose  which  of 
these  contracts  he  will  enforce  —  any  or  all.  Therefore  the 
holder  may  give  notice  to  his  immediate  indorser,2  or  he  may 
give  notice  to  any  indorser  he  chooses,3  or  to  the  drawer  or 
maker.1  He  is  not  required  to  give  notice  to  any  particular 
indorser.5  Therefore  a  second  indorser  notified  cannot  de- 
fend on  the  ground  that  a  party  to  the  paper  prior  to  him- 
self was  not  notified.6  It  is  the  duty  of  each  indorser  to 
protect  himself  by  giving  notice  to  any  or  all  of  the  parties 
prior  to  himself.7  But  every  notice  given  to  a  party  to  the 
paper  inures  to  the  benefit  of  every  one  on  the  paper  who 
stands  between  the  person  giving  the  notice  and  the  one  to 
whom  notice  is  given.8  Even  if  the  holder  tries  to  notify  a 
party  to  the  paper  and  fails,  yet  a  notice  received  in  due 
time  by  that  party  from  a  subsequent  party  to  the  paper 
properly  notified  will  bind  him  to  that  subsequent  party  and 
all  others  between  them,9  as  well  as  to  all  other  parties  sub- 
sequent to  that  subsequent  party.10  The  holder  may  mail  all 
the  notices  to  the  last  indorser  for  service,11  and  that  indorser 

*See  the  following  cases  in  the    Me.  392;  Watson  v.  Templeton,  11 
notes  to  this  section.  La.  Ann.  137;  Spencer  v.  Ballou,  18 

2  Griffith  v.  Assmann,  48  Mo.  66;    N.  Y.  327. 

West  River  Bank  v.  Taylor,  34  N.  Y.  8  Mead  v.  Engs,  5  Cow.  303;  Jor- 

128.  dan  v.  Ford,  7  Ark.  416 ;  Grand  Gulf 

3  Henry  v.  State  Bank,  3  Ind.  216;  Co.  v.  Barnes,  12  Rob.  (La.)  127. 
Crane  v.  Trudeau,  19  La.  Ann.  307.  9  Marr  v.  Johnson,  9  Yerg.  1. 

<  See  the  last  note.  Sometimes  a  w  Westfall  v.  Far  well,  13  Wis.  504; 

statute  requires  notice  to  all  prior  Linn  v.  Horton,  17  Wis.  151.  But 

parties.  See  note  29,  infra.  if  the  notice  to  a  certain  indorser 

8  Unless  a  statute  requires  all  to  was  excused,  another  party  subse- 

be  served.  See  note  29,  infra.  quent  to  the  one  not  notified  can- 

6  Boteler  v.  Dexter,  20  D.  C.  26;  not  hold  the  unnotified  party  liable 
Henry  v.  State  Bank,  3  Ind.  216;  on  the  strength  of  the  excuse,  if  he 
Valk  v.  Bank  of  State,  1  McMuL  Eq.  could  himself  have  given  the  no- 
414.  tice.    Beale  v.  Parrish,  20  N.  Y.  407. 

7  Lawson   v.  Farmers'   Bank,  1  » Pate  v.  State  Bank,  3  Ind.  176; 
Ohio  St.  206;  Renshaw  v.  Triplett,  Wood  v.  Callaghan,  61  Mich.  402. 
23  Mo.  213;  Crocker  v.  Gitchell,  23 


§  277.]  EXCHANGES,  SECURITIES,  ETC.  487 

may  mail  to  his  indorser,12  and  so  on  through  all  the  parties; 
and  each  party,  who  receives  notice  in  due  time  under  this 
method,  even  though  it  be  circuitous,  and  even  though  he 
would  have  received  notice  sooner  if  it  had  been  mailed  di- 
rectly to  him,  will  be  held.13  All  indorsements  are  on  the 
same  level  under  this  rule,  whether  they  are  for  value  or  for 
collection,  and  all  persons  who  hold  the  paper  for  collection 
unindorsed.14  The  indorsee  for  collection,  even  under  an 
unsigned  transfer,  may,  acting  as  holder,  send  the  notice  to 
his  indorser  for  service,15  the  residence  of  the  parties  being 
perfectly  immaterial  as  to  the  right.16  The  rule  has  been 
extended  to  include  an  agent,  and  the  agent  may  have  the 
same  right  to  send  notices  to  his  principal  without  inquiry 
as  to  residences  as  if  he  were  an  indorsee,17  or  he  may  him- 
self serve  the  notices  upon  any  or  all  the  parties 18  if  he  be 
authorized  to  do  so,19  and  the  presumption  will  be  as  against 
a  party  notified  by  him  that  he  is  so  authorized.20  Yet,  if  he 
were  expressly  forbidden  to  do  so,  there  would  be  nothing  to 
prevent  the  principal  from  giving  the  notices  if  he  did  it  in 
due  time,  even  if  his  agent  had  tried  to  do  so  but  failed.21 
If  the  paper  passes  through  a  succession  of  indorsees  for  col- 
lection, each  agent  or  bailee  is  to  be  treated  as  a  holder  for 
the  purposes  of  this  rule,22  although  there  has  been  some 

12  Wood  v.   Callaghan,  61  Mich.       ^Eosson  v.  Carrol,  90  Tenn.  90; 

402;  Butler  v.  Duval,  4  Yerg.  265.  Bowling  v.  Harrison,  6  How.  248; 

13Triplett  v.  Hunt,  3  Dana,  126;  Hartford  Bank  v.  Stedman,  3  Conn. 

Church  v.  Barlow,  9  Pick.  547.   And  489;  Colt  v.  Noble,  5  Mass.  167  (for- 

see  cases  in  note  16,  infra.  eign  bill);  Bank  of  U.  S.  v.  Goddard, 

14  Eagle  Bank  v.  Hathaway,  5  Met.  5  Mason,  366;  Morgan  v.  Van  Ingen, 

212;  Burnhain  v.  Webster,  19  Me.  2  Johns.  204.    The  agent  may  give 

232;  Blakelee  v.  Hewitt,  76  Wis.  341.  the  notice  in  his  own  name.  Dexter 

15Rosson  v.  Carrol,  90  Tenn.  90;  v.  McGlynn,  99  Cal.  14& 
Bowling  v.  Harrison,  6  How.  248;       H  Griffith  v.  Assmann,  48  Mo.  66; 

Big  Sandy  Nat.  Bank  v.  Chilton,  Wood  v.  Callaghan,  61  Mich.  402. 
40  W.  Va.  491;  First  Nat.  Bank  v.       ™See  the  next  note. 
Smith,  132  Mass.  227  (unsigned>  20payne  v.  Patrick,  21  Tex.  680. 

16  West  River  Bank  v.  Taylor,  34      21This  particular  case  does  not 

N.  Y.  128;  True  v.  Collins,  85  Mass,  seem  to  have  arisen. 
438;  Fitchburg  Bank  v.  Perley,  84      "See  cases  in  notes  17  and  18. 
Mass.  433;  First  Nat  Bank  v.  Smith. 
132  Mass.  227. 


4-88  BANKS   AND   BANKING.  [§  277. 

doubt  as  to  an  agent  who  was  not  indorsee.23  Since,  there- 
fore, the  holder  has  the  right  to  assume  that  the  agent  for 
collection  or  the  indorsee  for  collection  will  transmit  the 
notices  to  himself  for  service,  he  is  not  negligent  in  not  giv- 
ing the  agent  an y  information  whatever  as  to  the  residences 
of  the  parties,24  unless  he  direct  that  agent  or  indorsee  for 
collection  to  serve  the  notices,  when  he  should  give  the  agent 
all  the  information  in  his  possession  in  order  to  escape  the 
imputation  of  a  want  of  due  diligence.25  The  party  to  the 
paper  desiring  to  serve  a  notice  may  send  the  notice  to  a 
third  party,  a  stranger  to  the  paper,  to  serve  where  he  does 
not  know  the  address,  and  if  that  third  person  acts  with  due 
diligence  the  service  is  good.26  But  if  the  person  knew  the 
address,  the  sending  of  the  notice  to  a  third  person  not  a 
party  to  the  paper  would  not  bo  due  diligence.27  The  second 
case  cited  in  the  last  note  applies  wrongly  a  sound  principle 
by  mistaking  the  facts.  There  the  president  of  the  bank, 
who  had  received  in  his  private  capacity  knowledge  of  the 
residence  of  a  person  to  be  charged  with  notice,  was  not 
in  the  bank,  and  took  no  part  when  the  notice  was  sent, 
and  his  knowledge  was  clearly  therefore  not  imputable  to 
the  bank ;  so  the  case  is  one  of  that  numerous  list  where  courts 
have  failed  to  understand  properly  the  rules  of  agency.28 
Sometimes  statutes  require  all  indorsers  to  be  served,  and 
thus  modify  the  preceding  rules.29 

2»Fish  v.  Jackmann,  19  Me.  467,  26Sewell  v.  Russell,  3  Wend.  276; 

Slack  v   Longshaw,  8  Ky.  Law  R.  Lafayette  Bank  v.  McLaughlin,  4 

166.    But  the  other  rule  is  correct.  W.  L.  J.  70.    It  was  held  in  the  first 

Lawson  v.  Farmers'  Bank,  1  Ohio  case  above  that  where  the  notice 

St.  206;  Ellis  v.  Commercial  Bank,  was  sent  to  an  agent  to  serve,  he 

7  How.  (Miss.)  294.    See  Tunno  v.  has  not  one  day  after  receipt  merely 

Lague,  2  Johns.  Gas.  1,  and  note  17,  to  put  in  the  mail.    See  Uarmena 

isupra.  v.  Dougherty,  1  La.  Ann.  369. 

«  See  Bartlett  v.  Isbell,  31  Conn.  n  Carmena  v.  Dougherty,  1  La. 

296.    But  Clarke  v.  Ward,  4  Duer,  Ann.   369;    Central  Nat   Bank  v. 

206,  seems  contra,  and  so  seems  to  Levin,  6  Mo.  App.  543.    But  the 

be  First  Nat.  Bank  v.  Farneman,  93  first  case  is  wrong,  since  the  notice 

Iowa,  161,  but  they  are  wrong.  was  sent  to  the  holder. 

'-»  See  Lawrence  v.  Meller,  16  N.  Y.  28  See  §  112,  ante. 

235;  Smith  v.  Fisher,  24  Pa.  222.  29  Bowling  v.  Arthur,  34  Miss.  41. 


§  278.]  EXCHANGES,  SECURITIES,  ETC.  489 

§  278.  By  whom  notice  is  to  be  given. —  The  notice  may 
be  given  by  the  holder  or  his  agent.1  It  is  not  material 
whether  the  one  or  the  other  gives  the  notice.2  Under  this 
rule  the  notary  employed  is  an  agent,  which  fact  may  be 
inferred  from  his  acting.3  The  cashier  of  a  bank  hold- 
ing for  collection  is  an  agent  of  the  bank  to  give  notices.4 
The  indorsee  for  collection  has  been  called  also  an  agent 
under  this  rule ;  but  as  we  have  elsewhere  demonstrated,  a 
bank  holding  paper  for  collection  is  a  bailee,  and  therefore 
an  actual  holder,  not  an  agent.5  Notice  given  by  the  ac- 
ceptor6 or  maker,  as  agent  of  the  holder,  inures  to  the 
benefit  of  other  parties  to  the  bill.7  The  word  "  holder  "  in- 
cludes any  one  through  whose  hands  the  bill  or  note  has 
passed,8  even  an  assignor  without  indorsement.9  Each  one 
of  them  may  give  notice  to  all  or  any  parties  prior  to  them- 
selves.10 In  the  last  section  was  necessarily  considered  the 
giving  of  notices  by  successive  obligors.11  We  saw  that  an 
agent  could  give  notice  to  his  principal  instead  of  sending 
notices,12  or  he  might  give  notice  himself  in  his  own  name 13  or 
in  his  principal's  name.14  The  holder  can  give  notice  to  any 
or  all  the  prior  parties.15  Each  indorser  must  take  precau- 
tion to  see  that  all  prior  parties  whom  he  desires  to  hold  are 

See  Jarnagin  v.  Stratton,  95  Tenn.  as  agent  of  the  holder,  and  acted 

619,  as  to  the  effect  of  a  statute  in  due  time.    Sebree  Deposit  Bank 

making  all  joint  obligations  joint  v.  Moreland,  96  Ky.  150. 

and  several.    It  does  not  change  7  See  cases  in  last  note. 

this  rule.  8  Glasgow  v.  Prattle,  8  Mo.  336; 

1  Burke  v.  McKay,  2  How.  66;  West  River  Bank  v.  Taylor,  34  N.  Y. 
Harris  v.  Robinson,  4  How.  336.  128;  Stafford  v.  Yates,  18  Johns.  327. 

2  See  cases  in  last  note.  9He  would  be  on  the  same  foot- 

3  Burbank  v.  Beach,  15  Barb.  326.  ing  as  a  holder  to  whom  the  note 
See  Payne  v.  Patrick,  21  Tex.  680.  was  unindorsed.    See  Pate  v.  State 

4  State  Bank  v.  Vaughan,  36  Mo.  Bank,  3  Ind.  176. 

91.  1°  See  preceding  section. 

8  See  §  171,  ante,  and  Manchester  u  See  last  section. 

Bank  v.  Fellows,  28  N.  H.  302.  12  See  last  section. 

8  Union  Bank  v.  Grimshaw,  15  13  See  note  17  to  preceding  section. 

La.  821;  Brailsford  v.  Williams,  15  14See  §  270,  ante. 

Md.  150.    But  the  allegation  must  15See  preceding  section, 
be  that  the  maker  or  acceptor  acted 


400 


BANKS   AND   BANKING. 


[§  278. 


notified,16  unless  a  statute  should  change  the  rule.17  Notice 
to  a  prior  indorser  from  the  holder  inures  to  the  benefit  of 
the  subsequent  indorser,18  and  notice  by  a  subsequent  to  a 
prior  indorser  inures  to  the  benefit  of  the  holder.19  It  has 
been  held  that  notices  to  all  the  prior  parties  properly  ad- 
dressed, inclosed  in  a  letter  to  the  last  indorser,  will  hold 
all  the  prior  indorsers  to  the  holder,  although  the  last  in- 
dorser never  received  the  letter,  and  the  letter  was  lost  in 
the  mail.20  Other  authority  seems  to  require  that  the  notices 
be  actually  transmitted  with  proper  diligence  to  the  prior 
indorsers.21  This  modification  is  correct  to  this  extent,  that 
no  intervening  party  be  guilty  of  laches,  and  therefore  the 
first  statement  of  the  rule  is  undoubtedly  correct,  even  if  the 
holder  had  knowledge  as  to  the  residences.  If,  however, 
the  last  indorser  received  the  letter  it  must  appear  that  he 
remailed  or  served  the  notices,22  either  to  his  prior  indorser 
or  the  parties  separately,  and  the  same  rule  as  to  miscarriage 
in  the  mail  would  apply.23  All  the  cases  in  the  preceding 
section  should  be  consulted  in  connection  with  this  section. 
Notices  given  by  those  who  are  strangers  to  the  paper  are 


16  See  preceding  section.    But  if  a 
subsequent  party  not  notified  gives 
notice  to  a  prior  party,  the  notice 
does  not  inure  to  the  other  parties 
to  the  paper.    Brown  v.  Ferguson, 
4  Leigh,  37,  semble.    This  decision 
is  wrong.    The  rule  ought  to  be 
that  as  soon  as  it  appears  that  the 
holder    mailed  the   notice  under 
cover  to  the  last  indorser,  then  the 
indorser  should  be  called  upon  to 
show  that  he  did  not  receive  it,  and 
to  show  laches.    See  notes  20  and 
21,  and  Stafford  v.  Yates,  18  Johns. 
327. 

17  See  note  29  to  preceding  section. 

18  See  preceding  section. 
1  19  See  preceding  section. 

2°Wamesit  Bank  v.  Buttrick,  11 


Gray,  387.  Due  diligence  had  been 
used  to  notify  the  prior  parties.  If 
the  notices  had  not  been  lost,  then 
the  laches  of  an  intervening  holder 
would  'defeat  recovery.  Farmers' 
Bank  v.  Turner,  2  Litt.  13;  Holland 
v.  Turner,  10  Conn.  308. 

2 'See  Aldine  Mfg.  Co.  v.  Warner, 
96  Ga.  370;  Stix  v.  Matthews,  63 
Mo.  371;  Van  Brunt  v.  Vaughan,  47 
Iowa,  145. 

22  Renshaw  v.  Triplett,  23  Mo.  213; 
Ohio  Life  Ins.  Co.  v.  McCague,  18 
Ohio,  54;    Holland  v.  Turner,   10 
Conn.  308. 

23  There  is  no  doubt  that  a  notice 
properly  mailed  by  a  proper  person 
is  notice. 


§  279.]  EXCHANGES,  SECURITIES,  ETC.  491 

wholly  void ; 24  but  a  liberal  presumption  will  be  indulged  in 
favor  of  the  authority  of  the  giver  of  notice.25 

§  279.  Place  to  direct  by  mail. —  We  have  hereinbefore 
discussed  the  place  of  service  where  the  service  is  not  to  be 
made  by  mail  and  the  residence  is  known.1  It  will  be  nec- 
essary now  to  consider  to  what  postoffice  the  notice  should 
be  directed  when  the  postoffice  address  is  known.  The 
propriety  of  sending  a  letter  to  a  discontinued  postoffice 
has  been  considered  in  a  former  section.2  It  should  first  be 
observed  that  notice  by  mail  is  not  compulsory,  for  notice 
may  be  sent  by  messenger,  and  if  the  messenger  exhibit 
reasonable  diligence  in  transmitting  it  the  service  is  per- 
fectly good.3  In  the  next  place  the  particular  postoffice 
which  it  is  desired  to  address  may  be  called  by  more  than 
one  name ;  and  if  that  be  the  case  the  use  of  either  name  is- 
proper.4  Again,  a  particular  place  may  have  more  than  one 
postoffice,  and  a  notice  directed  to  the  place  without  indi- 
cating which  postoffice  would  be  sufficient,  unless  it  be  shown 
that  the  holder  or  his  agent  serving  was  aware  that  the  re- 
cipient of  the  notice  used  one  of  the  postoffices  exclusively,. 
or  could  have  known  it  by  reasonable  diligence.5  The  place 
to  be  addressed  may  be  a  district  of  country  with  a  post- 
office  in  it,  and  if  the  indorser  lives  in  the  district,  notice  to- 
him  through  the  postoffice  for  the  district  would  be  suffi- 
cient, unless  the  holder  knew  that  he  made  use  of  a  post- 

*  Lawrence  v.  Miller,  16  N.  Y.  235.  4  Geneva    Bank    v.    Hewlett,    4 

25  Payne  v.  Patrick,  21  Tex.  680.  Wend.  328. 

1  See  §  274,  ante.  6  Morton  v.  Westcott,  8  Gush.  425; 

2  See  §  273,  ante.  Roberts  v.  Taf t,  120  Mass.  169 ;  Man- 

3  Bank  of  Columbia  v.  Lawrence,  Chester  Bank  v.  White,  30  N.  H.  456; 
1  Pet  578;  Hazelton  Coal  Co.  v.  Downer  v.  Remer,  21  Wend.  10,  23 
Ryerson,  20  N.  J.  Law,  129.    But  Wend.  620;  Bank  of  Manchester  v. 
the  special  messenger  differs  from  Slason,  13  Vt.  334;  Burlingame  v. 
the  mail  in  that  notice  put  into  the  Foster,  128  Mass.  125.    If  the  post- 
mail  is  good,  but  notice  given  to  a  office  has  two  names,  either  name 
special  messenger  proves  nothing  may  be  used  (Bank  of  Geneva  v. 
until  it  is  shown  that  the  messen-  Hewlett,  4  Wend.  328) ;  but  a  notice 
ger  exercised  diligence.    Jarvis  v.  addressed  to  a  county  which  ha» 
St  Croix  Mfg.  Co.,  23  Me.  287.  more   than  one  postoffice  is  bad. 

Bank  of  III.  v.Taylor,  7  T.  B.  Mon.  576. 


492  BANKS   AND   BANKING.  [§  279. 

office  outside  of  that  district.8  If  the  notice  to  be  addressed 
is  to  a  city  of  considerable  size,  it  is  not  necessary  to  address 
the  person  receiving  the  notice  by  his  street  and  house  num- 
ber,7 unless  it  be  shown  that  the  holder  or  his  agent  for 
service  knew  the  house  number  and  the  street,  or  unless  the 
address  has  been  indicated  in  such  a  manner,  e.  g.,  upon  the 
paper,  that  the  holder,  ought  to  have  known  the  number.8 
There  may  be  two  places  in  different  states  with  the  same 
name;  if  one  of  those  places  be  in  the  same  state  as  the 
place  where  the  notice  is  sent,  the  state  need  not  be  named 
in  the  address,  but  otherwise  it  should  be.9  Subject  to  the 
above  limitations  the  notice  should  be  sent,  in  the  absence 
of  a  controlling  agreement,  to  the  postoffice  of  the  place  of 
actual  residence  of  the  indorser  or  other  person  to  be  charged 
with  notice,  provided  that  place  be  known  to  be  the  resi- 
dence of  the  party  or  represented  by  him  to  be  such.10  This 
rule  is  to  be  followed  regardless  of  the  place  where  the  bill 
or  the  note  is  dated.11  Sending  the  notice  in  this  manner 
will  always  be  considered  sufficient  if  the  mail  is  a  proper 
method  of  service  in  the  particular  case.12  People,  however, 
will  be  found  residing  in  one  place  part  of  the  year  and  in 
another  place  part  of  the  year,  and  it  would  seem  to  be  cor- 
rect to  address  the  postoffice  of  actual  residence,  regardless 
of  the  domicile.13  Yet  mere  absence  from  his  family  does 
not  constitute  a  change  of  residence  under  this  rule.1*  But 
cases  must  frequently  arise  where  the  indorser  lives  away 

6  Rand  v.  Reynolds,  2  Gratt  171.       "  Fitler  v.  Morris,  6  Whart.  406. 

7  True  v.  Collins,  85  Mass.  438;       12  See  §  272,  ante.  It  is  immaterial 
Webber  v.  Gotthold,  28  N.  Y.  Supp.  that  the  notice  was  never  received. 
763.  §  273,  ante,  note  1. 

8Bartlettv.Robinson,9Bosw.305,  ^This  is  the   rule  as  stated  in 

39  N.  Y.  187.  Young  v.  Durgin,  15  Gray,  264.  See 

»Beckwith  v.  Smith,  22  Me.  125.  Goodwin  v.  McCoy,  13  Ala.  271; 

10  Young  v.  Durgin,  15  Gray,  264;  Wooley  v.  Lyon,  117  III  244;  Mc- 

Robinson  v.  Barber,  8  Am.  Law  J.  Murtrie  v.  Jones,  3  Wash.  C.  C.  206; 

(N.  S.)  59;  Lewiston  Falls  Bank  v.  Gist  v.  Ly brand,  3  Ohio,  307. 

Leonard,  43  Me.  144  (represented  by  14  Curtis  v.  State  Bank,  6  Blackf. 

indorser  to  be  his  postoffice).    See  312;  Walker  v.  Stetson,  14  Ohio  St. 

also  Pierce  v.  Pendar,  5  Met.  352.  89. 


§  279.]  EXCHANGES,  SECURITIES,  ETC.  493 

from  a  place  with  a  postoffice.  In  that  contingency  the  place 
to  send  the  notice  through  the  mail,  if  the  server  does  not 
know  where  the  person  to  be  served  receives  his  mail,  is  the 
postoffice  nearest  to  the  residence  of  the  indorser  or  drawer.15 
In  order  to  determine  the  nearest  postoffice  it  is  said  that 
the  holder  may  consider  the  nearest  postoffice  the  one  from 
which  he  will  get  mail  the  soonest,  not  necessarily  the  post- 
office  nearest  in  point  of  distance.16  But  the  case  must  be 
very  rare  where  such  a  condition  of  affairs  is  likely  to  exist. 
It  is  the  safer  rule  to  choose  the  postoffice  that  is  the  nearer 
in  point  of  distance,  and  that  choice  is  proper  though  the 
postoffice  be  in  another  state.17  But  where  the  nearer  post- 
office  was  separated  from  the  indorser's  residence  by  a  wide 
and  rapid  river,  while  another  postoffice,  though  two  miles 
farther  away,  was  on  the  same  side  of  the  stream,  the  choice 
of  the  latter  place  of  address  was  justifiable.18  This  decision 
should  have  been  put  upon  the  ground  that  the  holder  had 
the  right  to  assume  that  the  indorser  received  his  mail  at 
the  latter  place.  In  yet  another  case,  where  the  indorser 
lived  three  miles  from  the  nearest  postoffice  and  eleven  miles 
from  the  place  of  demand,  it  was  seemingly  held,  by  an  ap- 
parently foolish  court,  that  the  place  of  demand  was  the 
postoffice  of  the  indorser,  and  that  service  by  mail  was  im- 
proper.19 If  it  were  shown  that  the  holder  knew  that  the 
indorser  did  not  get  mail  at  his  nearest  postoffice,  but  did 
get  it  from  the  postoffice  at  the  place  of  demand,  this  decis- 
ion might  be  upheld.20  Another  court  has  held  that  where 
the  drawer  or  indorser  lives  outside  of  the  city  the  notice 
may  be  by  mail  to  the  city  postoffice,  if  it  is  the  nearest 

15 Forbes  v.  Omaha  Nat.  Bank,  10  "Harrison  v.  Bowen,  16  La,  282; 

Neb.  338;    Hazelton    Coal    Co.  v.  Pollard  v.  Cook,  4  Rob.  (La.)  199. 

Ryerson,  20  N.  J.  Law,  129;  Reid  v.  18  Bank  of  Louisiana  v.  Corl,  3  La. 

Payne,  16  Johns.  218;  Seneca  Co.  Ann.  273. 

Nat  Bank  v.  Neass,  3  N.  Y.  442,  5  » Nashville  Bank  v.   Bennett,  1 

Denio,  329;  Bank  of  Columbia  v.  Yerg.  106. 

Magruder,  6  Har.  &  J.  172;  Woods  20See  the  cases  cited  in  note  28, 

v.  Neeld,  44  Pa.  86.  infra. 

le  Bank  v.  Lane,  10  N.  C.  453;  Bank 
of  Louisiana  v.  Corl,  3  La.  Ann.  273. 


494:  BANKS   AND   BANKING.  [§  279. 

postoffice,  and  if  he  has  no  place  of  business  in  the  city.21 
And  there  are  decisions  denying  this  rule  as  to  an  indorser 
who  lived  one  and  a  half  miles,22  a  few  miles,23  but  applying 
it  to  indorsers  who  live  four  or  five  miles,24  and  nine  miles 
out  of  the  city. 

But  the  rule  of  the  nearest  postoffice  is  only  a  rule  of  pre- 
sumption. For  a  notice  that  is  directed  to  the  postoffice 
where  the  person  receiving  notice  is  in  the  habit  of  receiving 
his  mail  will  unquestionably  be  sufficient  regardless  of  the 
rule  of  the  nearest  postoffice.25  And  if  the  indorser  should 
be  in  the  habit  of  receiving  mail  at  more  places  than  one, 
notice  to  either  of  these  places  is  sufficient;26  yet  in  Louisiana 
(a  state  where  almost  any  kind  of  a  decision  upon  this  phasa 
of  the  law  may  be  found,  and  where  the  multitudinous  de- 
cisions lead  one  to  imagine  that  the  most  active  pursuit  of 
the  population  was  the  indorsing  of  notes,  which  the  makers 
never  paid),  the  court  thought  an  indorser  ought  to  be  pro- 
tected against  a  postoffice  twenty-two  miles  away  from  his 
residence,  even  though  he  was  foolish  enough  to  receive  his 
mail  there  sometimes.27  If  now  the  holder  or  his  agent  knows 
that  the  indorser  is  in  the  habit  of  receiving  his  mail  at  a 
certain  postoffice,  the  notice  may  be  directed  there  even  if 
it  be  not  the  nearest; 28  but  he  is  not  compelled,  it  appears,  to 

21  See  note  8  to  §  272,  ante.  Walker  v.  Stetson,  14  Ohio  St.  89; 

22  Forbes  v.  Omaha  Nat.  Bank,  10    Hazelton  Coal  Co.  v.  Ryerson,  20 
Neb.  338.    And  see  notes  6-8,  §  272,    N.  J.  Law,  129. 

ante.  26  Bank  of  U.  S.  v.  Carneal,  2  Pet. 

23  Ireland  v.  Kip,  10  Johns.  490, 11  543;  Follain  v.  Dupre,  11  Rob.  (La.) 
Johns.  231.    See  notes  6-8,  §  272,  454;  Menzies  v.  Farmers'  Bank,  3 
ante,  Ky.  Law  R.  822;  Crawford  v.  Read, 

24  See  notes  6-8,  §  272,  ante.  9  Rob.   (La.)  243.     See  Shelburne 
2»  Bank  of  U.  S.  v.  Carneal,  2  Pet    Falls  Bank  v.  Townsley,  107  Mass. 

543;  Glasscock  v.  Bank  of  Mo.,  8  444;  Mechanics'  Bank  v.  Compton, 

Mo.  443;  Mercer  v.  Lancaster,  5  Pa.  3  Rob.  (La.)  4. 

160;  Nevins  v.  Bank,  10  Mich.  547;  v  Pritchard  v.  Scott,  7  Mart.  (N.  S.) 

Montgomery  Co.  Bank  v.  Marsh,  11  491. 

Barb.  645,  7  N.  Y.  481;  Shay  lor  v.  2«  Follain  v.  Dupre,  11  Rob.  (La.) 

Mix,  86   Mass.  351;    Grief  v.  Mo-  434;  Grand  Gulf  Co.  v.  Barnes,  12 

Daniel,  14  La.  Ann.  155;  Farmers'  Rob.  (La.)  127;  Bank  of  Illinois  v. 

Bank    v.    Battle,    4    Humph.    86;  Taylor,  7  T.  B.  Mon.  579;  Reid  v. 


§  279.]  EXCHANGES,  SECURITIES,  ETC.  495 

do  so.  But  if  the  holder  does  not  know  the.  fact  he  needs 
not  inquire,  but  should  follow  the  rule  of  mailing  to  the 
nearest  postoffice.29 

There  is  yet  another  consideration  that  will  govern  the 
rule  of  mailing  to  the  postoffice  nearest  the  residence  of  the 
recipient  of  notice.  "While,  as  we  have  seen,  the  presence 
of  an  address  for  the  indorser,  not  put  upon  the  note  by  the 
indorser,  will  not  justify  the  sending  of  notice  there  without 
inquiry,  a  direction  to  the  holder  to  send  notice  to  a  cer- 
tain place  can  be  deviated  from  only  at  the  risk  of  the 
holder.30  This  direction  as  to  notice  will  be  reasonably  and 
liberally  and  not  strictly  construed.31  It  governs  the  rule  as 
to  the  nearest  postoffice,32  and  the  accustomed  postoffice  as 
well.  The  direction  need  not  be  given  necessarily  by  the 
indorser,  for  the  order  to  direct  notice  given  by  the  drawer 
for  an  accommodation  indorser,33  or  the  direction  as.  to  no- 
tice to  indorser  given  by  the  person  who  presents  the  paper 
for  discount,  apparently  for  the  indorser,  is  binding  upon  the 
indorser.34  But  the  direction  as  to  notices  must  be  given  to 
the  holder.  He  cannot  take  advantage  of  a  direction  given 
to  the  postmaster  as  to  the  forwarding  of  mail,  in  order  to 
avoid  the  force  of  the  rule  as  to  the  nearest  postoffice.35 

But  it  should  not  be  forgotten  that  these  rules  are  only 
compulsory  when  the  indorser  or  drawer  has  not  received 

Payne,  16  Johns.  218;  Seneca  Co.  33Bank  of   Utica  v.   Bender,  21 

Nat.  Bank  v.  Neass,  3  N.  Y.  442.  Wend.  643. 

29  See  last  case  in  last  note  and  34  Bank  of  Utica  v.  Davidson,  5 
Taylor  v.  Bank  of  Illinois,  7  T.  B.  Wend.  587. 

Hon.  576.  85  Ireland  v.  Kip,  Anth.  N.  P.  195. 

30  Paterson  Bank  v.  Butler,  12  N.  J.  In  the  upper  courts  the  point  was 
Law,  268.     See  as  to  address  on  missed.    This  point  would  seem  to 
paper,  Bowling  v.  Harrison,  6  How.  be  the  only  ground  upon  which 
248.  this  decision  can  be  justified.    But 

31  Menzies  v.  Farmers'  Bank,  3  Ky.  the  point  is  really  immaterial.    It 
Law  R.  822.    See  Follain  v.  Dupre,  proves  that  the  person  has  been 
11  Pvob.  (La.)  454;  Priestley  v.  Bis-  getting  his  mail  at  the  place,  and 
land,  9  Rob.  (La.)  425.  if  the  holder  does  not  know  of  the 

3-Carmena  v.  Bank  of  La,  1  La.  change,  mailing  to  the  place  is  good. 
Ann.  369;  Crowley  v.  Barry,  4  Gill,  McGrew  v.  Toulmin,  2  Stew.  &  P. 
194.  428. 


4:96  BANKS   AND   BANKING.  [§  280. 

notice  in  due  time.  If  he  has  received  such  notice  in  due 
time  from  the  holder,  or  from  some  other  party  to  the  paper, 
as  hereinbefore  stated,  it  is  immaterial  how  the  notice  was 
directed,38  or  to  what  place  it  was  directed,37  or  who  conveyed 
it,88  or  where  it  was  received.89 

§  280.  Absence  from  home. —  Incidentally,  in  the  preced- 
ing section  upon  personal  service,  the  effect  of  a  person's  ab- 
sence from  his  home  was  noticed.  The  rule  may  be  stated 
to  be  that  the  temporary  absence  of  a  person  from  his  resi- 
dence does  not  require  any  different  method  of  service 
whether  the  absence  be  for  several  days  or  several  months.1 
If  his  place  of  business  or  his  residence  is  kept  open,  service 
there  otherwise  good  ought  in  all  cases  to  be  upheld.2  If 
the  person  is  traveling,  it  would  be  absurd  to  expect  the 
holder  to  pursue  him  from  place  to  place  with  a  notice.  It 
is  the  duty  of  the  person  leaving  home  to  make  provision 
for  proper  attention  to  his  business  while  he  is  away.  The 
rule  is  reasonable  and  proper  from  every  standpoint.  It  has 
been  so  held  as  to  a  person  traveling  in  Europe,5  and  as  to 
a  person  who  has  accepted  a  consulship,4  and  in  a  number 
of  other  contingencies,  such  as  temporary  absence  from  one's 
boarding  house 5  or  office 6  or  residence.7  The  rule  ought  to 
be  that  in  case  of  absence  from  his  residence  the  indorser 
or  drawer  should  be  served  at  his  residence  without  attempt- 

36  See  note  22,  §  281,  post.  2  See  Murray  v.  Ormes,  3  MacA.  60. 

37  See  note  22,  §281,  post.  'McMurtrie    v.  Jones,  3  Wash. 
88  See  note  22,  §  281,  post.                   C.  C.  206. 

39  See  note  22,  §  281,  post.  <  Burkhardt  v.  Fourth  Nat.  Bank, 

1  McCrummen  v.  McCrummen,  5  6  Wkly.  Law  BuL  138. 

Mart.  (N.  S.)  159;  Walker  v.  Stetson,  *  See  Bradley  v.  Davis,  26  Me.  45; 

14  Ohio  St.  89;  Goodwin  v.  McCoy,  Bank  of  U.  a  v.  Hatch,  6  Pet  250. 

13  Ala.  271;  Wooley  v.  Lyon,  117  See  Rives  v.  Parmley,  18  Ala.  256. 

HL    244;    McMurtrie   v.   Jones,    3  »Hobbs  v.  Straine,  149  Mass.  212; 

Wash.  C.  C.  206;  Gist  v.  Ly  brand,  State  Bank  v.Hennen,  4  Mart  (N.S.) 

3  Ohio,  307;    Isbell   v.   Lewis,  98  227. 

Ala.  550 ;  Burkhardt  v.  Fourth  Nat.  '  Lawrenoe  v.  Ralston,  3  Bibb,  102 ; 

Bank,  6  Wkly.  Law  BuL  138.  But  Curtis  v.  State  Bank,  6  Blackf.  312. 
see  Runyon  v.  Montfort,  44  N.  C.  371. 


§  280.]  EXCHANGES,  SECURITIES,  ETC.  497 

ing  to  ascertain  his  whereabouts  or  waiting  for  his  return.8 
Even  though  the  house  be  closed  during  the  absence,  the  no- 
tice may  be  left  with  a  neighbor  with  directions  to  deliver.9 
But  it  has  been  held  that  where  an  indorser  with  his  family 
had  left  his  home,  which  was  kept  open  and  occupied  by 
servants,  a  notice  left  at  the  house  was  not  a  good  service, 
if  the  holder  by  reasonable  diligence  could  have  ascertained 
that  the  family  were  absent.10  The  family  had  gone  south 
within  the  rebel  lines,  and  there  was  no  showing  whatever 
that  they  had  an  established  residence  or  even  a  nomadic 
stopping  place  elsewhere.  The  case  is  undoubtedly  a  wretch- 
edly erroneous  decision.  In  another  case  the  indorser  was 
away  from  his  residence  and  within  the  Confederate  lines, 
and  a  notice  by  mail  was  sent  to  his  place  of  residence,  and 
the  notice  was  held  bad.11  In  yet  another  case  the  indorser 
was  away  from  his  residence  and  serving  in  the  rebel  army, 
and  a  notice  left  at  his  residence  was  held  bad.12  On  the 
principle  of  these  decisions,  if  a  man  in  the  far  west  should 
absent  himself  from  his  residence  and  go  out  upon  the  range 
for  the  purpose  of  stealing  cattle,  a  notice  left  at  his  house 
or  mailed  to  his  postoffice  would  be  badly  served,  a  conclu- 
sion absurd  enough;  yet  the  two  cases  do  not  differ  except 
in  the  species  of  illegality  that  actuated  the  person  leav- 
ing home.  It  is  exceedingly  difficult  to  avoid  the  impres- 
sion of  a  political  prejudice  in  these  rulings  of  the  court. 
The  court  seems  to  have  thought  that  the  interruption  of 
communication  by  war  cut  some  figure,  but  that  is  material 

8  See  Walker  v.  Stetson,  14  Ohio  whether  that  fact  was  known  to  the 
St.  89.  server.    The  opinion  is  accurately 

9  Williams  v.   Bank  of  U.  S.,  2  described  by  the  word  "  btte." 
Pet  96.  12  McVeigh  v.  Allen,  29  Gratt.  588. 

10  Alexandria    Sav.    Inst.   v.  Me-  See  the  same  case  26  Gratt.  785, 
Veigh,  84  Va.  41.  where  the  opinion  by  Moncure,  J., 

11  Gilroy  v.  Brinkley,  12  Heisk.  392.  who  seemed  to  be  much  more  of  a 
The  court  in  this  case  does  not  see  lawyer  than  the  judge  who  deliv- 
that  the  whole  point  is  whether  ered  the  controlling  opinion,  cor- 
the  residence  of  the  indorser  had  rectly  states  the  law.    It  is  pitiful 
been  established  anywhere  else,  and  to  read  the  opinion  of  Anderson.  J.. 


4:98  BANKS    AND   BANKING.  [§  280. 

only  when  the  residences  of  the  party  serving  and  the  one 
to  be  served  are  separated  by  the  theatre  of  war. '  Here  the 
only  question  to  determine  was  that  of  residence  or  no  resi- 
dence at  the  place  of  serving.  But  even  conceding  that  the 
indorser  had  obtained  a  residence  in  Kichmond,  nevertheless 
he  kept  his  house  at  Alexandria,  and  there  was  nothing  to 
show  that  the  server  had  not  exercised  full  diligence.  It  is 
difficult  to  speak  of  such  opinions  with  anything  but  impa- 
tient distaste.  Judges  who  make  them  simply  certify  to 
their  own  either  incompetence  or  unfitness. 

The  cases  of  members  of  legislatures,  while  on  service  with 
their  legislative  bodies,  may  be  considered  sometimes  as  cases 
of  change  of  residence,  sometimes  of  temporary  absence  from 
home.  If  the  legislator  keeps  a  residence  at  his  home,  no- 
tice may  be  served  there,  though  the  proprietor  is  in  Wash- 
ington serving  in  the  legislature.13  A  notice  left  at  the 
"Washington  lodgings  after  congress  had  adjourned,  where 
the  congressman  had  returned,  as  was  his  habit,  after  ad- 
journment to  his  home  in  Virginia,  a  home  which  he  kept 
open  all  the  time,  was  held  to  be  not  properly  served.14 
Again,  it  has  been  held  that  a  notice  left  at  the  postoffice 
of  the  House  or  Senate  for  a  member  of  either  body  was  not 
good  without  showing  an  actual  reception  of  it; l5  but  a  no- 
tice left  at  the  legislator's  room  in  the  hotel  where  he  stopped 
was  properly  served.16  If  the  congressman  retains  a  resi- 
dence in  his  state  it  is  wrong  to  send  the  notice  to  "Wash- 
ington by  mail,17  although  afterwards  the  court  held  it  a 
proper  proceeding  where  the  member  had  no  residence  or 

13  Marr    v.    Johnson,   9   Yerg.   1.  There  was  no  right  to  make  mail 

Compare  with  Gilroy  v.  Brinkley,  service. 

12  Heisk.  392.    The  two  cases  are  16  Graham  v.  Sangston,  1  Md.  59. 

irreconcilable.  The  court  was  compelled  to  make 

14Bayley  v.  Chubb,  16  Gratt.  284  the  presumption  that  the  room  was 

The  learned  reporter  informs  us  the  member's  residence, 

that  in  this  case  Lee,  J.,  did  not  17  Walker    v.    Tunstall,    3   How. 

"  set"  Compare  McVeigh  v.  Allen,  (Miss.)  259.    This  case  amounts  to 

29  Gratt.  588.  saying  that  the  domicile  and  not 

15  Hill  v.  Norvel,  3  McLean,  583.  the  residence  is  the  place  to  serve 

notice. 


§  2SO.]  EXCHANGES,  SECURITIES,  KTO.  499 

agent  in  the  state.18  Another  court  held  that  when  a  mem- 
ber of  congress  was  in  Washington,  a  notice  sent  to  him 
there  was  good.19  But  in  a  case  where  Daniel  Webster, 
with  his  easy  facility  in  matters  of  business,  had  indorsed  a 
note,  he  was  served  with  notice  by  mail  to  Washington  while 
he  was  there  attending  a  session  of  the  senate.  He  had  an 
agent  in  Boston  who  attended  to  his  business  (at  Webster's 
place  of  business  in  Boston)  in  his  absence,  but  the  holder 
did  not  know  this,  although  it  is  a  fair  inference  that  he 
could  have  found  it  out  if  he  had  tried  to  do  so;  yet  the 
notice  was  held  to  have  been  properly  served.20  From  the 
foregoing  decisions  it  is  difficult  to  say  what  is  the  rule. 
Certainly,  a  legislator's  absence  from  his  place  of  residence 
is  but  temporary;  he  retains  his  legal  residence  there.  Most 
of  the  members  have  their  businesses  and  places  of  business 
at  their  homes.  They  may  achieve  a  somewhat  precarious 
residence  while  battening  in  some  Washington  boarding 
house,  or  may  even  attain  to  the  dignity  of  a  rented  house. 
Under  such  circumstances  a  service  at  their  homes  ought  to 
be  held  good,  yet  it  is  no  less  certain  that  a  service  by  mail 
to  Washington  during  the  session,  or  a  personal  service,  act- 
ual or  constructive,  at  Washington  during  the  session  ought 
to  be  good.  Perhaps  the  riddle  is  best  solved  by  saying, 
under  the  circumstances  above  stated,  that  the  member  has 
his  place  of  business  at  his  home  and  his  residence  during 
the  session  in  Washington,  and  a  service  at  either  place  is 
good.  Fortunately,  the  place  of  sojourn  of  congressmen  is 
so  thoroughly  exploited  by  our  indefatigable  press  that  a 
service,  either  personal  or  by  mail,  is  always  possible,  unless 
the  member  should  be  absent  upon  one  of  those  admirable 

18  Tunstall   v.  Walker,  2  Smedes  compared  with  the  cases  in  the  last 
&  M.  638.    The  record  in  this  case  section.    The  courts  have  been  un- 
shows  that  a  man  may  be  secretary  able  to  agree  upon  any  reasonably 
of  the  treasury  and  have  little  sense  fixed  rule,  and  the  same  court  has 
of  business  honor.  been  unable  to  agree  with  itself. 

19  Commercial  Bank  v.  Chambers,  The  question  is  complicated  by  the. 
14  Mo.  App.  152.  distinctions  that  are  sought  to  be 

20  Chouteau  v.  Webster,  6  Met.  1.  made  and  are  made  between  actual 
The  cases  in  this  section  should  be  residence  and  domicile. 


500  BANKS   AND   BANKING.  [§  281 

junketing  expeditions  which  so  justly  permit  a  little  relax- 
ation from  arduous  duties,  and  which  are  so  thoroughly  de- 
signed to  reflect  credit  upon  our  representative  institutions. 

§  281.  Change  of  residence. —  Some  of  the  instances  men- 
tioned in  the  former  section  Ynay  be  considered  as  cases 
where  the  indorser  or  drawer  has  changed  his  residence,  and 
no  further  reference  needs  be  made  to  them  here.  It  is  need- 
less to  say  at  this  point  that  if  the  maker  of  the  note  or  the 
drawee  or  acceptor  of  the  bill  of  exchange  has  changed  his 
residence  so  that  for  any  reason  a  demand  of  payment  can- 
not be  made  after  due  diligence,  or  is  excused,  notice  to  the 
drawer  or  indorser  is  not  thereby  excused,  but  notice  should 
be  given  just  as  well  as  where  a  demand  is  made  and  pay- 
ment actually  refused.1  The  instances  which  are  now  being 
considered  are  those  where  the  indorser  or  the  drawer  has 
changed  his  residence  so  as  to  interfere  with  the  service  of 
notice.  This  change  of  residence  may  be  known  or  not 
known  to  the  holder.  If  known  to  the  holder  it  may  not 
be  known  to  the  agent  serving  the  notices.  Whether  the 
holder  will  be  chargeable  with  negligence  for  not  giving  the 
agent  all  his  knowledge  as  to  the  indorser's  residence  has 
been  already  discussed.2  Considering  now  the  person  serv- 
ing the  notice,  whether  it  be  the  holder  or  his  agent,  if  the 
person  serving  knows  of  a  change  of  residence  on  the  part 
of  the  indorser  or  drawer  and  knows  the  new  residence,  no- 
tice must  be  sent  to  the  new  place  of  residence,3  wherever 
it  maybe, except  if  the  removal  be  into  another  state;4  and 
this  rule  is  not  changed  by  the  place  where  the  instrument 
is  dated5  nor  where  it  is  made  payable.6  If  the  change  of 
residence  is  known,  and  it  is  said  if  it  be  not  known  but 

1  Taylor  v.  Snyder,  8  Denio,  145;  Gray,  503;  Hilborn  v.  Artus,  4  Itl. 

Michaud  v.  Legarde,  4  Minn.  43;  844 

Williams  v.  Matthews,  3  Cow.  252;  6  Taylor  v.  Snyder,  8  Denio,  145; 

Haber  v.  Brown,  101  CaL  445.  Lowery  v.  Scott,  24  Wend.  858. 

• 2  See  §  277,  ante,  note  24  8  See    cases    cited    in  preceding 

8  Taylor  v.  Snyder,  3  Denio,  145.  notes,  and  Baker  v.  Clark,  20  Me. 

4  See  Graf  ton  Bank  v.  Cox,  13  158. 


§  281.]  EXCHANGES,  SECUKITIES,  ETC.  501 

ought  to  have  been  known  in  the  exercise  of  due  diligence,7 
the  person  serving  the  notice  proceeds  to  serve  as  if  the  per- 
son to  be  charged  had  resided  at  his  new  residence  when 
the  bill  was  drawn  or  note  was  indorsed.8  But  in  case  the 
fact  of  the  change  of  residence  is  known,  but  the  new  resi- 
dence is  not  known  to  the  person  serving,  the  whole  matter 
of  proper  service  is  resolved  simply  into  a  question  of  due 
diligence  to  ascertain  the  new  address,  a  matter  which  will 
be  examined  in  the  next  section.  But  even  if  the  change  of 
apparent  address  be  known,  there  are  instances  such  as  those 
mentioned  in  the  former  section,  where  the  change  may  be 
treated  merely  as  an  absence  from  the  residence.9  An  ex- 
ample of  such  a  case  is  found  where  the  indorser  had  left 
the  house  in  Washington  where  he  lived  at  the  time  he  in- 
dorsed and  had  removed  to  New  York,  where  he  was  living 
with  his  wife,  although  his  residence  in  "Washington  re- 
mained in  the  occupancy  of  his  daughter  and  his  former 
servants;  the  notice  served  at  the  house  in  Washington  was 
considered  good.10  The  facts  in  this  case  were  not  plain,  but 
it  seems  reasonably  certain  that  the  server  must  have  been 
able  to  ascertain  and  did  ascertain  the  change  of  residence 
on  the  part  of  the  indorser;  therefore  the  above  statement 
is  correct. 

Where  the  change  of  residence  is  not  known  certain  pre- 
sumptions may  be  indulged,  subject  to  the  limitation  as  to 
the  manner  of  service  suggested  below,  and  those  presump- 
tions are  that  the  maker  of  the  note  lives  where  the  note  is 
dated,11  and  the  drawer  of  the  bill,  provided  diligent  inquiry 
gives  no  information,  lives  where  the  bill  is  drawn ; 12  but  this 
same  presumption  does  not  necessarily  exist  in  the  case  of  an 

7  Baker  v.  Clark,  20  Me.  156 ;  Har-  Heisk.  793.    If  the  address  is  on  the 
ris  v.  Memphis  Bank,  4  Humph.  519.  note  the  place  of  dating  is  second- 

8  See  notes  3  and  4,  supra.  ary.    Nicholson  v.  Barnes,  11  Neb. 

9  See  preceding  section.  452. 

10  Murray  v.  Armes,  3  Mac  A.  60.  12  Robinson  v.  Hamilton,  4  Stew. 

11  White  v.  Wilkinson,  10  La.  Ann.  &  P.  91;  Tyson  v.  Oliver,  43  Ala. 
394;  Smith  v.  Philbrick,  10  Gray,  455;  Loweryv.  Scott.  24  Wend.  358; 
252.    But  see  Gal  pin  v.  Hard,  3  Me-  Hill  v.  Varrel,  3  Ma  233;  Barn  well 
Cord,  394;   Mason  v.  Pritchard,  9  v.  Mitchell,  3  Conn.  101. 


502  BANKS   AND   BANKING.  [§  281. 

indorser,18  yet  it  has  been  upheld.  Therefore  in  serving  by 
mail,  in  the  absence  of  other  knowledge,  the  notice  to  the 
drawer  u  or  the  indorser,15  by  some  authority  (certainly  as 
to  the  indorser  or  drawer  after  diligent  inquiry),16  may  be 
directed  to  the  place  of  dating.  Again,  the  server  has  the 
right  to  assume  in  the  absence  of  other  knowledge  that  the 
drawer  and  the  indorser  have  continued  to  reside  or  to  have 
a  place  of  business  where  the  residence  or  place  of  business 
was  at  the  time  of  the  indorsement  or  drawing  of  the  bill.17 
It  is  beyond  doubt  that  if  the  server  has  notice  of  the  change 
of  residence,  ne  must  direct  his  notice  to  the  new  residence 
if  he  knows  it,18  and  if  he  does  not  his  duty  is  confined  to 
exercising  due  diligence  as  will  appear  in  the  next  section. 
This  question  of  presumption  is  not  as  likely  to  arise  where 
the  service  being  made  is  personal.  If  the  service  is  being 
made  at  the  former  residence,  if  it  is  found  closed  and  un- 
occupied, diligence  will  require  further  inquiry.  If  it  is 
occupied,  inquiry  will  necessarily  be  made  for  the  person  to 
be  charged,  and  the  fact  of  non-residence  at  the  place  will  be 
ascertained,  or  the  reason  of  absence.  But  a  person  may 
change  his  residence  and  still  maintain  a  place  of  business 
at  his  former  place.  Service  by  mail  to  the  place  of  business 
so  retained  will  necessarily  be  good,  as  will  personal  service 
at  that  place  under  the  rules  hereinbefore  stated,19  wherever 
the  residence  may  be.  Or  if  the  sign  is  retained  at  the  place 
of  business  the  server  may  act  upon  the  apparent  fact  of 

13  Runyon  v.  Montfort,  44  N.  C.  371.  Howe,  48  Conn.  432;  Bank  of  Utica 

14  Robinson  v.  Hamilton,  4  Stew.  v.  Phillips,  3  Wend.  408;  Importers' 
&  P.  91,  semble.  Nat.  Bank  v.  Shaw,  144  Mass.  421. 

15  Page  v.  Prentice,  5  B.  Mon.  7,      ^Wilcoxv.  Mitchell,  4  How.  (Miss.) 
semble.  272.    If  he  does  not  know,  must  in- 

1«  Dickens  v.  Beal,  10  Pet  574  See  quire  with  due  diligence.  Barker  v. 

cases   in   note   12   as  to  drawer.  Clark,  20  Me.  156.    It  is  needless  to 

Runyon  v.  Montfort,  44  N.  C.  371,  say  that  personal  notice  may  be 

and  Carrol  v.  Upton,  3  N.  Y.  272,  as  given  to  the  indorser  at  the  place 

to  indorser.  of  demand  whether  it  is  his  resi- 

17  Ward  v.  Perrin,  54  Barb.  89;  dence  or  not.    Austin  v.  Latham, 

Menzies  v.  Farmers'  Bank,  3  Ky.  19  La  88. 

Law  R.  822;  Union  Bank  v.  Govan,  *9  See  preceding  section. 
10  Smedes  &  M.  333;  Rowland  v. 


§  282.]  '   EXCHANGES,  SECURITIES,  ETC.  503 

occupation,20  unless  he  has  other  knowledge.  And  the  serv- 
ice upon  an  agent  retained  in  the  place  of  former  residence 
will  be  equally  good  if  he  have  the  requisite  authority.21 
The  above  rules  are  of  importance  only  when  the  person  to 
be  charged  with  notice  has  not  actually  received  the  notice 
in  due  time.  If  he  does  receive  in  proper  time  the  notice 
sent,  however  wrongly  it  may  have  been  directed,  and  how- 
ever irregular  the  means,  he  will  none  the  less  be  charged 
with  notice.22 

§  282.  Diligence  to  find  address. —  The  question  of  notice 
to  an  indorser  is  never  one  of  the  actual  receipt  of  notice, 
except  where  the  server  has  failed  to  exercise  due  diligence 
in  the  manner  of  service.1  Assuming  the  server  not  to  know 
the  present  address  or  residence  or  place  of  business  of  the 
person  to  be  served,  and  eliminating  the  cases  where  the 
place  of  service  has  been  designated,2  a  duty  devolves  upon 
the  server  to  ascertain  the  address  if  he  can  do  so  by  the 
exercise  of  due  diligence.3  The  server  may  never  have  known 
any  address,  or  he  may  not  know  the  address  on  account  of 
a  change  of  residence,  of  which  he  has  information.4  It 
perhaps  needs  not  be  stated  that  if  the  server,  knowing  the 
right  address,  serves  at  a  wrong  one,  the  notice  is  not  good ; 5 
or  if,  having  information,  he  does  not  act  upon  it  to  the  best 
of  his  knowledge,  the  notice  will  not  be  sufficient.6  The 

2°Beier  v.  Strauss,  54  Md.  278.  what  was  done,  not  by  information 

21  Bliss  v.  Nichols,  94  Mass.  443.  received  after  the  fact.  Brighton 

See  Blakeley  v.  Grant,  6  Mass.  386.  Market  Bank  v.  Philbrick,  40  N.  H. 

22Cadillon  v.  Rodriguez,  25  La.  506. 

Ann.  79;  Thomas  v.  Marsh,  2  La.        2  See  §235,  ante. 

Ann.  353;  First  Nat.  Bank  v.  Wood,        3See  the  cases  in  note  1,  supra, 

51  Vt  471;  Moreland  v.   Citizens'  and  note  18  to  last  section. 

Sav.  Bank,  97  Ky.  211;  Matthewson       4This  requires  due  diligence  in 

v.    Stafford  Bank,  45  N.   H.   104;  inquiring. 

Bank  of  U.  a  v.  Corcoran,  2  Pet.        8  Bacon  v.  Hanna,  137  N.  Y.  379. 

121.  «  Randall  v.  Smith,  84  Barb.  452. 

1  See  cases  in  note  22  to  last  sec-  And  see  Bacon  v.  Hanna,  supra, 

tion,  and  Hitner  v.  Finney,  1  Wkly.  where  the  address  was  upon  an  old 

Notes  Cas.  50.    The  question  of  due  note,  of  which  the  particular  note 

diligence  is  to  be  determined  by  was  a  renewal 


504:  BANKS   AND   BANKING.  [§  282. 

test  of  reasonable  diligence  has  been  defined  to  be  the 
amount  of  care  a  reasonably  prudent  man  of  business  would 
exercise  in  regard  to  matters  upon  which  he  desired  to  act 
with  correct  information.7  "Whether  or  not  these  phrases 
define  anything  at  all  more  than  the  fact  that  the  standard 
of  the  law  is  a  reasonably  prudent  man  it  is  difficult  to  say, 
but  they  have  at  least  received  the  full  meed  of  judicial  ap- 
probation. From  the  decisions  a  number  of  rules  for  the 
determination  of  correct  diligence  can  be  derived,  but  the 
application  of  them  will  vary  with  varying  circumstances. 
For  after  all,  due  diligence  is  an  ultimate  fact  to  be  gathered 
from  the  probative  facts  in  evidence.  If  those  facts  are  in 
dispute,  the  question  of  due  diligence,  in  this  case  as  in  all 
others,  is  one  for  the  jury  under  cautionary  instructions  from 
the  court.  If  the  facts  are  such  that  reasonable  men  might 
differ  in  regard  to  the -conclusion  from  them  of  due  dili- 
gence, the  question  is  none  the  less  a  matter  for  the  jury. 
If  the  facts,  however,  are  undisputed  and  the  matter  is  one 
about  which  reasonable  men  could  not  differ,  the  question  is 
one  for  the  court. 

Assuming  now  that  the  server  of  notice  has  inquired  of  the 
owner,  and  the  holder  of  the  paper  has  no  knowledge  as  to 
the  place  of  residence  of  the  indorser  o'r  drawer,  he  must 
govern  himself  by  making  proper  inquiries.  He  cannot  as- 
sume that  the  indorser  has  retained  a  residence  which  he 
had  some  considerable  time  prior  to  the  date  of  indorsing;8 
although,  as  we  have  said,  he  may  assume  that  the  residence 
at  the  time  of  indorsement  or  drawing  has  been  retained.9 
If  he  has  reasonable  ground  to  think  that  he  knows  the  resi- 
dence or  has  ascertained  it,  he  exercises  due  diligence  in  act- 
ing upon  his  belief.10  Subject  to  this  presumption  he  should 
examine  the  paper  itself.  If  it  be  payable  at  a  particular  place, 
aj  a  bank,  inquiries  must  be  made  at  that  place.11  He  may  act 

7  Palmer  v.  Whitney,  21  Ind.  58.  Palmer   v.  Whitney,   21  Ind.  58; 

» Planters'  Bank  v.  Bradford,  4  Wood  v.  Corl,  4  Met.  20& 

Humph.  39.  «  Goodloe  v.  Godley,  13  Smedes  & 

9  See  the  preceding  section.  M.  233. 
10Barr    v.    Marsh,    9  Yerg.   253; 


§  282.]  EXCHANGES,  SECURITIES,  ETC.  505 

upon  information  received  there  if  it  indicates  the  residence 
of  the  person  to  be  charged.12  If  he  does  not  receive  suffi- 
cient information  there  he  should  inquire  of  the  parties  to 
the  paper,  such  as  the  maker  or  drawer  or  other  indorsers;13 
he  cannot  rest  upon  the  bank's  lack  of  information  as  to  the 
residence.  If  it  be  the  drawer  he  is  seeking,  however,  he 
may  not  address  him  at  the  place  where  the  bill  is  drawn 
without  inquiry,14  according  to  some  authority,  but  may  do 
so  without  further  inquiry,  according  to  other  authority.1' 
Where  the  paper  is  not  payable  at  a  particular  place,  if  it 
be  a  note  he  should  inquire  of  the  maker  or  of  the  other 
parties,  if  he  knows  the  residences  of  those  parties.16  He  is 
justified  in  acting  upon  the  information  indicating  the  resi- 
dence which  he  receives,17  even  though  the  information  be 
incorrect;  as,  for  example,  where  another  person  had  the 
same  name.18  But  information  from  a  casual  stranger  (this 
term  is  used  for  want  of  a  better),  which  turns  out  to  be  incor- 
rect owing  to  the  identity  of  names,  ought  not  to  have  been 
acted  upon.19  But  this  seems  to  be  an  instance  of  ex  post  facto 
wisdom.  If  information  be  not  received  in  the  preceding  man- 
ner, inquiry  should  be  made  from  those  who  are  most  likely 
to  know  where  the  person  to  be  charged  is,20  and  if  informa- 

12  Herbert  v.  Servin,  4  N.  J.  Law,  17  Harris  v.  Robinson,  4  How.  336; 
225;  Hunt  v.  Nugent,  10  Smedes  &  Gawtry  v.  Doane,  51  N.  Y.  84  (in- 
M.  541;   Cabot  Bank  v.  Russell,  4  formation  from  the  maker);  Eager 
Gray,  167.  v.  Brown,  11  La.  Ann.  625  (informa- 

13  Gilchrist  v.  Donnell,  53  Mo.  591.  tion  from  the  drawee). 

See  the  language  of  the  court  in      18  Libby  v.  Adams,  32  Barb.  542. 
Whitridge   v.   Rider,  22  Md.   548;       19  Lawrence  v.  Miller,  16  N.  Y.  235. 

but  Goodloe  v.  Godley,  13  Smedes  See  Chapman  v.  Lipscomb,  1  Johns. 

&  M.  233,  says  that  no  further  in-  294. 
quiry  is  necessary.  20  Bartlett  v.  Isbell,  31  Conn.  296. 

14  See  the  preceding  section.   And  This  case  makes,  as  applied  to  the 
he  must  make  due  inquiry  as  to  facts,  an  untenable  distinction  be- 
whether  there  be  a  postoffice  at  the  tween  a  servant  and  agent.    The 
place.    Tyson  v.  Oliver,  43  Ala.  455.  case  is  really  wrong,  because  the 

15  See  the  preceding  section.  agent  did  not  inquire  of  the  holder. 
18  Gilchrist  v.  Donnell,  53  Mo.  591 ;    Harris  v.   Robinson,  4  How.  836. 

Earnest  v.  Taylor,  25  Tex.  Sup.  37;    Garver  v.  Downie,  83  Cal.  176. 
Mitchell  v.  Young,  21  La.  Ann.  279. 


506  BANKS   AND   BANKING.  [§  282. 

tion  is  obtained  from  such  persons  it  may  be  acted  upon.21 
If  the  information  received  indicates  a  residence  in  some- 
other  place  than  where  the  server  lives,  he  mails  the  notice 
accordingly.22  But  it  would  not  be  safe  to  follow  any  other 
method  without  inquiry,  such  as  mailing  to  the  indorser  di- 
rectly to  the  place  where  the  note  is  dated,23  or  mailing  di- 
rectly to  the  drawer  or  indorser  at  the  place  where  the  bill 
is  drawn.24  Nor  if  the  paper  is  pa}rable  at  a  particular  place, 
can  the  notice  be  left  there  or  mailed  to  that  place,  without 
inquiry  for  the  drawer  or  indorser.25 

But  the  inquiry  may  designate  a  district  as  a  county  for 
the  residence  of  the  party  to  be  charged  without  indicating 
his  postoffice  address.  If  the  notice  is  mailed  to  the  county 
generally,  where  it  has  more  than  one  postoffice,26  or  to  a 
parish  which  is  in  the  same  condition,27  it  will  be  insuffi- 
cient. But  if  diligent  inquiry  does  not  develop  the  post- 
office  beyond  indicating  the  county,  the  notice  may  be  mailed 
to  the  county  seat.28  But  a  letter  should  not  be  directed 
to  any  place  without  knowledge  or  inquiry  as  to  their  being 
a  postoffice  at  the  place.29  If  the  information  derived  indi- 
cates that  the  person  to  be  served  has  a  residence  in  the 
same  place  with  the  server  and  the  place  has"  no  free-deliv- 
ery system,  the  notice,  under  the  rule,  must  be  personally 
served ;  it  cannot  be  served  by  mail,30  unless  by  force  of  a 
statute.31  As  soon  as  the  fact  appears  that  the  server  has 
mailed  a  letter  containing  notice  directed  to  the  same  place 
where  it  is  mailed,  that  particular  place  having  no  free- 

21  Harris  v.  Robinson,  4  How.  336;       ^  See  preceding  section. 
Branch  Bank  v.  Pierce,  3  Ala.  321,       24  See  preceding  section. 

and  last  note.  25  Greves   v.    Tomlinson,    19   La. 

22  Brighton  Market  Bank  v.  Phil-    Ann.  90. 

brick,  40  N.  H.  506;  Beals  v.  Par-  2«  Taylor  v.  Bank  of  Illinois,  7  T. 

ish,  24    Barb.    243.    The    liability  B.  Mon.  576. 

having  been  fixed  by  due  diligence,  'a  Freeman  v.  Wikoff,  16  La.  20. 

the  right  to  hold  such    indorser  28  Whitridge  v.  Rider,  22  Md.  548. 

passes  to  every  subsequent  holder  29  Tyson  v.  Oliver,  43  Ala.  455. 

of    the    note,    even    though   that  30  See  §  272,  ante. 

holder  was  an  indorser  who  had  3l  See  §  272,  ante. 

knowledge  which  the  server  had 

not. 


§  282.]  EXCHANGES,  SECURITIES,  ETC.  50T 

delivery  system,  the  burden  is  thrown  upon  the  server,  at 
once,  to  show  due  inquiry  before  such  mailing,  and  failure 
to  ascertain  information.32  But  this  is  subject  to  the  rule 
that  the  server  may  always  send  the  notices  to  a  particular 
place  to  be  served  either  personally 33  or  by  mail,34  where  he 
does  not  know  the  address.  In  making  his  inquiries  to  find 
the  residence  or  place  of  business  of  the  party  to  be  served, 
in  the  same  place  where  the  server  resides,  he  cannot  act 
upon  the  identity  of  a  name  in  the  directory  alone.35  He 
should  make  other  inquiries.  He  must  resort  here  as  well 
to  the  people  most  likely  to  know  the  address,36  to  the  place 
where  it  is  payable,  if  it  be  payable  at  a  particular  place,37 
to  the  parties  to  the  paper,38  and  to  the  usual  means  of  pub- 
lic information.39  If  he  cannot  find  the  residence  or  place 
of  business,  he  may  leave  the  notice  at  the  place  where  the 
paper  is  payable.40  If  he  does  find  the  address  or  place  of 
business  and  there  be  no  free-delivery  system,  he  must  pro- 
ceed to  make  personal  service  as  indicated  in  a  preceding 
section.41 

Where  a  change  of  residence  has  taken  place,  inquiry 
should  be  made  in  the  manner  before  indicated,  to  the  place 
where  the  paper  is  payable,42  to  the  parties  to  the  paper,43 
to  those  people  most  likely  to  know,44  and  to  the  usual 
sources  of  public  information.45  But  inquiry  should  be  made 
at  the  last  place  of  residence  as  well  as  the  new  place  of 
residence,  if  it  is  ascertained.46  Where  the  new  place  of  res- 

32  See  §  272,  ante.  a  party's  agent.    Barker  v.  Hall,  8 

83  See  §  272,  ante.  Tenn.  183. 

34  See  §  272,  ante.  39  The  cases  in  the  notes  just  cited 

35  Bacon  v.  Hanna,  137  N.  Y.  379;  indicate  these  means.    See  note  35, 
Greenwich  Bank  v.  De  Groodt,  7  supra. 

Hun,  210.    The  directory  should  be  40  He  needs  not  serve  notice  at  all» 

consulted  if  it  is  accessible.    Law-  41  See  §  272,  ante. 

rence   v.    Miller,    16    N.    Y.    231;  42  See  cases  in  note  11,  supra, 

Cooley  v.  Shannon,  20  La.  Ann.  548.  43  See  cases  in  note  16,  supra, 

36  See  cases  in  note  20,  supra,  44  See  cases  in  note  20,  supra. 

37  See  cases  in  note  11,  supra.  45See  note  39,  supra. 

38  See   cases   in   note    16,  supra.  46  Hume  v.  Watt,  5  Kan.  34.    The 
Pierce  v.  Fender,  5  Met.  352.   Or  to  first  head-note  to  this  case  ought 


508  BANKS   AND   BANKING.  [§  283. 

idence  is  in  another  place  than  the  former,  and  not  in  tho 
same  place  where  the  server  resides,  the  mail  will  be  used. 
If  the  person  to  be  served  with  notice  has  moved  into  an- 
other state,  notice  needs  not  be  given  to  him;47  but  if  the 
party  to  be  served  has  absconded 48  or  has  departed  without 
leaving  any  address  *9  or  agent,80  notice  to  him  will  not  be 
necessary.  Since  in  all  cases  diligence  to  find  is  equal  to 
a  good  service,  it  follows  that,  if  afterward  information  be 
obtained  as  to  the  residence,  notice  then  will  not  be  neces- 
sary;81  but  on  this  point  there  seems  to  be  a  doubt  suggested 
in  a  certain  case  which  is  not  authority.52  But  even  if  dili- 
gence has  not  been  used  in  any  case,  the  receipt  of  the  no- 
tice in  due  time  by  the  person  to  be  served  from  some  one 
competent  to  give  it,  however  irregular  the  means,  renders 
the  lack  of  diligence  immaterial.53  These  rules  as  to  service 
are  all  of  them  modified  by  the  right  to  transmit  notices, 
and  to  serve  them  as  between  successive  obligors  upon  the 
paper.54 

§  283.  Time  for  service. —  Subject  to  excuses  for  no  no- 
tice at  all,  and  subject  to  reasons  for  delay  which  are  ade- 
quate, the  rule  as  to  the  necessity  of  promptitude  in  giving 
notice  is  strictly  held.  The  parties  who  may  claim  this 
right  to  prompt  notice  have  been  hereinbefore  indicated  as 
the  indorser  of  a  note,1  the  drawer  of  a  bill,2  the  indorser  of 

to  be  put  among  the  genuine  curi-  83Witeford  v.  Burckmeyer,  1  Gill, 

osities  of  the  law.  127;  Thomas  v.  Marsh,  2  La.  Ann. 

47  See  §  281,  ante,  note  4.  353;  First  Nat  Bank  v.  Wood,  51 

<8Madderom  v.  Heath  Mfg.  Co.,  Vt.  471;  Cadillon  v.  Rodriguez.  25 

35  111.  App.  588;  Williams  v.  Bank  La.  Ann.  79;   Matthews  v.  Straf- 

of  U.  S.,  2  Pet.  96.  ford  Bank,  45  N.  H.  104;  Moreland 

49  Williams  v.  Bank  of  U.  S..  2  v.  Citizens'  Sav.  Bank,  97  Ky.  211; 

Pet.  96.  Freeman  v.  Wikoff,  16  La.  20;  Bank 

^Williams  v.  Bank  of  U.  S.,  2  of  Columbia  v.  Lawrence,  1  Pet 

Pet  96.  578. 

«  Lambert  v.  Ghiselin,  9  How.  552;  64  See  §§  277,  278,  ante. 

Rowland  v.  Howe,  48  Conn.  432.  l  See  §  239,  ante. 

w  Canonge  v.  La.  St  Bank,  7  Mart  2  See  §  235,  ante. 
<N.  S.)  58a   But  see  Blodgett  v.  Dur- 
gin,  32  Vt.  361. 


§  283.]  EXCHANGES,  SECURITIES,  ETC.  509 

a  bill,*  the  drawer  of  a  check  only  when  he  has  been  injured 
by  delay,4  the  indorser  of  a  check.5  This  notice  must  be 
neither  too  early  nor  too  late.  A  notice  served  before  a  de- 
mand made,6  or  before  a  demand  could  be  legally  made,7 
are  alike  worthless.  A  notice  given  on  the  second  day  of 
grace,8  unless  the  third  day  is  Sunday,9  is  a  nullity.  The 
notice  can  be  sent  as  soon  as  the  demand  is  made  on  the 
third  day  of  grace; 10  but  in  jurisdictions  where  the  whole  of 
the  third  day  of  grace  is  permitted  to  the  maker  or  drawee 
in  which  to  pay,11  a  notice  cannot  be  given  before  the  close 
of  business  hours  on  the  third  day  of  grace,12  or,  if  the  paper 
is  payable  at  a  bank,  before  the  close  of  banking  hours  on 
the  third  day  of  grace.13  But  as  soon  as  the  demand  for  ac- 
ceptance is  made  and  refused,14  or,  if  no  such  demand  is 
made,  as  soon  as  a  demand  for  payment  is  made  and  re- 
fused,15 the  notice  must  be  given.  It  will  be  immaterial  if 
a  second  demand  is  made  and  notice  of  that  demand  and 
refusal  given.16  This  notice  may  be  given  the  same  day,17 
but  it  is  not  necessary  that  it  should  be.  If  the  parties  live 
in  the  same  place,  notice  may  be  given  the  next  day,  if  the 
notice  is  personal.18  If  the  service  in  the  same  place  is  to 

»See  §  235,  ante.  v.  West,  9    Baxt.   315;   Draper    v. 

4  See  §  237,  ante.  Clemens,  4  Mo.  52. 

8  See  §  237,  ante.  ll  Pierce  v.  Gate,  12  Gush.  190.  For 

6  Lawrence  v.  Langley,  14  N.  H.  rule  in  California,  see  Toothaker  v. 
70.  Cornwall,  4  Gal.  28. 

7  Toothaker  v.  Cornwall,  3  Gal.       12  See  the  last  note. 
144;  Etting  v.  Schuylkill  Bank,  2      13See  the  last  note. 
Pa.  355;  Thornberg  v.  Emmons,  23       14See  §  233,  ante. 
W.  Va.  325.  15  See  §  233,  ante. 

8  Etting     v.     Schuylkill    Bank,       16  See  §  270,  ante,  note  50. 
supra.  17  See  cases  in  note  10,  supra, 

9  See  §  286,  post.  18  Pierson  v.  Duckham,  3  Litt.  385  ;. 
10  Manchester  Bank  v.  Fellows.,  28    Lockwood  v.  Crawford,  18  Conn. 

N.  H.  302;  Bussard  v.  Levering,  6  361;   Curry  v.  Bank  of  Mobile,  » 

Wheat.  102;  Lyndenberger  v.  Beall,  Port.  360;  Remington  v.  Harring- 

6  Wheat.  104:  Guignon  v.  Union  ton,  8  Ohio,  507;  Barker  v.  Weston, 

Trust  Co.,   156    111.   135;    King  v.  10  Iowa,  593  (the  usage  of  ban k  does 

Crowell,  61  Ma  244;  Corp  v.  Me-  not  change  this  rule);  Grand  Bank 

Comb,  1  Johns.  Gas.  328;  Garland  v.  Blanchard,  23  Pick  806. 


510  BANKS    AND   BANKING.  [§  283. 

be  made  by  mail,  by  reason  of  a  statute I9  or  the  existence  of 
a  free-delivery  system,20  the  notice,  if  mailed  the  next  day 
after  the  demand  and  refusal,  should  be  mailed  in  time  to 
be  delivered  on  that  day,21  and,  if  addressed  to  a  place  of 
business  in  the  same  city,  it  ought,  on  principle,  to  be  mailed 
in  time  to  be  delivered  during  business  hours  of  that  day.22 
The  mailing  is  a  substitute  for  the  personal  service,  but  the 
question  of  time  is  determined  by  the  deposit  in  the  mail, 
without  regard  to  the  receipt  of  the  notice.  Therefore  a 
rule  can  be  laid  down  uniformly  as  to  a  mail  service  where 
the  residence  is  known.  But  where  the  residence  is  un- 
known, time  consumed  in  diligent  inquiry  for  the  residence 
is  always  permitted,  whether  the  service  is  personal  or  by 
mail  to  the  same  place  or  another  place.23  Where  personal 
service  is  had,  the  question  of  reasonableness  of  the  time  of 
service  is  to  be  determined  by  the  receipt  of  the  notice.  The 
test  is  whether  notice  is  given  within  a  reasonable  time  in 
view  of  all  the  circumstances.24  The  notice  need  not  be  im- 
mediate where  there  is  no  regular  communication,25  yet  dili- 
gence should  be  shown  to  use  the  earliest  means  of  convey- 
ance where  the  mails  are  not  regular.26  The  holdings  upon 
this  question  are  generally  negative  and  many  of  them 
made  when  means  of  communication  were  defective.  Thus, 
a  delay  of  two  and  a  half  years  to  serve  a  notice  at  a  dis- 
tance of  one  hundred  and  thirty-two  miles,27  a  delay  of  four 
years,28  a  delay  of  two  years  by  one  indorser  to  another,29  a 

19  See  §  272,  ante.  2«Phelps  v.  Blood,  2  Root,  518.    It 

20  See  §  272,  ante.  is  singular  to  notice  how  much  su- 

21  Bell  v.  Hagerstown  Bank,  7  Gill,  perior  the  old  style  of  opinion  is 
216;  Walters  v.  Brown,  15  Md.  285;  to  the  present  method  of  writing 
Shoemaker  v.  Mechanics'  Bank,  59  treatises  in  eacli  case. 

Pa.  79.  25  See  cases  in  succeeding  notes. 

22  There  seems  to  be  no  decision      x  Spencer   v.  Sterling,  10   Mart 
on  this  point  (O.  S.)  88;  United  States  v.  Barker, 

23  Eagle  Bank  v.  Chapin,  3  Pick.  4  Wash.  C.  C.  464,  12  Wheat.  559. 
180;  Smyth  v.  Hawthorn,  3  Rawle,       27Steinmetz  v.  Curry,  1  DalL  234, 
355.    The  court  is  mistaken  in  its  270. 

statement  of  the. facts  «f  the  casa       28  Hager  v.  Boswell,  4  J.  J.  Marsh. 

The  notice  was  one  day  too  late,  un-    61. 

less  the  time  was  given  for  inquiry.       29  Steinmetz  v.  Curry,  1  DalL  234 


§  283.]  EXCHANGES,  SECUKITIES,  ETC.  511 

delay  of  twelve  months,30  a  delay  of  seven  months,31  of  four 
and  one-half  months,32  of  four33  and  of  two34  months  in  the 
same  city,  a  delay  of  fourteen  days,35  of  fifteen  days,36  of 
three  weeks,37  of  nineteen  days  in  the  same  town,33  of  ten 
days,39  of  nine  days  to  serve  at  a  distance  of  two  miles,40 
nine  days  on  a  foreign  bill,41  eight  days  to  serve  at  a  dis- 
tance of  four  miles,42  a  delay  of  several  days,43 —  was  in  each 
instance  held  unreasonable.  Approaching  the  shorter  times, 
a  delay  of  two  days  unexplained  on  a  personal  service,44  of 
two  days  without  diligence  shown,45  a  notice  after  three 
days'  delay,46  a  notice. on  the  second  day  after  maturity,47  or 
after  one  day's  delay,48  is  too  late.  Thus  the  rule  can  be 
brought  down  to  the  general  statement  that  a  delay  in  serv- 
ing notice  personally  or  by  mail  for  any  longer  period  than 
the  next  day  after  demand  is  presumptive  negligence  and 
must  be  explained.  The  effect  of  holidays  intervening  will 
be  noticed  a  little  later  on.49  But  certain  delays  have  been 
held  reasonable.  Thus,  in  the  old  days  when  the  mails  were 
carried  at  comparatively  long  intervals  between  Europe  and 
America,  a  delay  in  waiting  for  the  fast  mail  was  excusable, 
though  ships  carrying  mails  left  earlier,  but  would  not  reach 
the  port  any  sooner  than  the  fast  mail.50  One  court,  at  an 

30  Kilpatrick  v.  Heaton,  3  Brev.  92.       43  Bank  of  Orleans  v.  Whittemore, 

31  Lewis  v.  Brewster,  2  McLean,  21    12  Gray,  469. 

{a  guarantor).  44  Howland    v.  Adrian,   30  N.  J. 

32  Patillo  v.  Alexander,  96  Ga.  60.  Law,  41. 

33  Yancey  v.  Littlejohn,  9  N.  C.  525.  45  Union  Bank  v.  Fonteneau,  12 

34  London   v.  Howard,  2   Hay  w.  Rob.  (La.)  120. 

<N.  C.)  332.  46  Clark  v.  Nat.  Metrop.  Bank,  2 

35  Hubbard  v.  Troy,  2  Ired.  134.  MacA.  249.                    \ 

36  Brown  v.  Turner,  11  Ala.  752.  «Hert  v.  Vincent,  29  N.  Y.  Supp. 

37  Alshausen  v.  Lewis,  1  Biss.  419.  61. 

38  Green  v.  Darling,  15  Me.  141.  48  East  River  Bank  v.  Gedney,  4 
39Deininger  v.  Miller,  40    N.  Y.  E.  D.  Smith,  582;  Hert.v.  Vincent, 

Supp.  195  (notice  to  an  executor).  29  N.  Y.  Supp.  61.    And  see  Farm- 

40  Morris  v.  Gardner,  1  Cranch,  C.  ers'  Bank  v.  Butler,  3  Litt.  498. 
€.213.  «See§286,posf. 

41  United  States  v.  Barker,  Fed.       50  Stainbaok  v.  Bank  of  Virginia, 
CJas.  14,519.  11  Grat.  260. 

42  Hussey  v.  Freeman,  10  Mass.  84. 


512  BANKS   AND   BANKING.  [§  284. 

early  day,  achieved  the  unique  distinction  of  saying  that  in 
case  of  dishonor  notice  must  be  sent  by  the  first  ship  sailing 
for  any  port  in  the  United  States.51  A  delay,  in  the  year 
1816,  of  six  or  seven  days  in  starting  a  letter  from  New 
York  to  New  Orleans  was  considered  reasonable,52  or  a 
delay  of  six  or  seven  days  when  that  was  the  due  course  of 
mail,53  or  a  delay  of  one  day  in  serving  twenty  miles.51  De- 
lays caused  by  miscarriages  in  the  mail 55  are  excusable.  The 
delays  caused  by  death  or  war  or  pestilence  will  be  later 
examined.56 

§  284.  What  mail  of  the  day. —  As  we  have  seen,  where 
notice  is  served  by  mail  in  the  same  place  where  it  is  given, 
the  letter  should  be  deposited  in  the  mail,  if  deposited  the 
next  day  after  demand,  in  time  to  be  delivered  on  that 
day.1  There  is  another  rule  applicable  to  posting  on  the 
next  day  after  demand  which  has  its  reason  in  the  same 
considerations  of  active  diligence  which  support  the  rule 
just  stated.  It  is  that  notice  mailed  upon  the  next  day  after 
dishonor  must  be  by  the  first  mail  on  that  day.2  But  this 
rule  is  subject  to  limitations:  first,  that  there  be  a  mail  on 
that  day;  if  there  be  none,  the  server  may  wait  until  the 
next  mail  day;3  second,  the  mail  must  be  made  up  at  a  rea- 
sonable hour  on  that  day.  If  the  mail  of  that  day  closed 
the  night  before,  it  is  a  mail  of  the  preceding  day.4  "What 

«  Fleming  v.  McClure,  1  Brev.  428.  A.  K  Marsh.  610;  U.  S.  Bank  v. 

There  was  no  evidence  to  show  an  Merle,  2  Rob.  (La.)  117;  Peabody 

earlier  sailing.  The  jury  were  left  Ins.  Co.  v.  Wilson,  29  W.  Va.  528. 

to  presume  it  without  proof.  And  see  cases  in  the  next  two  notes.. 

«  Finder  v.  Nathan,  4  Mart.  (O.  a)  See  also  Smith  v.  Poillon,  87  N.  Y. 

346.  590;  Eagle  Bank  v.  Chapin,  3  Pick, 

83  Sharpe  v.  Drew,  9  Ind.  281.  180;  Commercial  Bank    v.  Union 

"Freeman  v.  Wikoff,  16  La.  20.  Bank,  19  Barb.  391. 

55  See  §  273,  note  1,  and  Newbold  8  Lawson  v.  Farmers'  Bank,  1 

v.  Boralf,  155  Pa.  227.  Ohio  St.  206.  But  he  must  send  by 

86  See  g§  287,  291,  post.  the  first  mail  thereafter.  Townsley 

1  See  note  21  to  the  preceding  sec-  v.  Springer,  1  La.  122. 

tion.  «Wemple     v.     Dangerfield,     2: 

2  Burgess  v.  Vreeland,  24  N.  J.Law,    Smedes  &  M.  445. 
71;  Dodge  v.  Bank  of  Kentucky,  2 


§  284.]  EXCHANGES,  SECURITIES,  ETC.  513 

is  a  reasonable  hour  should  be  decided  by  the  business  hours 
of  the  place,  allowing  reasonable  time  for  the  preparation 
of  the  notice  after  the  beginning  of  business  hours.8  Thus, 
8  o'clock  in  the  morning  is  an  unreasonable  hour  in  New 
York,6  but  an  Ohio  court  contends  that  9  o'clock  A.  M.  is  a 
reasonable  hour  for  a  Pennsylvania  man  at  the  depressing 
city  of  Pittsburgh  But  2  o'clock  A.  M.  and  5  o'clock  A.  M. 
are  unreasonable  for  mailing.8  In  Mississippi  a  mail  at  sun- 
rise is  too  early,9  but  one  at  9  o'clock  in  the  morning  is  a 
perfectly  reasonable  hour.10  At  just  what  barbarous  hour 
business  begins  in  Mississippi  cannot  be  said,  but  it  lies  some- 
where between  sunrise  and  9  o'clock  in  the  morning.  In 
Louisiana  7  o'clock  in  the  morning  is  presumed  to  be  early 
enough.11  Subject  to  the  foregoing  considerations  as  to  the 
hour  of  the  mail's  leaving,  and  subject  to  the  rule  as  to  the 
first  mail,  the  notice  if  mailed  on  the  succeeding  day  must 
be  mailed  in  time  to  be  put  into  the  mail  of  that  day.12  The 
better  rule  is  that  the  notice  need  not  be  sent  by  the  first 
mail  on  the  next  day  after  maturity  if  a  reasonable  excuse 
exists  for  not  doing  so,  or  if  there  be  more  than  one  mail  on 
that  day,13  and  a  special  indulgence  of  one  day  was  given 
to  the  secretary  of  the  treasury  owing  to  the  necessities  of 

8  Sussex  Bank  v.  Baldwin,  17  N.  J.  a  mailing  at  9  o'clock  A.  M.  was  in- 

Law,  487;  Marks  v.  Boone,  24  Fla.  sufficient  unless  it  appeared  that 

177;  Farmers'  Bank  v.   Duvall,  7  there  was  no  earlier  mail 

Gill  &  J.  78;  Chick  v.  Pillsbury,  24  »  Commercial   Bank  v.   King,  3 

Me.  458.  Rob.  (La.)  243.    Notice  put  into  the 

6  Howard  v.  Ives,  1  Hill,  263.  mail  at  7  o'clock  A.  M.  will  be  pre- 

7  Lawson    v.   Farmers'    Bank,   1  sumed  to  be  in  time  for  the  mail 
Ohio  St.  206.    The    Pennsylvania  of  that  day,  but  notice  put  in  at 
court  considers  7  A.  M.  a  reasonable  9  A.  M.  will  not  be  so  presumed, 
hour!    Stephenson  v.  Dickson,  24  Beckwith  v.  Smith,  22  Me.  125. 

Pa.  148.  12  Lenox  v.  Roberts,  2  Wheat.  373 ; 

8  West  v.  Brown,  6  Ohio  St.  542;  Goodman  v.  Norton,  17  Me.  381; 
Stephenson  v.  Dickson,  24  Pa.  148.  Beckwith   v.   Smith,  22   Me.   125; 

9  Deminds  v.  Kirkman,  1  Smedes  Manchester  Bank  v.  White,  30  N.  H. 
&  M.  644.    The  case  carefully  con-  456;  Bank  of  Alexandria  v.  Swan,  9 
ceals  the  time  of  year.  Pet.  33;  Moore  v.  Burr,  14  Ark.  230. 

10 Downs    v.    Planters'    Bank,    1       "Smith  v.  Poillon,  87  N.  Y.  590; 
Smedes  &  M.  261.    It  was  held  that    Whitwell  v.  Johnson,  17  Mass.  454^ 
33 


514  BANKS   AND    BANKING.  [§  285. 

public  business.14  If  the  server  sends  notices  to  an  agent  to 
mail,  the  agent  must  exercise  due  diligence,  and  his  delay 
of  one  day  has  been  considered  unreasonable,15  as  well  as  his 
mailing  of  the  notice  to  be  delivered  on  the  next  day  where 
he  could  have  delivered  on  the  same  day.16  The  choosing  of 
a  needlessly  circuitous  route  is  not  an  excuse  for  the  delay 
resulting  therefrom.17 

§  285.  Time  for  successive  obligors. —  As  we  have  seen, 
the  notice  may  come  through  successive  holders  or  indorsers,1 
and  each  indorse?  has  one  day  in  which  to  forward  notice 
after  service  has  been  received  by  him.2  The  rule  of  the  ear- 
liest practicable  mail  upon  the  next  day  is  applied  to  this 
method  of  service.3  The  indorser  notified  must  send  notice  of 
the  first  notice  he  receives  to  the  prior  indorser,  however  re- 
mote the  party  may  be.4  He  cannot  wait  until  he  receives  a 
notice  passing  through  successive  parties  after  the  one  who 
has  given  him  notice.5  But  notice  need  not  be,  as  one  court 
mistakenly  supposed,  after  the  receipt  of  actual  knowledge.6 
The  rule  that  whichever  party  to  the  paper  is  selected  to  be 
noticed  directly  from  the  holder,  notice  from  the  holder  must 
be  given  to  him  as  of  the  next  day  after  dishonor,  without 

14  United  States  v.  Barker,  4  Wash,    one  day  from  the  time  that  notice 
G.  C.  464,  12  Wheat.  559.  was  received  in  faci    But  the  in- 

15  United  States  v.  Barker,  supra,    dorser  can  await  notice  in  the  reg- 
16Cassidy  v.  Kreamer,  13  AtL  R.    ular  way.     West  River  Bank  v. 

744  (Pa.);  Shelburne  Falls  Bank  v.  Taylor,  7  Bosw.  466,  34  N.  Y.  128. 

Tovvnsley,  102  Mass.  177.  8  Earliest  mail  on  next  day.   Has- 

17  West  River  Bank  v.  Taylor,  7  kell    v.    Boardman,    90   Mass.  38; 

Bosw.  466,  semble.  Mitchell  v.  Cross,  2  R.  L  437;  Araer- 

1  See  §§  276,  277,  278,  ante.  ican  Life  Ins.   Co.  v.  Emerson,  4 

2  State  Bank  v.  Ayres,  7  N.  J.  Law,  Smedes  &  M.  177;  Manchester  Bank 
131;  Smith  v.  Poillon,  87  N.  Y.  590;  v.  Fellows,  28  N.  H.  302.    Mail  on 
Carter  v.  Burley,  9  N.  H.  558;  Allen  the  same  day  to  same  postoffice. 
v.  Avery,  47  Ma  287;   Lawson  v.  Shelburne  Falls  Bank  v.  Townsley, 
Farmers'  Bank,    1    Ohio   St   206;  102  Mass.  177. 

Davis    v.    Hanley,    12    Ark.    645;        *  Carter  v.  Burley,  9  N.  H.  55a 
Grand  Gulf  Co.  v.  Barnes,  12  Rob.        8  See  the  last  note. 
(La.)  127.     It  was  held  in  New  Or-       6See  note  2,  supra,  the  case  of 

leans  Co.  v.  Bieu,  9  Rob.  (La.)  110,  New  Orleans  Co.  v.  Bieu,  9  Rob. 

that  the  notice  must  be  sent  within  (La.)  110. 


§  286.] 


EXCHANGES,  SECURITIES,  ETC. 


515 


waiting  and  claiming  the  time  that  would  have  been  made 
possible  if  the  notice  had  been  sent  to  him  through  the  par- 
ties subsequent  to  him  upon  the  paper,7  applies  to  indorsers 
giving  notice  to  other  indorsers  after  notice  to  them  of  dis- 
honor.8 "When  notice  is  sent  from  the  holder  or  server  at 
another  place  to  an  indorser  to  serve  upon  a  person  in  the 
same  place  as  the  indorser,  that  indorser  may  serve  by  mail,9 
although  some  authority  disputes  this,10  and  the  rule  as  to 
the  next  day  for  service  ought  to  apply  to  notice  sent  to  an 
agent  to  serve; u  but  there  is  abundant  authority  for  saying 
that  he  must  act  upon  the  same  day  that  he  receives  the  no- 
tice to  serve.12  The  rule  applies  conversely,  and  there  is  no 
doubt  that  the  holder  receiving  notices  from  his  agent  has 
until  the  next  day  in  which  to  serve.13  The  persons  who  can 
give  this  notice  must  be,  as  we  have  seen,  parties  to  the  paper 
or  their  agents,14  and  a  transferrer  of  the  paper  without  in- 
dorsement.15 But  one  who  is  merely  interested  in  the  paper 
cannot  be  entitled  to  this  privilege,1"  except  as  an  agent  for 
some  actual  party;  nor  can  indorsors  whose  indorsements 
have  been  erased,17  it  seems,  according  to  a  palpably  errone- 
ous decision. 

§  286.  Time  of  service  as  affected  by  holidays  and  Sun- 
days.—  Where  the  day  upon  which  notice  should  have  been 


7  See  §  277,  ante,  and  City  Nat. 
Bank  v.  Clinton  Co.  Nat.  Bank,  49 
Ohio  St.  351;  West  River  Bank  v. 
Taylor,  34  N.  Y.  128. 

8  fitting  v.  Schuylkill  Bank,  2  Pa. 
3oo ;  Simpson  v.  Turney,  5  Humph. 
419. 

9  Shelburne  Falls  Bank  v.  Towns- 
ley,  102  Mass.  177;  Warren  v.  Oil- 
man, 17  Me.  360. 

10  See  §272,  ante,  note  19. 

11  See  §  272,  ante,  note  19,  and 
note  16,  infra. 

12  See  §  285,  ante,  notes  15  and  16, 
and  note  16,  infra. 

13  Haskell  v.  Boardman,  90  Mass.  38. 


"  See  §  278,  ante. 

is  See  §278,  ante. 

w  Flack  v.  Green,  3  Gill  &  J.  474; 
Barker  v.  Whitney,  18  La.  575.  But 
the  real  owners  who  have  indorsed 
the  paper  for  collateral  security 
may  give  notice,  Cowperthwaite 
v.  Sheffield,  1  Sandf.  416. 

"  First  Nat.  Bank  v.  Farneman,  93 
Iowa,  161.  But  it  is  difficult  to  con- 
ceive of  a  more  erroneous  case.  The 
indorsements  were  canceled  after 
transmission  of  the  noticea  That 
fact  was  therefore  immaterial. 
They  existed  when  the  notices  were 
transmitted. 


516  BANKS    AND   BANKING.  [§  286. 

given  is  a  holiday,  assuming  that  day  to  be  the  day  of  demand 
and  refusal,  if  that  day  had  not  fallen  upon  Sunday  or  a 
holiday,  there  is  no  question  but  that  a  notice  on  the  follow- 
ing day  would  be  a  good  notice.1  Thus,  where  the  third 
day  of  grace  falls  upon  Sunday,  notice  may  be  given  upon 
Monday.2  But  it  is  also  true  that  notice  may  be  given  upon 
Saturday,  the  day  of  demand,3  and  suit  may  be  begun  upon 
that  day.4  But  if  the  third  day  of  grace  falls  upon  Saturday, 
the  question  is  a  different  one.  The  Supreme  Court  of  the 
United  States,  in  one  of  those  Homeric  slumbers  in  which  it 
has  occasionally  indulged,  seems  to  hold  that  if  the  third 
day  of  grace  were  Saturday,  and  by  custom  demand  was  per- 
missible on  Monday,  notice  upon  Monday  was  too  late.5 
But  all  the  authority  and  all  the  reason  of  the  matter  is  that, 
if  Sunday  follow  the  day  of  demand,  notice  may  be  given 
on  Monday.6  This  rule  should  be  that  the  intervening  holi- 
day is  simply  eliminated  and  notice  cannot  be  given  thereon.7 
Holidays  under  this  rule  may  exist  by  custom,8  if  the  indorser 
or  other  party  to  be  charged  had  actual  or  constructive 
knowledge  of  the  fact.9  The  suspension  of  business  during 

1Burckmeyerv.Whiteford,6Gill,  demand  was  not  in  time  and  the 

9;  Colms  v.  Bank  of  Tennessee,  4  question  of  notice  was  immaterial. 
Baxt.422;  Barlow  v.  Planters'  Bank,  6  Crawford  v.  Milligan,  2  Cranch, 

7  How.  (Miss.)  129;  Irwin  v.  Brown,  C.  C.  226;  Canonge  v.  Cauchoix,  11 

2  Cranch,  C.  C.  314.  Mart.  (O.  S.)  452;  Seventh  Ward  Bank 

2  See  the  cases  in  the  last  note.  v.  Hanrick,  2  Story,  416;  Williams 

3Bussard  v.  Levering,  6  Wheat,  v.  Matthews,  3  Cow.  252;  Howard 

102.    But  a  note  was  due  July  1st,  v.  Ives,  1  Hill,  263;   Hallowell  v. 

last  day  of  grace  July  4th,  which  Curry,  41  Pa.  322.    Contra,  if  mail 

was  not  a  holiday,  but  was  so  ob-  on  Saturday  would  reach  indorser 

served;  it  was  held  that  July  4th  on  Saturday,  mailing  on  Monday  is 

was  the  day  for  notice  and  July  3d  too  Ip.te.   King  v.  Foyles,  2  Cranch, 

was  premature.  See  Lewis  v.  Burr,  C.  C.  303. 
2  Games'  Gas.  195.  ^  Rheim  v.  Carlisle  Deposit  Bank, 

4Mandevillev.Runiney,3Cranch,  76  Pa.  132.    The  English  authority 

C.  C.  424  is  contra,  and  so  is  Deblieux  v.  Bul- 

8  A  dams  v.  Otter  back,  15  How.  lard,  1  Rob.  (La.)  66.    Notice  may 

539.    If  the  demand  was  good  the  be  given  on  Sunday,  but  indorser 

notice  ought  to  be  good.  The  above  need  not  act  until  Monday, 
is  what  the  decision  says.    But  the       8  See  §  256,  ante, 

9  See  §256,  ante. 


§  287.]  EXCHANGES,  SECURITIES,  ETC.  517 

the  Christmas  season  excused  notice,10  but  it  was  also  excused 
because  there  were  no  mails. 

§  287.  Service  as  affected  by  death  or  illness. — The 

death  of  the  person  to  be  served  may  affect  the  place  of 
service,  the  manner  of  service  or  the  time  thereof.  The  death 
of  the  holder  can  only  affect  the  time  of  service  or  the  per- 
son by  whom  the  notice  is  served.  The  notice,  in  case  of  the 
holder's  death,  should  be  given  by  the  personal  representa- 
tive.1 Any  delay  in  noticing  that  is  reasonable,  which  is 
caused  by  the  holder's  death,  is  excusable.2  In  case  the  in- 
dorser  or  other  person  to  be  served  with  notice  is  dead,  the 
person  upon  whom  to  serve  the  notice  is  the  personal  rep- 
resentative of  the  deceased.3  Service  upon  any  one  of  the 
personal  representatives  is  good.4  A  notice  left  at  the  tem- 
porary boarding  place  of  the  administrator  is  good  if  he  re- 
ceived it,  and  ought  to  be  good  if  he  did  not  receive  it, 
provided  it  was  left  with  any  suitable  person  therein  in  his 
absence  with  directions  to  deliver;5  a  notice  addressed  to 
the  deceased  but  served  on  the  personal  representative,6  and 
a  notice  addressed  to  the  estate  of  the  deceased,  are  equally 
good  if  received,7  and  a  notice  addressed  by  mail  to  "Per- 
sonal ^Representative  "  of  deceased,  naming  the  deceased,  is 
good  whether  it  be  received  or  not.8  The  holder  here 
threw  upon  the  postoffice  the  onus  of  a  search  and  proper 
delivery,  and  the  court  presumed  that  the  postoffice  properly 
attended  to  the  matter.  It  would  be  consistent  with  the 
proven  facts  that  the  postoffice  authorities  paid  no  attention 

10  Martin  v.  Ingersoll,  8  Pick.  1.  5  Matthewson  v.  Strafford  Bank, 

1  He  succeeds  to  the  personalty.  45  N.  H.  104 

2  White  v.  Stoddard,  11  Gray,  258.  efieals  v.  Peck,    12    Barb.  245; 

3  Bank  of  Columbia  v.  King,  2  Maspero  v.  Pedisclaux,  22  La.  Ann. 
Cranch,  C.  C.  570;  Cayuga  Co.  Bank  227. 

v.  Bennett,  5    Hill,  236;   Oriental  '  Jefferson  v.  Darling,  91  Hun. 

Bank  v.  Blake,  22  Pick.  206;  Mer-  236. 

chants'  Bank  v.  Birch,  17  Johns.  25;  8  Pillow  v.  Hardeman,  3  Humph. 

Bird  v.  Doyal,  20  La.  Ann.  541.  538.    Smalley  v.  Wright,  40  N.  J. 

4  Carolina  Nat.  Bank  v.  Wallace,  Law,  471,  seems  to  be  contra. 
13  S.  C.  347;  Beals  v.  Peck,  12  Barb. 

245. 


518  BANKS    AND   BANKING.  [§  287. 

to  the  letter.  The  executor  named  in  the  will,  though  not 
approved  by  the  court,  is  the  personal  representative  upon 
whom  to  serve ; 9  but  the  same  is  not  true  in  the  case  of  an 
executor  who  renounced,  whereupon  a  special  administrator 
(though  it  would  seem  he  should  have  been  administrator 
cum  testamento  annexo)  was  appointed,  if  the  holder  could 
have  known  the  fact  of  such  substitution  by  reasonable  dili- 
gence.10 If  there  be  a  personal  representative  he  should  be 
served  if  the  holder  knows  of  the  death.  Service  upon  the 
son  of  deceased  at  the  deceased's  place  of  business  was  held 
insufficient  where  the  personal  representative  had  a  place  of 
business  of  his  own.11  If  the  holder  is  ignorant  of  the  death, 
a  service  by  letter  addressed  to  the  deceased  is  sufficient.12 
But  if  the  holder  has  notice  of  the  fact  of  death,  he  must 
exercise  due  diligence  by  consulting  the  records,  if  in  the 
same  place,  or  by  proper  inquiries  as  to  the  records  and  from 
other  sources  of  information.13  If  after  such  due  diligence 
no  personal  representative  is  found,  service  at  the  deceased's 
residence,  and  the  rule  is  the  same  if  no  personal  represent- 
ative exists;14  or  the  mailing  of  notice  addressed  to  the  de- 
ceased indorser  at  his  late  residence,  where  the  residence  is 
such  that  service  by  mail  is  permitted,  will  hold  the  estate 
of  the  indorser.15  If  the  maker  of  the  note  is  the  indorser's 
personal  representative,  notice  to  him  is  still  necessary;16 
but  even  if  the  maker  is  one  of  several  executors,  he  may  be 

9Shoenberger  v.  Lancaster  Sav.  129;  Mathewson  v.  Straff ord  Bank, 

Inst.  28  Pa.    459;   Drexler  v.  Mo  45  N.  H.  104 

Glynn,  99  CaL  143.  !» Barnes  v.  Reynolds,  4  How.  (Miss. ) 

10 Goodnowv. Warren,  122 Mass. 79.  114;  Mathewson  v.  Strafford  Bank, 

11  Bank  of  Columbia  v.  King,  2  45  N.  H.  104;  Merchants'  Bank  v. 

Cranch,  C.  C.  570.  Birch,   17  Johns.  25;    Stewart    v. 

i2Linderman  v.  Guldin,  84  Pa.  54;  Eden,  2  Caines,  121;  Massachusetts 

Planters'  Bank  v.  White,  2  Humph.  Bank  v.  Oliver,  10  Gush.  567;  Dod- 

112.  son  v.  Taylor,  56  N.  J.  Law,  11.    If 

13  Massachusetts  Bank  v.  Oliver,  there  be  no  administrator  notice 
10  Gush.  557;  Bank  of  Louisiana  v.  mailed  to  such  non-existent  poten- 
Smith,  4  Rob.  (La.)  276;  Dodson  v.  tiality  seems  to  be  good.    Boyd  v. 
Taylor,  56  N.  J.  Law,  11.  City  Sav.  Bank,  15  Grat  501. 

14  Weaver  v.  Penn,  27  La.  Ann.  w  Alton  v.  Robinson,  2  Humph.  341. 


§  288.]  EXCHANGES,  SECURITIES,  ETC.  519 

singly  served  with  notice  so  as  to  bind  all  the  executors.17 
If  there  be  no  personal  representative  there  is  no  need  of 
applying  for  the  appointment  of  one  in  order  to  serve  notice 
upon  him.18  The  service  upon  the  deceased  in  the  latter 
case  should  be  at  his  residence  at  the  time  of  his  decease,  or 
upon  his  family  or  widow.19  A  notice  addressed  to  the  place 
of  residence  of  the  deceased,  where  his  family  yet  lived,  ad- 
dressed to  "  Legal  Kepresentative  "  of  the  dead  indorser,  was 
held  sufficient,  though  there  was  no  personal  representative.20 
The  agency  to  receive  notice  expires  with  the  death  of  the 
principal,  as  in  the  case  of  all  other  agents  who  do  not  attain 
to  the  dignity  of  donees  of  a  power  coupled  with  an  interest, 
and  service  cannot  be  made  upon  him  after  the  death.21  If 
the  personal  representative,  however,  has  been  discharged, 
notice  should  be  served  upon  the  heirs.22  Upon  the  effect  of 
illness  the  rules  stated  in  a  former  section23  should  be  con- 
sulted, since  the  same  excuses  ought  to  apply  to  notice,  being 
served  personally. 

§  288.  Customs  and  usages  as  to  notice. —  The  customs 
and  usages  of  a. bank  where,  a  note  is  made  payable,  even 
though  it  may  be  made  payable  there  by  parol  agreement, 

17  Lewis  v.  Bakewell,  6  La.  Ann.  ington  v.  Pierson,  2  Cranch,  C.  C. 
859.  685;  Bird  v.  Doyal,  20  La.  Ann.  541. 

18  Weaver  v.  Penn,  27  La.  Ann.  22  Generally  speaking,  this  situa- 
129.  tion  would  be  impossible.   Thecon- 

19  See  Weaver  v.  Penn,  27  La.  Ann.  tingent  liability  would  be  presented 
129,  and  cases  as  to  demand,  §  257,  as  a  claim  and  the  administration 
ante.  would  not  be  closed.  But  see  Christ- 

20  Boyd  v.  City  Sav.  Bank,  15  Grat.  mas  v.  Flisker,  7  Rob.  (La.)  13;  New 
501.    The  court  must  have  held  the  Orleans  E.  Co.  v.  Kerr,  9  Rob.  (La.) 
words  "  legal  representative  "  to  be  122. 

surplusage.  There  should  have  been  23See  §  257,  ante.    There  is  one 

proof  that  the  notice  was  received,  case  where  notice  was  served  upon 

unless  the  presumption  is  to  be  in-  an  indorser  who  was  sick.    It  was 

dulged  that  the  postoffice  is  omnis-  sufficient.    He  was  told   what  it 

cient.  was,  but  it  did  not  appear  that  he 

21  Brent   v.  Washington  Bank,  2  heard.    Miles  v.  Hall,  12  Smedes  & 
Cranch,  C.  C.  517;  Bank  of  Wash-  M.  332. 


520  BANKS   AND   BANKING.  [§  2S9. 

binds  the  indorser  who  knows  of  the  agreement,1  and  so  it  is 
that  a  custom  of  banks  to  give  notice  to  the  maker  demand- 
ing payment  on  the  first  day  of  grace,  and  then  giving  no- 
tice forthwith  without  further  demand,  is  binding  upon  the 
indorser  if  he  knows  of  it,  and  the  fact  that  the  bank  has  the 
paper  for  collection,2  even  though  the  paper  is  not  payable 
at  the  particular  bank.3  The  same  rule  is  good  as  to  bank- 
ing customs  for  notice  after  the  last  day  of  grace.*  A  cus- 
tom of  banks  as  to  notes  payable  at  the  bank  to  give  notices 
through  the  postoffice  to  people  residing  at  the  same  place, 
in  contravention  of  the  recognized  rule  that  such  service 
must  be  personal,  is  binding  upon  indorsers  of  the  paper.5 
But  a  custom  to  give  notice  of  dishonor  before  the  close  of 
banking  hours  on  the  last  day  of  grace  is  not  good,6  where 
the  rule  is  held  that  the  maker  or  acceptor  or  drawee  has 
the  whole  of  the  last  day  of  grace  during  banking  hours  in 
which  to  pay.7 

§  280.  Actual  notice. —  Actual  knowledge  of  dishonor  is 
not  the  equivalent  of  notice.1  The  fact  that  an  indorser  was 
present  when  payment  was  demanded  and  refused  does  not 
excuse  notice  as  to  him,2  unless,  of  course,  he  had  taken  the 

1  Pearson  v.  Bank  of  Metropolis,    Wallace,  13  S.  C.  347.    See  Lime 

1  Pet  89.  Rock  Bank  v.  Hewitt,  52  Me.  51. 

2  Jones  v.  Fales,  4  Mass.  245 ;  North  6  Boston  Bank  v.  Hodges,  9  Pick. 
Bank  v.  Abbott,  13  Pick.  465;  Cen-  420.    See  Munroe  v.  Maudeville,  2 
tral  Bank  v.  Davis,  19  Pick.  37&  Cranch,  C.  C.  187. 

See   Farmers'  Bank    v.  Duvall,  7  7  See  §  250,  ante. 

Gill  &  J.  78;  Thorn  v.  Rice,  15  Me.  1  Lane  v.  Bank  of  West  Tennes- 

263.  see,  9  Heisk.  419 :  Phipps  v.  Harding, 

3  See  the  preceding  note  for  the  70  Fed.  R.  498;  In  re  Grant,  Fed. 
cases.  Cas.  No.  5691;  First  Nat.  Bank  v. 

4  Patriotic  Bank  v.  Farmers' Bank,  Zahm,  1  Atl.  R.  190  (Pa.);  Bank  of 

2  Cranch,  C.  C.  560.    See  Adams  v.  Columbia  v.  Mackall,  2  Cranch,  C.  C. 
Otterback,  15  How.  539.    This  case  631.    But  the  case  of  Citizens'  Nat. 
holds  that  a  single  bank  cannot  Bank  v.  Cade,  78  Mich.  449,  is  abso- 
have   a    custom.    The    dictum    is  lutely  wrong,  because  there  was  an 
wrong.    It  is  by  McLean,  J.  oral  notice  given  which  was  good. 

6  Chicopee  Bank  v.  Eager,  9  Met.    The  vice-president  of  the  bank  was 
583;  Gindrat  v.  Mechanics'  Bank,    acting  for  the  bank. 
7  Ala.  324;  Carolina  Nat.  Bank  v.        2  Grant  v.  Spencer,  1  Mont.  136. 


§  290.]  EXCHANGES,  SECURITIES,  ETC.  521 

note  into  his  own  hands  to  collect  and  to  give  notices.8  But 
this  rule  of  notice  by  estoppel  was  not  applied  to  an  attor- 
ney who  was  himself  the  indorser  upon  a  note  which  he 
was  collecting.4  The  reasoning  of  the  court  is  somewhat 
strained,  but  the  decision  may  be  justified  on  the  ground  that 
it  was  no  part  of  the  attorney's  duty  to  give  the  notices; 
yet  an  attorney  with  any  sense  of  honor  would  hesitate  to 
make  such  a  defense.  So  knowledge  of  the  dishonor  ob- 
tained from  the  maker  does  not  amount  to  notice  to  the 
indorser/  The  fact  that  the  indorser  was  director  of  a  bank 
where  the  note  was  dishonored,  or  that  he  had  personal 
knowledge  of  the  dishonor,  is  not  notice ; 6  or  the  fact  that 
one  of  the  drawers  was  an  acceptor  does  not  excuse  notice 
as  to  him;7  but  notice  is  excused  to  a  drawer  who  draws 
upon  the  firm  of  which  he  is  a  member.8  But,  as  we  have 
seen,  if  notice  is  received  from  a  proper  source,  it  is  imma- 
terial that  it  came  through  an  irregular  channel  or  in  an 
improper  way,9  provided  it  was  received  in  due  time.10 

§  290.  Excuses  for  failure  to  notify. —  The  use  of  due 

diligence  may  be  considered  as  an  excuse  for  failure  to  notify, 

3  See  §  298,  post,  notes  20,  21.  of  the  maker's  board  of  directors 

4  Agan  v.  McManus,  11  Johns.  180.  (Phipps  v.  Harding,  70  Fed.  R.  468, 

5  Jagger  v.  German  Am.  Bank,  53  34  U.  S.  App.  148);  nor  where  a 
Minn.  386.  stockholder  indorses  for  his  corpo- 

6  Lane  v.  Bank  of  West  Tennes-  ration  (Field  v.  New  Orleans  News- 
see,  9  Heisk.  419.  paper  Co.,  21  La.  Ann.  24).    Contra, 

?McMean  v.  Little,  3  Baxt.  330.  Hull  v.  Myers,  90  Ga.  674.  This  is  the 

8  West  Branch  Bank  v.  Feltmer,  case  in  which  the  judge  delivering 

3  Pa.  399;  Fuller  v.  Hooper,  3  Gray,  the  opinion  pompously  announced 

334;  Go  wan  v.  Jackson,  20  Johns,  that  good  sense  and  good  law  are 

176.    For  the  rule  as  to  demand,  the  same  unless  violently  sundered 

see  §  208,  ante.    But  the  fact  that  by  judicial  ignorance.    In  Pliipps 

the  maker  is  a  partner  of  the  in-  v.  Harding,  supra,  the  conclusion 

dorser,  and  the  same  person  acted  of  the  learned  judge  is  pointedly 

for  both,  does  not  excuse  either  de-  condemned  by  a  court  of  appeal, 

mand  or  notice.    Dwight  v.  Scovil,  Query,  which  of  the  courts  was  ju- 

2  Conn.  654.    See  Foland  v.  Boyd,  dicially  ignorant? 

23  Pa.  476;  In  re  Grant,  Fed.  Caa  9See  §  281,  ante,  note  22. 

No.  5691.    This  rule  is  not  applied  "See  §  281,  ante,  note  22. 
where  the  indorsers  are  a  majority 


522  BANKS   AND   BANKING.  [§  290. 

as  may  miscarriages  in  the  mail,  or  failure  of  the  person  to 
deliver  with  whom  the  notice  is  left  where  a  proper  personal 
service  has  been  made.  Those  cases  have  been  considered.1 
The  excuses  for  failure  to  demand  or  to  give  notice  arising 
from  the  nature  of  the  paper  have  also  been  considered.2 
An  agreement  between  the  maker  and  indorsee,  postponing 
the  time  of  presentment  for  payment,  will  not  excuse  a  no- 
tice of  non-payment  to  the  indorser  when  dishonor  takes 
place,3  unless  the  indorser  became  a  guarantor  or  waived 
demand  and  notice.4  The  absconding  of  the  indorser  or 
drawer,5  or  his  departure  without  leaving  any  address  or 
agent6  that  can  be  discovered  with  due  diligence,  excuses 
any  service  of  notice.  The  same  facts  as  to  the  drawer's 
lack  of  funds  in  the  hands  of  the  drawee  that  will  excuse 
a  demand  upon  the  drawee  will  excuse  notice  to  the  drawer,7 
but  while  it  will  excuse  demand  as  to  the  indorser,  it  will 
not  excuse  notice  of  the  dishonor  to  him,8  unless  he  was  the 
real  drawer  of  the  bill  or  maker  of  the  note.9  The  question 
of  the  insolvency  of  the  maker  excusing  a  demand  upon  the 
maker  and  notice  to  the  indorser  has  been  noticed.10  The 
rule  must  necessarily  be  that  where  a  demand  upon  the  maker 
of  a  note  is  excused  notice  to  the  indorser  is  not  excused,11 
unless  he  was  a  guarantor.12  The  insolvency  of  the  drawee 
will  not  excuse  notice  to  the  drawer  or  indorser; 13  nor  will 

1  See  §  274,  ante.  Peai'son  v.  Bank  of  Metropolis,  1 

2  See  §208,  ante.  Pet  89. 

3  Sice  v.Cunningham,  1  Cow.  397;  4  See  §241,  ante,  and  §  298,  note 
Worden  v.  Mitchell,  7  Wis.  161.   So  25,  and  §  299,  notes  6,  10,  post. 

of  paper  indorsed  overdue.    Notice  *  Williams  v.   Bank   of    United 

must  be  given  upon  dishonor.  Jones  States,  2  Pet.  96. 

v.  Robinson,  11  Ark. 504;  McKeever  "Williams   v.  Bank    of   United 

v.  Kirtland,  33  Iowa,  348;  Grant  v.  States,  2  Pet.  96. 

Strutzel,  53  Iowa,  712;  Rosson   v.  ?  See  g  264,  ante. 

Carrol,  90  Tenn.  90;  but  see  Jordan  8  gee  §  264,  ante. 

v.  Hurst,   12  Pa.  269.    An  agree-  » Farmers'  Bank  v.  Van  Meter,  4 

ment  as  to  notice    between   the  Rand.  553. 

maker  of  the  note,  or  the  drawer  w  See  §  263,  ante. 

of  a  bill  and  the  holder,  known  to  »  See  £§  264,  265,  266,  ante. 

the  indorser,  is  binding  upon  him.  12See  §  241,  ante. 

w  See  §263,  ante. 


§  291.]  EXCHANGES,  SECURITIES,  ETC.  523 

the  insolvency  of  the  drawer  excuse  notice  to  the  indorser.14 
The  indorser  of  a  check  is  in  the  position  of  the  indorser  of 
a  bill  and  entitled  to  the  same  rights.15  "Where  a  demand 
as  to  an  indorser  is  excused  on  account  of  the  fraud  of  the 
indorser,16  or  on  account  of  the  fact  that  owing  to  a  forgery 
the  indorsement  transfers  nothing,17  notice  to  the  indorser 
is  not  necessary.  The  case  where  the  indorser  of  a  note 
becomes  personal  representative  of  the  deceased  maker  prior 
to  dishonor  has  been  hereinbefore  noticed.18 

§291.  Effect  of  war  and  pestilence. —  Where  war  has 
suspended  the  ordinary  intercourse  between  two  places,  the 
transmission  of  notices  between  those  places  cannot  be  made.1 
"While  the  state  of  war  continues  the  giving  of  notice  is  nu- 
gatory.2 It  will  not  be  any  evidence  of  notice  whatever. 
If  the  countries  of  the  person  to  serve  and  the  person  to  be 
served  are  at  war,  or  if  the  ordinary  commercial  intercourse 
has  been  suspended  by  proper  authority,  notice  cannot  be 
transmitted;  but  if  the  district  is  merely  disturbed  by  a 
state  of  war,  the  condition  must  be  such  as  to  prevent  com- 
mercial intercourse  between  the  two  places.3  If  means  of 
communication  exist,  it  is  the  duty  of  the  person  to  trans- 

14  See  §  268,  ante.  546;  Union  Bank  v.  Robertson,  19 

15  See  §  287,  ante.  La.  Ann.  72. 

16 See  §  262,  ante.  'See  note  1.    Even  if  war  exists 

17  See  §  244,  ante.  it  will  not  excuse  the  use  of  due 

18  See  §§  287,  289,  ante.  diligence  in  trying  to  transmit  no- 
!Lanev.  Bank  of  West  Tennessee,  tice.    Peters  v.  Hobbs,  25  Ark.  67 

9  Heisk.  419  (on  the  whole  question  (this  case  wrongly  holds  that  the 

involved  this  decision  is  wrong);  existence  of  a  state  of  war  is  a 

House  v.  Adams,  48  Pa.  261;  Bell  question  for  the  jury);  Dunbar  v. 

v.   Hall,  2  Duv.  288;   Hopkirk  v.  Tyler,  44  Miss.  1;  James  v.  Wade, 

Page,  2  Brock.  20.  21  La.  Ann.  548.    Interruption  of 

2Norris  v.  Despard,  38  Md.  487;  the  mail  is  not  alone  sufficient  to- 

Hardin   v.    Boyce,  59    Barb.   425;  excuse.    Citizens' Bank  v.  Pugh,  19 

Farmers'  Bank  v.  Gunnell,  26  Grat.  La.  Ann.  43.    But  a  notice  depos- 

131  (in  this  cas^  the  court  held  that  ited  in  the  mail  under  such  con- 

a  part  of  the  secession  ordinance  ditions  is  nugatory.    Billgerry  v. 

was  unconstitutional);  Bynum  v.  Branch,  19  Grat  393;  Shawv.Neal, 

Apperson,  9  Heisk.  632;   Bank  of  19  La.  Ann.  156. 
Old  Dominion  v.  McVeigh,  29  Grat. 


52-i  BANKS    AND   BANKING.  [§  292. 

mit  notices  by  those  means.  But  the  transmission  of  no- 
tice through  a  country  with  which  both  belligerents  were 
at  peace,  or  the  use  of  a  licensed  vessel,  was  wrongly  sug- 
gested.4 This  cannot  be  considered  a  proper  rule,  for  the 
better  rule  would  be  that  such  a  notice  was  void.5  But 
the  excuse  or  necessity  for  delay  exists  only  so  long  as 
the  state  of  war  continues  or  the  interruption  continues;6 
as  soon  as  commercial  intercourse  is  resumed,  reasonable 
diligence  must  be  exercised  in  the  transmission  of  the  no- 
tice.7 With  the  magnificent  disdain  for  private  rights  ex- 
hibited by  so  many  revolutionary  bodies,  especially  strict 
constructionists,  a  southern  state  attempted  by  a  secession 
ordinance  to  dispense  with  notice  upon  existing  paper.8  The 
prevalence  of  an  epidemic  suspending  ordinary  business  ex- 
cuses notice,9  but,  unlike  a  state  of  war,  a  notice  served 
during  the  prevalence  of  the  epidemic  is  good,10  even  though 
there  be  a  statute  suspending  demands  and  notices  until  fif- 
teen days  after  the  epidemic  was  declared  at  an  end.11 

§  292.  Result  of  want  of  due  notice,— As  to  all  parties  to 
negotiable  paper  entitled  to  claim  notice,  except  the  drawer 
of  a  check,  who  can  claim  recompense  only  to  the  extent  of 
injury,  those  who  have  not  been  given  notice  in  the  manner 
hereinbefore  described  are  absolutely  relieved  from  all  obli- 

4  United  States  v.  Barker,  Fed.  cession  ordinance  valid.    See  Farm- 

Cas.  No.  14,519.    This  judge  did  not  ers'  Bank  v.  Gunnell,  26  Gratt.  131, 

eeera  to  know  that  such  a  notice  which  held  it  was  governed  by  the 

would  be  invalid.  Federal  Constitution.  It  seems  that 

6  See  cases  in  note  2.  the  secession  ordinance  took  Vir- 
6Norris  v.  Despard,  88  Md.  487;  ginia  out  of  the  Union,  and  yet  it 

Farmers'  Bank  v.  Gunnell,  26  Grat.  remained  in  the  Union.    Such  are 

131,  and  cases  in  note  1,  supra.  the  productions  of  Bourbonism. 

7  Turner  v.  Patten,  49  Ala.  406;  9Tunno  v.  Lague,  2  Johns.  Gas.  1; 
Harp  v.  Kenner,  19  La.  Ann.  63;  Hanauer  v.  Anderson,  16  Lea,  340; 
Morgan  v.   Bank  of  Louisville.  4  Apperson  v.  Bynum,  4  Cold.  445  (dic- 
Bush,  82;  Shaw  v.  Neal,  19  La.  Ann.  turn).    Contra,  Roosevelt  v.  Wood- 
156.    See  Apperson  v.  Union  Bank,  hull,  Anth.  N.  P.  250. 

4  Cold.  445.    This  decision  purports  10  Hanauer  v.  Anderson,  16  Lea, 

to  be  a  trea  tise.  840. 

8Duerson  v.  Alsop,  27  Gratt  229.  n  Hanauer  v.  Anderson,  16  Lea, 

In  this  case  the  court  held  the  se-  340. 


§  293.]  EXCHANGES,  SECURITIES,  ETC.  525 

gation  upon  the  paper,1  unless  notice  has  been  waived  in  the 
manner  stated  in  the  next  section.  The  same  rule  applies 
to  a  failure  to  present  for  acceptance  paper  that  requires 
acceptance,  and  to  a  failure  to  make  a  demand  where  a  de- 
mand is  required.  And  the  rules  stated  herein  may  be  ap- 
plied to  those  cases  also.  If  the  negotiable  paper  has  been 
given  in  payment  of  a  claim,2  or  indorsed  in  payment  of  a 
claim,3  the  claim  is  extinguished  to  the  amount  of  the  paper. 
If  the  paper  has  been  given  or  transferred  as  security  for  a 
debt,  the  maker  or  transferrer  is  entitled  to  a  credit  upon 
the  debt  to  the  amount  of  the  paper,  if  it  be  lost  through  the 
pledgee's  negligence.4  The  matter  of  release  will  not  be  a 
question  of  injury  suffered,5  whenever  the  debtor  is  an  in- 
dorser,  but  will  be  a  case  of  an  obligation  to  arise  upon  the 
performance  of  a  condition  precedent,  which  condition  was 
never  performed.  The  analogy  between  the  effect  of  a  fail- 
ure to  make  a  demand  for  payment  or  for  acceptance  and  a 
failure  to  give  notice  is  complete. 

ARTICLE  Y. — WAIVER  OF  DEMAND  AND  NOTICE. 

§  293.  Waiver  of  demand  and  notice  in  general. —  The 

waiver  of  acceptance  of  paper  requiring  acceptance  has  been 

1  Even  if  a  new  draft  for  the  orig-  Ins.  Co.  v.  Allen,  11  Mich.  501 ;  Ship- 
inal  is  given,  where  the  original  man  v.  Cook,  16  N.  J.  Eq.  251. 
liability  of  the  drawer  has  been  dis-  4  Jennison  v.  Parker,  7  Mich.  855; 
charged,  and  the  drawer  in  giving  Whitten  v.  Wright,  34  Mich.  92; 
the  new  draft  reserves  his  rights,  Foote  v.  Brown,  2  McLean,  369,  ap- 
the  second  draft  is.  unenforceable  plying  the  rule  where  a  guarantor 
against  him.    Benton  v.  Martin,  40  was  held  entitled  to  notice;  Shriner 
N.  Y.  345.    See  S.  C.,  31  N.  Y.  382.  v.  Keller,  25  Pa.  61 ;  Moore  v.  Brun- 

2  Allen  v.  King,  4  McLean,  128;  gard,  6  Miss.  557.    See  Gallagher  v. 
Halbrook  v.  Allen,  4  Fla.  87;  Man-  Roberts,  2  Wash.  C.  C.  191. 

ney  v.  Coit,  80  N.  C.  300;  Dayton  v.  5Shipman  v.  Cook,  16  N.  J.  Eq. 
Trull,  23  Wend.  345;  Denniston  v.  251.  But  in  order  to  claim  strict 
Iinbrie,  3  Wash.  C.  C.  396.  For  an  rights  as  indorsers,  the  debtor  trans- 
exchange  of  checks,  see  Foster  v.  ferring  the  collateral  must  have 
Paulk,  41  Me.  425.  indorsed.  Boardman  v.  Steele,  18 

3  Murphy  v.  Phelps,  12  Mont.  531;  Conn.   547;  Van  wart  v.  Smith,  1 
Stam  v.  Kerr,  31  Miss.  199;  Phoenix  Wend.  219. 


526  BANKS    AND   BANKING.  [§  293. 

examined  in  preceding  sections.1  The  waiver  of  acceptance, 
it  was  said,  does  not  dispense  with  demand  of  payment  and 
notice  of  non-payment.2  The  waiver  of  demand  or  of  notice 
or  of  both  is  now  to  be  considered.  This  waiver  may  be  ex- 
press or  implied.  If  express  it  may  be  oral  or  written  unless 
a  statute  prohibits  oral  waivers.  If  written,  it  may  result 
from  the  single  waiver  of  the  party  making  an  express  waiver 
by  himself  indorsing  the  waiver  upon  the  paper,  or  may  re- 
sult from  the  indorsement  of  paper  containing  a  waiver  in 
the  form  of  a  stipulation  incorporated  in  the  body  of  the 
paper  or  prefixed  to  a  preceding  indorsement,  or  it  may  re- 
sult from  a  blank  indorsement  delivered  to  an  indorsee  with 
authority  to  write  a  written  waiver  above  the  indorsement. 
The  oral  waiver  may  be  either  express  or  implied.  If  ex- 
pressly made  at  the  time  of  indorsement,  a  sharp  division  in 
the  authorities  exists  as  to  whether  it  is  provable  under  the 
parol  evidence  rule.  The  oral  waiver  may  be  implied  from 
acts  and  circumstances.  A  promise  to  pay  before  maturity 
acted  upon  by  the  holder  amounts  to  a  waiver.  The  obtain- 
ing by  the  indorser  of  an  extension  of  time  for  the  principal 
debtor  may  amount  to  a  waiver.  The  exaction  of  full  in- 
demnity by  the  indorser  from  the  maker  before  maturity 
waives  notice  and  demand.  Other  circumstances  or  acts 
have  the  same  effect.  The  rule  of  law  varies  as  to  a  waiver 
made  before  or  after  maturity.  Whether  a  waiver  after  ma- 
turity and  dishonor  requires  a  new  consideration  is  sharply 
disputed.  A  new  promise  to  pay  after  release  of  the  in- 
dorser, if  made  with  knowledge,  or  a  partial  payment  of  the 
paper  by  the  indorser,  or  an  unconditional  acknowledgment 
of  liability,  may  have  the  effect  of  a  waiver  of  a  notice  and 
demand.  It  will  thus  appear  that  there  is  much  analogy 
between  the  rule  applicable  to  a  waiver  of  demand  and  no- 
tice, and  to  what  amounts  to  a  waiver  of  the  statute  of  lim- 
itations. The  various  divisions  of  the  subject  will  be  treated 
in  what  seems  to  be  the  natural  order. 

i  See  §  209,  ante.  *  English  v.  Wall  12  Rob.  (La.)  132, 


§  294]  EXCHANGES,  SECURITIES,  ETC.  527 

§  294.  Who  may  make  waiver.— The  person  to  be  charged 
by  demand  and  notice  must  make  the  waiver  either  himself 
or  through  an  agent  with  express  or  implied  authority. 
"Where  the  agent's  authority  to  waive  demand  and  notice  of 
dishonor  is  express,  no  difficulty  can  arise  if  it  be  kept  in 
mind  that  the  authority  ends  with  the  death  of  the  princi- 
pal, unless  it  is  coupled  with  an  interest.  But  the  person 
who  makes  the  waiver  must  be  sui  generis  and  not  a  married 
woman  under  disability.1  But  the  latter  case  is  not  a  fre- 
quent one  now  owing  to  "Married  Woman's  Acts."  If  the 
person  be  not  sui  generis  he  cannot,  of  course,  grant  author- 
ity to  an  agent.  A  partner  may  waive  demand  and  notice 
for  his  firm,  and  may  do  it  even  after  dissolution  of  the  firm,2 
but  in  a  peculiar  case  this  has  been  denied.3  The  agent  of 
a  corporation  who  is  authorized  to  create  a  liability  against 
the  corporation  may  waive  demand  and  notice  for  the  corpora- 
tion.4 But  this  ruling  should  properly  be  put  upon  the  ground 
of  a  ratification  by  the  corporation  resulting  from  its  recep- 
tion of  benefits,  for  the  agent  was  acting  for  another  party 
as  well  as  for  the  corporation.  It  is  therefore  a  case  of  ex- 
press authority  to  the  agent.  Implied  authority  to  waive 
may  result  from  the  fact  that  the  person  who  makes  the 
waiver  is  apparently  in  charge  at  the  indorser's  place  of  busi- 
ness in  the  absence  of  the  indorser,5  or  from  the  fact  that 
the  person  is  negotiating  the  note  for  tho  benefit  of  the 
indorser.15  The  same  rule  would  apply  to  the  indorser  and 
drawer  of  a  bill  of  exchange.  These  last  cases  of  im- 
plied authority  are  examples  of  an  agency  by  estoppel,  and 
it  is  needless,  perhaps,  to  say  that  if  the  person  receiving  the 
waiver  had  notice  (either  personally  or  through  his  agent 

1  Marshall  v.  Overbay,  10  La.  161.        *  Whitney  v.  South  Paris  Mfg. 

2  Darling  v.  March,  22  Me.  184j    Co.,  39  Me.  316. 

Seldner  v.  Mt.  Jackson  Nat.  Bank,  8  Johnson  v.  Zeckendorf,  12  Pac. 

66  Md.  488.    Contra,  see  case  in  note  R.  65  (Ariz.).    There  was  no  proof 

6,  infra,  which  is  wrong.  of  special  authority. 

3Manney  v.  Coit,   80  N.   C.  300  «  Driggs  v.  Driggs,  11  N.  Y.  St  R. 

(dormant  partner  was  sought  to  be  256. 
bound).    The  case  seems  to  be  un- 
supported. 


528  BANKS  AND  BANKING.  [§  295 

receiving  the  waiver)  of  the  lack  of  authority,  the  estoppel 
does  not  arise. 

§  295.  To  whom  the  waiver  should  be  given. — A  waiver 
must  be  made  to  one  who  is  a  holder  of  the  paper  or  to  some 
one  for  such  a  holder,1  except  that  an  agreement,  it  has  been 
held,  made  by  the  indorser  with  the  maker,  that  he  would 
take  up  the  note  and  pay  it,  inures  to  the  benefit  of  the  in- 
dorsee as  a  waiver  of  demand  and  notice.2  Yet  it  is  held 
that  the  indorser's  agreement  made  with  the  maker  to  waive 
demand  and  notice  does  not  inure  to  the  benefit  of  the  holder. 
The  distinction  ought  to  be  this:  if  the  promise  is  to  the 
maker,  whether  it  be  made  before  maturity  or  after  maturity, 
with  knowledge  of  dishonor,  it  is  binding3  and  inures  to  the 
benefit  of  all  the  holders  as  a  waiver.4  But  if  made  after 
maturity  without  such  knowledge,  the  promise,  since  it  would 
not  be  good  if  made  to  the  holder,  is  not  good  if  made  to 
the  maker.5  The  agreement  to  waive  made  with  the  maker 
by  the  indorser  ought  to  be  held  good  if  it  was  com- 
municated to  the  holder  when  he  was  holder  and  he  relied 
upon  it  in  not  giving  notice.  There  is  also  the  case  of  the 
trustee  under  a  mortgage;  he  so  far  represents  the  holder 
that  a  promise  of  waiver  or  a  waiver  made  to  him  is  good 
as  made  to  the  holder  of  the  note.6  Even  if  the  waiver  is. 
made  to  a  person  not  a  holder,  but  he  afterwards  becomes- 
holder,  the  waiver  is  not  binding,7  unless  the  indorser  knew 
or  intended  that  the  person  was  about  to  become  the  holder 
and  the  holder  actually  relied  upon  the  waiver  in  not  giving 
notice. 

Kerrey  v.  Wilber,  1  Bailey,  453;  Anderson,  87  Mo.  91.    In  this  cas& 

Attwood  v.  Haseldon.  2  Bailey,  457;  the  proof  seems  not  to  have  been 

Jaccard  v.  Anderson,  37  Mo.  91.  at  all  conclusive.    If  a  waiver  is 

2  Marshall  v.  Mitchell,  35  Me.  221.  made  to  the  maker  in  order  to  be 

3  See  the  case  in  the  last  note,  and  told  or  shown  to  the  holder,  it  is  no 
Boyd  v.  Cleveland,  4  Pick.  525.  doubt  binding  as  an  estoppel. 

4  But  Brown  v.  Ferguson,  4  Leigh,  6  Riker  v.  Sprague  Mfg.  Co.,  14 
87,  is  contra  as  to  the  promise  of  R.  I.  402. 

drawer  to  drawee.  7  National  Bank  v.  Lewis,  50  Vt* 

5  See  §  299,  post,  and  Jaccard  v.    622. 


§  2U6.J  EXCHANGES,  SECURITIES,  ETC.  529 

§  296.  Express  waiver  in  writing. —  Cases  of  guaranty 
are  sometimes  considered,  and  no  doubt  very  properly  so, 
as  instances  of  waiver.1  An  indorser  who  writes  the  word 
"  accountable  "  after  his  signature  waives  demand  and  no- 
tice;2 but  the  word  "unconditionally"  after  the  indorser's 
signature  was  not  considered  a  waiver,3  nor  is  an  indorse- 
ment in  this  form :  "  I  assign  on  condition  that  the  property  of 
the  maker  and  indorsers  is  exhausted  before  recourse  on  me." 4 
The  indorser  who  signs  his  name  below  that  of  another  in- 
dorser whose  name  on  the  bill  or  note  is  accompanied  by  a 
waiver  is  considered  also  as  having-  signed  the  waiver.5  The 
indorsing  of  a  note  which  contains  a  waiver  in  the  body  of 
the  note,6  or  stamped  on  the  back,7  or  who  signs  such  a  bill 
of  exchange,  is  bound  by  the  waiver,  and  that  is  so  even 
though  he  have  a  general  agreement  with  the  holder  for  no- 
tice upon  all  paper  indorsed  by  him.8  The  waiver  may  also 
arise  from  a  general  agreement,9  provided  its  proper  con- 
struction will  enable  it  to  cover  the  particular  paper  in  ques- 
tion.10 It  follows  from  the  parol  evidence  rule  that  an 
express  waiver  in  writing  that  is  general  cannot  be  shown 
by  evidence  of  a  contemporaneous  oral  agreement  to  have 
been  for  a  limited  time,11  or  to  have  been  subject  to  condi- 
tions not  expressed  in  the  waiver.12  But  a  waiver  in  writing 
may  be  modified  by  an  oral  agreement  afterward  made.13 

JSee  §  241,  ante.  Neal  v.  Wood,  23  Ind.  523;  Lowry 

2Furber  v.  Caverly,  42  N.  H.  74.  v.  Sfeele,  27  Ind.  168;  Bryant  v. 

s  Dowd  v.  Aaron,  2  Hill  (S.  C.),  Merchants'  Bank,  8  Bush,  43  (upon 

531.  bills  of  exchange). 

4  Duffy  v.  O'Conner,  7  Baxt.  498.  7  Farmers'  Bank  v.  Ewing,  78  Ky. 

8  Portsmouth  Sav.  Bank  v.  Wil-  264. 

son,  5  App.  D.  C.  8;   Parshley  v.  8  Bryant  v.  Lord,  19  Minn.  396. 

Heath,  69  Ma  90.    See  Central  Bank  9  Duval  v.  Farmers'  Bank,  7  Gill 

v.  Davis,  19  Pick.  373.  &  J.  44,  9  Gill  &  J.  81.    See  Martin 

6  Dunnegan  v.  Stevens,  122  III  v.  Perqua,  65  Hun,  225. 

896;    Gordon   v.    Montgomery,  19  10  Studebaker  v.  Ryan,  46  Kan.  273. 

Ind.  110;  Sohn  v.  Morton,  92  Ind.  "  Hayes  v.  Fitch,  47  Ind.  21 ;  Buck- 

170:  Leeds  v.  Hamilton  Paint  Co.,  ley  v.  Bentley,  42  Barb.  646. 

35  S.  W.  R  (Tex.)  77;  Hoover  v.  Mo  12See  Jones  v.  Albee,  70  III  34 

Cormick,  84  Wis.  215  (upon  notes);  The  express  written  waiver  cannot 

13  This  is  the  general  rule  as  to  ail  simple  contract* 
84 


530 


BANKS    AND   BANKING. 


[§  296. 


The  construction  of  express  waivers  is  as  follows:  A  waiver 
of  protest  waives  a  presentation  for  payment,  demand -and 
notice  of  non-payment.14  Waiver  of  notice  of  demand  and 
protest  waives  all  steps  in  the  proper  protest.15  A  waiver 
of  protest  and  notice  waives  demand  as  well  as  notice,16  and 
so  would  a  waiver  of  protest  or  notice 17  and  a  waiver  of  de- 
mand of  protest.18  A  waiver  of  demand  seems  to  waive 
notice  of  non-payment  —  a  very  proper  rule.19  But  a  waiver 
of  notice,20  or  a  waiver  of  notice  of  demand,21  or  a  waiver  of 
notice  of  protest,22  does  not  waive  a  demand,  unless  it  be  ac- 
companied with  a  guaranty.23  A  waiver  of  notice  of  protest 
and  demand  waives  demand,  protest  and  notice.24  But  a 
married  woman,  who  by  her  indorsement  charges  her  sepa- 
rate estate,  does  not  waive  demand  or  notice.25  An  agree- 
ment between  the  parties  (drawer  and  payee)  not  to  present 


be  supplemented  by  oral  testimony 
in  order  to  give  it  a  greater  effect. 
Burke  v.  Ward,  32  S.  W.  R  1047. 
But  see  contra,  Mills  v.  Beard,  19 
Cal.  158,  where  the  different  waiv- 
ers were  contemporaneous.  But 
the  waiver,  if  ambiguous,  may  be 
explained  by  parol  evidence.  Union 
Bank  v.  Hyde,  6  Wheat  572. 
14  First  Nat.  Bank  v.  Falkanhan, 

94  Cal.  141;  Fitch  v.  Citizens'  Nat 
Bank,  97  Ind.  211;  Harvey  v* Nel- 
son, 31  La.  Ann.  434;  Carpenter  v. 
Reynolds,  42   Miss.   807;    Scott  v. 
Greer,  10  Pa.  103;  Jaccard  v.  An- 
derson, 37  Mo.  91;  Cooke  v.  Pome- 
roy,  65  Conn.  466;  Shaw  v.  McNeil, 

95  N.  C.  535;  Continental  Life  Ins. 
Co.  v.  Barber,  50  Conn.  567;  Car- 
mena  v.  Mix,  15  La.  165;  First  Nat. 
Bank    v.    Hartman,  110    Pa.  196; 
Fisher  v.  Price,  37  Ala.  407.    See, 
however,  Johnson  v.  Parsons,  140 
Mass.  173  (waives  notice  but  not  de- 
mand); Moffatt  v.  Griswold,  1  Neb. 
415  (waives  demand  but  not  notice). 


15  Johnson  Co.  Sav.  Bank  v.  Lowe, 
47  Mo.  App.  151. 

16  Gordon  v.  Montgomery,  19  Ind. 
110;  Baker  v.  Scott,  29  Kan.  136; 
Walford  v.  Andrews,  29  Minn.  250; 
Walker  v.  Popper,  2  Utah,  96.     Con- 
tra, Scull  v.  Mason,  43  Pa.  99,  sem- 
Ue. 

17  Hatley  v.  Jackson,  48  Md.  254. 
is  Porter  v.  Kemball,  53  Barb.  467. 

19  Dye  v.  Scott,  35  Ohio  St.  194; 
Jaccard  v.  Anderson,  37  Mo.  91. 

20  Lane  v.  Steward,  20  Me.  98;  Bu- 
chanan v.  Marshall,  22  Vt  561. 

2iVoorhees  v.  Atlee,  29  Iowa,  49; 
Drinkwater  v.  Tibbets,  17  Me.  16; 
Berkshire  Bank  v.  Jones,  6  Mass. 
524;  Backus  v.  Sheperd,  11  Wend. 
629. 

22  Buckley  v.  Bentley,  42  Barb.  646 ; 
Sprague  v.  Fletcher,  8  Oreg.  367. 

23  Farmer  v.  Sewell,  16  Me.  456; 
Backus  v.  Sheperd,  11  Wend.  629. 

24  Hammett  v.  Frenworthy,  51  Ma 
App.  281. 

2*  Jaffray  v.  Krauss,  79  Hun,  449. 


§  297.]  EXCHANGES,  SECURITIES,  ETC.  531 

a  check  amounts  to  a  waiver  of  demand  and  notice26  as  to 
the  drawer,  as  well  as  to  an  indorser  if  he  were  a  party  to 
the  agreement.27 

§  297.  Filling  up  of  blank. —  The  general  rule  is  said  to 
be  that  if  a  written  waiver  appears  above  the  signature  of 
an  indorser,  it  is  presumed  to  have  been  placed  there  with 
his  authority.1  The  courts  are  badly  divided  upon  the  ques- 
tion whether,  if  the  actual  agreement  upon  indorsement  were 
for  a  waiver,  the  delivery  of  a  blank  indorsement  impliedly 
authorizes  the  holder  to  insert  the  waiver  above  the  indorse- 
ment.2 But  if  the  authority  to  write  the  indorsement  is  de- 
nied by  evidence  to  show  that  the  waiver  was  unauthorized, 
it  devolves  upon  the  holder  to  prove  the  authority.8  The 
mere  delivery  of  a  regular  blank  indorsement,  with  authority 
to  fill  it  up,  does  not  authorize  the  writing  of  a  waiver  above 
it,4  even  though  the  indorser  authorized  the  holder  to  fill  it 
up  as  he  thought  proper.5  Where  authority  is  granted  in 
this  way  it  is  generally  by  parol,  and  if  the  waiver  is  required 
to  be  written,  as  some  statutes  provide,  it  might  be  contended 
that  the  authority  to  write  the  waiver  should  be  in  writing; 
but  the  writing  of  the  waiver  is  not  the  execution  of  a  con- 
tract for  another,  but  the  mere  filling  up  of  the  contract  al- 
ready executed  and  signed  by  the  person  to  be  charged. 
For  a  like  reason  the  writing  of  the  waiver  is  not  a  modifi- 
cation of  the  indorsement  by  parol  evidence.  Therefore,  in 
all  cases,  whether  an  oral  waiver  be  valid  or  not,  the  filling 
up  of  a  blank  indorsement  according  to  agreement,  express 
or  implied,  ought  to  be  perfectly  valid.  An  anomalous  in- 
dorsement, that  is  to  say  one  made  by  a  stranger,  wherever 

26  Culver  v.  Marks,  122  Ind.  554.  next  section  for  the  general  discus- 

^Barclay  v.  Weaver,  19  Pa.  396;  sion. 

and  see  §  298,  note  25,  and  g  299,  3  Farmer  v.  Rand,  14  Ma  225. 

notes  6, 10.  4Catlin  v.  Jones,  1  Pin.  130;  An- 

1  Farmer  v.  Rand,  14  Ma  225.  drews  v.  Simons,  33  Ark.  771;  Hill 

2  Fowler  v.  Fleming,   1  McMul.  v.  Martin,  12  Mart.  (O.  S.)  177. 

282.  Contra,  Farwell  v.  St.  Paul  6  Kimbro  v.  Lamb,  4  Humph.  95. 
Trust  Co.,  45  Minn.  495;  and  see  the 


532  BANKS   AND   BANKING.      .  [§  298. 

it  is  held  to  be  a  guaranty,  ought  to  permit  of  a  waiver  being 
written  above  it  if  there  were  no  other  actual  agreement.6 

§  298.  Parol  waiver. —  The  waiver  of  the  necessity  for 
demand  and  notice  may  be  made  by  parol 1  unless  the  stat- 
ute or  rule  of  law  held  in  the  jurisdiction  expressly,  requires 
the  waiver  to  be  written;2  but  even  in  the  latter  case  a  per- 
son may  be  estopped  by  his  conduct  from  insisting  upon  a 
written  waiver.8  This  waiver  may  be  made  at  any  time 
after  indorsement.  It  is  difficult  to  see  how  a  waiver  could 
be  made  before  indorsement,  except  by  the  drawer  of  a  bill 
under  certain  peculiar  circumstances,  which  are  to  be  classed 
as  excuses  for  making  a  demand  and  giving  notice.4  If  the 
waiver  is  made  at  the  time  of  indorsement,  as  we  saw  in 
the  last  section,  it  is  equivalent  to  an  authority  to  write -a 
waiver  above  the  indorsement  and  is  not  a  case  of  a  parol 
modification  of  a  written  contract.  So  where  the  agreement 
is  for  an  actual  waiver  at  the  time  of  the  indorsement,  it  is 
difficult  to  see  what  effect  the  parol  evidence  rule  can  have.5 
The  theory  and  rationale  of  the  doctrine  is  that  the  indorser, 
by  his  waiver  or  by  his  promise  to  be  liable  as  a  guarantor, 
makes  the  holder  his  agent  to  insert  the  contract  above  the 
blank  indorsement  which  he  gives  to  him.  This  authority 
can  be  given  by  parol,  just  as  he  could  authorize  a  man  to 
sign  his  name.  The  sole  question  involved  is  whether,  by 

« This  merely  makes  the  indorse-  with  a  written  waiver  of  notice, 

ment  what  it  purports  to  be  on  its  Mills  v.  Beard,  19  CaL  158.    Contra, 

face.  Buckley  v.  Bentley,  48  Barb.  283. 

1  Annaville  Nat.  Bank  v.  Ketter-  For  the  language  used  in  waiving, 

ing,  106  Pa.  531;  Maples  v.  Traders'  see  Taunton  Bank  v.  Richardson,  5 

Deposit  Bank,  15  Ky.  Law  R.  879;  Pick.  436. 

Edwards  v.  Tandy,  36  N.  H.  540;  2  Thomas  v.  Mayo,  56  Me,  40;  First 

Fuller  v.  McDonald,    8   Ma    213;  Nat  Bank  v.  Maxfleld,  83  Me.  576. 

Kaiser  v.  Nial,  9  Mo.  App.  590:  Bar-  3  Hallowell  Nat.  Bank  v.  Mar&ton, 

clay  v.  Weaver,  19  Pa.  396 ;  Andrews  85  Me.  488. 

v.  Simms,  33  Ark.  771;  Schmeid  v.  <See  §§  262,  290,  ante. 

Frank,  86  Ind.  230;  Taunton  Bank  8  See  the  last  section.    A  parol 

v.  Richardson,  5  Pick.  436.    A  parol  waiver  on  an  assignment  is  good, 

waiver  of  a  demand  may  be  shown  Dick  v.  Martin,  7  Humph.  263. 


•§  298.]  EXCHANGES,  SECURITIES,  ETC.  533 

making  such  an  agreement  and  executing  the  blank  indorse- 
ment, he  authorizes  the  holder  to  fill  it  up.  If  there  is  au- 
thority to  fill  it  up,  neither  the  parol  evidence  rule  nor  a 
statute  requiring  a  writing  is  violated,  for  the  contract  is 
written.  But  reasonable  as  the  above  rule  seems  to  be,  it  is 
settled  by  the  great  preponderance  of  authority,  in  spite  of 
text  writers  to  the  contrary,  that  parol  evidence  is  inadmis- 
sible to  show  a  parol  waiver  or  a  parol  guaranty  contempo- 
raneous with  a  regular  indorsement.6  But  in  the  case  of  an 
anomalous  indorsement,  the  actual  contract  of  indorsement 
may  be,  and  in  some  states  must  be,  shown  by  parol.7  Where 
the  anomalous  indorser  is  a  guarantor  or  original  promisor 
by  law,  the  indorser  may  not  show,  according  to  some  au- 
thority, the  actual  contract,  to  rebut  the  contract  of  guar- 
anty inferred  from  the  nature  of  the  indorsement.8  In  other 
'states  where  the  anomalous  indorser  is  merely  an  ordinary 
indorser,  parol  evidence  is  admissible  to  show  a  parol  con- 
tract of  guaranty,9  but  this  holding  is  denied.10  But  the 
proper  rule  would  seem  to  be  that  in  no  case  should  the 
contract  raised  by  the  law  from  the  nature  of  the  indorse- 
ment be  reduced  by  parol  evidence  as  against  a  lonafide 

6  Rodney  v.  Wilson,  67  Mo.  123:  v.  Tempel,  48  Mo.  71;  Stack  v.  Beach, 

Better  v.  Frost,  70  Mo.  185.    Or  a  74  Ind.  571;  Chaddock  v.  Vanness, 

guaranty.     Barnard   v.   Galin,  23  35  N.  J.  Law,  517. 

Minn.  192;  Farwell  v.  Trust  Co.,  45  8  Dale  v.  Gear,  38  Conn.  15;  Allen 

Minn.  495;  Barry  v.  Morse,  3  N.  H.  v.  Brown,  124  Mass.  77;  Dennis  v. 

132;  Bank  of  Albion  v.  Smith,  27  Jackson,  108  Mich.  295;  Watson  v. 

Barb.   489;    Schmitz   v.  Hawkeye  Hart,   6  Grat.  633.     Contra,  Key 

Co.,  8  S.  D.  544,  and  cases  therein,  v.  Simpson,  22  How.  341;  White  v. 

See  Stack  v.  Beach,  74  Ind.  571,  as  Weaver,  41  III  409;  Kingsland  v. 

to  what  may  be  shown  by  parol  Koeppe,  137  111.  344;  Strong  v.  Hiker, 

evidence.    These  cases  follow  the  16  Vt.  554 

English  rule.    This  rule  could  not  »McComb  v.  Thompson,  2  Minn, 

apply  to  a  parol  waiver  after  in-  139;  Coulter  v.  Richmond,  59  N.  Y. 

dorsement.  478;  Deering  v.  Creighton,  19  Oreg. 

'Rey  v.  Simpson,  22  How.  341;  118;  Wells  v.  Jackson,  6  Blackf.  4C 

Cady  v.  Shepard,  12  Wis.  639;  Bright  10  Heath  v.  Van  Cott,  9  Wis.  516 

v.  Carpenter,  9  Ohio,  139;  Feather-  (seemingly  overruled  by  Cady  v. 

stone  v.  Hendrick,  59  III  App.  497;  Shepard,  12  Wis.    639);  Stack    v. 

O wings  v.  Baker,  54  Md.  82;  Kuntz  Beach,  74  Ind.  571,  aemble. 


534  BANKS   AND    BANKING.  [§  298. 

holder,11  although  the  same  objection  would  not  exist  to  evi- 
dence adding  to  the  contract  terms  beneficial  to  the  holder.12 
This  parol  waiver  in  jurisdictions  which  permit  such  proof 
as  to  an  indorsement  may  be  proved  as  between  indorser 
and  indorsee.13  The  waiver  may  also  be  made  after  indorse- 
ment. In  case  the  statute  or  the  rule  of  law  requires  a  writ- 
ten waiver,  a  waiver  after  indorsement  would  necessarily 
be  in  writing,  because  the  holder  would  not  be  authorized 
to  write  the  waiver  above  the  indorser's  signature.14  But 
where  a  written  waiver  is  not  required  this  waiver  may  be 
made  at  any  time  before  maturity,15  and  by  much  authority 
after  maturity,  as  will  appear  in  a  succeeding  section.  A 
parol  waiver  may  be  proved  by  facts  and  circumstances 1S 
as  well  as  by  words.17  Cases  examining  the  evidence  to 
support  such  a  waiver  may  be  found  in  the  note  below.18 
This  waiver  arises  from  the  indorser's  request  to  the  holder 
not  to  protest  the  paper,19  or  by  the  indorser  wrongfully 
taking  possession  of  the  paper  before  maturity  and  retain- 
ing it  until  after  maturity,20  or  by  the  indorser's  taking  the 
paper  and  attempting  himself  to  collect  it.21  But  the  mere 
presence  of  the  indorser  at  the  demand  is  not  a  waiver,22 
nor  the  fact  that  the  indorser  aided  the  holder  in  collecting 
interest  upon  the  note.23  But  if  the  indorser  induces  the 
holder  to  give  time  to  the  maker  at  the  time  of  indorsement, 
or  before  or  at  maturity,  his  conduct  is  a  waiver  of  demand 
and  notice  at  the  maturity  of  the  note,24  but  some  authority 

11  Schneider  v.  Schiff man,  20  Mo.  Young,  13  Ark.  401 ;  Taunton  Bank 
571;  Salisbury  v.  First  Nat.  Bank,  v.  Richardson,  5  Pick.  436.  For  lan- 
37  Neb.  872.  guage  not  a  waiver,  see  Kent  v. 

12  This  view  of  the  matter  seems  Warner,  94  Mass.  561;  Wright  v. 
to  be  sound  on  principle.  Liesenfeld,  93  Cal.  90. 

"Dye  v.  Scott,  35  Ohio.St  194       » Scott  v.  Grier,  10  Pa.  103. 

See  note  6,  supra.  2<>  Havens  v.  Talbot,  11  Ind.  323. 

14  See  cases  in  note  2,  supra.  2l  Braine  v.  Spaulding,  52  Pa.  247. 

15  See  the  next  section.  22  Grant  v.  Spencer,  1  Mont.  136. 

16  See  cases  in  note  1,  supra.  23  Isham  v.  McClure,  58  Iowa,  515. 

17  See  cases  in  note  1,  supra.  A  contrary  decision  in  this  case 

18  Teconic    Bank   v.  Johnson,   21    would  have  been  proper. 

Ma  426;  Oswego  Bank  v.  Knower,  24  Marsh  v.  Badcock,  2  D.  Chip.  124; 
Hill  &  D.  Supp.  122;  Lary  v.  Hudson  v.  Wolcott,  39  Ohio  St.  618 ; 


§  299.]  EXCHANGES,  SECURITIES,  ETC.  535 

holds  that  it  is  not  so  as  to  demand  and  notice  at  the  expi- 
ration of  the  extension.25  If  the  indorser  himself  gives  se- 
curity upon  the  note,  it  seems  that  the  security  may  be  en- 
forced, although  the  note  was  not  demanded  nor  notice  of 
non-payment  given.26  The  commonest  form  of  waiver  be- 
fore maturity  is  examined  in  the  next  section. 

§  299.  Promise  to  pay  before  maturity. —  A  promise  by 
the  indorser  to  pay  the  note,  made  before  maturity,  is  a 
promise  essentially  different  from  the  promise  made  by  the 
indorsement.  If  this  promise  is  orally  made  at  the  time  of 
the  indorsement,  the  difficulty,  as  we  have  already  indi- 
cated, is  that  the  indorsement  makes  a  written  contract, 
while  the  parol  contemporaneous  agreement  to  pay  at  all 
events  contradicts  the  engagement  which  the  written  in- 
dorsement shows.1  The  difficulty  is  not  obviated  when,  in- 
stead of  a  promise  to  pay,  the  parol  contemporaneous  agree- 
ment is  one  of  guaranty.2  The  exception  where  such  proof 
of  waiver  is  allowed  is  generally  as  to  the  contract  of  the 
anomalous  indorser.3  But  where  the  indorsement  is  regu- 
lar, such  parol  proof  is  in  general  inadmissible  where  it  is 
to  show  a  contemporaneous  waiver.4  Where  a  promise  to 
pay  is  made  before  maturity  upon  a  regular  indorsement, 
the  question  that  theoretically  presents  itself  is  one  of  con- 
sideration. But  since  a  consideration  may  be  a  detrinv-nt 
to  the  promisee  as  well  as  a  benefit  to  the  promisor,  there 
is  one  branch  of  the  rule  which  says  that  if  the  indorser's 
promise  to  pay  induces  the  holder  to  refrain  from  making 

Whittier   v.  Collins,   15  R.  L  44  The  security  must  be  considered 

Contra,   Michaud    v.    Legarde,    4  that  of  the  maker.    But  the  in- 

Minn.  43.  But  see  Hart  v.  Eastman,  dorser  may  become  absolutely  lia- 

7  Minn.  74    See  note  6  to  the  fol-  ble.    Hoover  v.  Glasscock,  16  La. 

lowing  section.  242. 

25  See  Hart  v.  Eastman,  7  Minn.  iBaskerville  v   Harris,  41  Miss. 
74;  Worden  v.  Mitchell,  7  Wis.  161.  535.    But  contra,  Worden  v.  Mitch- 
Contra,  Sheldon  v.  Horton,  43  N.  Y.  ell,  7  Wis.  161. 

93,  and  the  cases  in  notes  5  and  10       2  See  §  298,  ante,  notes  5,  6. 
to  the  following  section.  8  See  §  298,  ante. 

26  Cardwell  v.  Allen,  33  Grat.  160.        4  See  §  298,  ante. 


536  BANKS    AND   BANKING.  [§  299. 

a  demand  and  from  giving  notice,  the  promise  is  binding, 
whether  express  or  by  implication.5  This  promise  may  be 
the  offer  of  a  new  note  in  renewal,6  or  an  implied  promise  to 
pay.7  Considered  as  a  promise  the  legal  theory  of  the  con- 
tract of  waiver  must  be  that  the  new  promise  is  a  continu- 
ing offer  to  pay,  including  therein  a  waiver  of  demand  and 
notice,  which  is  accepted  by  the  holders  acting  upon  it  by 
not  making  a  demand.  This  theory  is  inadequate,  for  if  it 
be  a  continuing  offer,  it  could  be  accepted  at  any  time  after 
it  was  made  and  before  the  time  came  for  a  demand.  An 
express  acceptance  ought  in  that  event  to  bind  the  prom- 
isor. But  this  statement  of  the  obligation  shows  no  con 
sideration.  The  new  promise  cannot  be  considered  an  es- 
toppel, even  if  acted  upon,  because  it  is  a  promise,  not  a 
representation  of  any  fact.  So  we  are  driven  to  the  conclu- 
sion that  the  new  promise,  a  nullity  in  itself,8  becomes,  and 
can  become,  binding  as  an  actual  contract  only  by  the  giv- 
ing of  some  consideration.  A  consideration  is  given  by  the 
detriment  to  the  holder  in  acting  upon  the  promise.  Till 
that  is  done  the  promise  ought  in  theory  to  be  revocable  as 
an  offer.  If,  however,  the  holder,  relying  upon  the  promise, 
should  release  the  maker  or  his  surety,  could  such  a  detri- 
ment be  an  acceptance  of  the  offer?  Probably  it  would 
not  be  so,  because  the  new  promise  is  merely  a  waiver.  It 
does  not  render  the  indorser  any  the  less  a  surety  sub  modo 
for  the  maker,  and  the  act  of  releasing  the  maker  or  his  se- 

8Sigerson  v.  Mathews,  20  How.  143;  Lititz  Nat  Bank  v.  Siple,  145 

496;  Leffingwell  v.  White,  1  Johns.  Pa.  49. 

Cas.  99;  Lane  v.  Stewart,  20  Me.  98;  6  First  Nat.  Bank  v.  Ryerson,  23 

Hale  v.  Danforth,  46  Wis.  554;  Kyle  Iowa, 508;  National  Hudson  R.  Bank 

v.  Green,  14  Ohio,  490;  Markland  v.  v.  -Reynolds,  57  Hun,  307;  Jenkins 

McDaniel,  51  Kan.  350;  First  Nat.  v.  White,  147  Pa.  303,  and  Glaze  v. 

Bank  v.  Connoway,  4  Houst  206;  Ferguson,  48  Kan.  157.    And  see 

Schley  v.  Merritt,  37  Md.  352;  Sie-  note  24  to  the  last  section, 

ger  v.  Second  Nat.  Bank,  132  Pa.  7  Stahl  v.  Wolfe,  6  Wkly.  Notes 

307;  Lary  v.  Young,  13  Ark.  401;  Cas.  143. 

Bryant  v.  Wilcox,  49  CaL  47;  Blaf-  8  It  is  not  a  promise  to  pay  a  debt, 

fer   v.  Herman,  7   La.  Ann.   659;  because  no  debt  exists.    Reiff  v. 

Stahl  v.  Wolfe,  6  Wkly.  Notes  Cas.  McMiller,  45  Leg.  Int.  26. 


§  299.]  EXCHANGES,  SECURITIES,  ETC.  537 

curity  -would  probably  release  the  indorser.  Therefore  it 
seems  reasonably  certain  that  the  only  way  in  which  the 
offer  can  be  accepted  is  by  the  holder's  acting  upon  it  at 
maturity,  except  where  the  time  of  pa}Tment  is  extended. 
The  extension  of  time,  with  the  concurrence  of  the  parties 
before  maturity,  is  theoretically,  but  not  legally,  a  waiver 
only  until  the  extended  day  of  maturity.9  But  if  the  ex- 
tension of  time  is,  or  is  not,  accompanied  on  the  part  of  the 
indorser  with  a  promise  to  pay  the  note  upon  maturity,  or 
a  guaranty  or  a  waiver,  there  is  an  absolute  waiver  of  de- 
mand and  notice  at  any  time.10  This  may  be  treated  on  the 
theory  that  the  indorser  thereby  becomes  a  maker.  The 
cases,  however,  show  that  the  new  promise  is  merely  a 
waiver  going  in  support  of  the  original  contingent  liability 
on  the  paper.  Nothing  short  of  an  unqualified  promise  to 
pay  seems  sufficient  as  a  waiver.  Thus,  if  the  holder  noti- 
fies the  indorser  before  maturity  that  he  looks  to  him  for 
payment,  he  does  not  thereby  affect  the  right  of  the  indorser 
to  demand  and  notice,11  or  if  the  holder  and  the  indorser,  at 
the  time  of  indorsement,  agree  that  the  maker  is  not  to  be 
sued  until  the  indorser  notifies  the  holder  to  sue,  the  demand 
and  notice  is  not  waived  by  the  indorser.12  The  indorser 
who  appears  at  a  meeting  of  the  creditors  of  the  maker,  and 
by  reason  of  his  indorsement  takes  the  position  of  a  creditor, 
does  not  waive  notice  and  demand,13  nor  is  a  request  by  the 
indorser  of  the  holder  not  to  sue  during  the  former's  absence.14 
But  if  the  demand*  is  omitted  at  the  indorsees  request  at 
maturity,15  there  is  a  waiver  both  of  the  demand  and  notice. 

9  See  note  25  to  last  section.   But  Good  v.  Arrowsmith,  Anth.  N.  P. 

see  the  cases  cited  in  note  6,  supra.  289.    See  Boyd  v.  Cleveland,  4  Pick. 

K>Cady  v.  Bradshaw,  116  N.  Y.  524. 

188;  Sheldon  v.  Horton,  43  N.  Y.  12  Freeman  v.  O'Brien,  38  Iowa, 

93;  Amoskeag  Bank  v.  Moore,  87  406. 

N.  H.  539;  Norton  v.  Lewis,  2  Conn.  13  Miranda  v.  City  Bank,  6  La.  740. 

478;  Farmers'  Bank  v.   Catlin,  13  14  Button  v.  Bratt,  11  S.  W.  R.  821 

Vt.  39;  Long  v.  Moore,  2  Brev.  172;  (Ark.). 

Blanc  v.  Mutual  Nat.  Bank,  28  La.  15  Whittier  v.  Collins,  15  R  L  44 

Ann.  921.  And  see  note  10,  supra, 

11  Da  vis  v.  Go  wen,  19    Me.   447; 


538  BANKS   AND   BANKING.  [§  300. 

§  300.  Indemnity  as  a  waiver. —  An  indorser  who  pro- 
tects himself  by  receiving  security  from  the  principal  debtor, 
the  maker  of  the  note,  or  from  a  prior  indorser,  waives  his 
right  to  demand  and  notice,1  provided  the  security  is  suffi- 
cient to  cover  his  contingent  liability,2  or  provided  the  se- 
curity is  the  whole  estate  of  the  indorser  whether  it  be 
sufficient  or  not.3  Or  if  the  note  is  secured  by  a  mortgage 
or  pledge  of  property  of  the  maker,  and  the  indorser  takes 
the  property  from  the  maker,  agreeing  to  take  care  of  the 
note,  he  waives  thereby  demand  and  notice;4  or  if  the  in- 
dorser takes  property  of  the  maker,  and  as  the  price  thereof 
agrees  to  pay  the  note,  he  likewise  binds  himself  by  waiver.' 
If  the  indorser  holds,  however,  security  to  which  he  is  en- 
titled not  by  virtue  of  a  transfer  to  cover  his  liability,  he 
does  not  waive  his  rights.6  The  limitations  upon  this  rule  are 
that  the  indorser  agree  to  the  transfer  to  himself;7  that 
the  transfer  must  either  be  of  the  whole  estate  of  the  maker 
or  of  sufficient  property  to  cover  his  liability,8  and  that  the 

1  Stephenson  v.  Primrose,  8  Port.  3  See  cases  in  two  preceding  notes 
155;    Mead    v.  Small,  2  Me.   207;  and  Mechanics'  Bank  v.  Griswold, 
Lewis  v.  Kramer,8  Md.  265;  Walker  7  Wend.  165;  Coddington  v.  Davis, 
v.  Walker,  7  Ark.  542;  Barrett  v.  3  Denio,  16,  1  N.  Y.  186;  Barton  v. 
Charleston   Bank,  2  McMul.   191;  Baker,  1  S.&  R  334;  Bank  of  South 
Durham  v.  Price,  5  Yerg.  300;  Beard  Carolina  v.  Meyers,  1   Bailey,  412. 
v.  Westerman,  32  Ohio  St.  29.    But  See  Moses  v.   Ela,  43  N.   H.  557; 
see  Woodbury  v.  Crum,  1  Biss.  284;  Woodbury  v.  Crum,  1  Biss.  284. 
Woodman  v.   Eastman,  10  N.   H.  4  Armstrong   v.    Chadwick,    127 
359;  Kramer  v.  Sanford,  4  Watts  &  Mass.    156.  "But   see    Coghlan    v. 
S.  328:  Seacord  v.  Miller,  13  N.  Y.  Dinsmore,  9  Bosw.  453. 

55.     Contra,  Whittier  v.  Collins,  15  6  Whitridge  v.  Rider,  22  Md.  548; 

R.  1. 44.    The  rule  applies  as  against  Andrews  v.  Boyd,  3  Met.  434.    Or 

a    prior   indorser   in    favor   of   a  if  he  receives  property  upon  an 

subsequent  indorser.     Walker   v.  agreement  to  pay  the  note.   Wright 

Walker,    7    Ark.    542;    Duvall    v.  v.   Andrews,  70   Ma  86;    Ray    v. 

Farmers'  Bank,  9  Gill  &  J.  81.  Smith,  17  Wall.  411. 

2  See  cases  in  preceding  note  and  6  Cruger  v.  Luedheim,  16  S.  W.  R 
Burrows  v.  Hannegan,  1  McLean,  420  (Tex.). 

309;  Spencer  v.  Harvey,  17  Wend.        'Holman  v-  Whiting,  19  Ala.  703. 
489;  Brunson  v.  Napier,  1  Yerg.  199;        8  See  notes  1,  2  and  3,  supra. 
Marine  Bank  v.  Smith,  18  Me.  99. 


§  301.]  EXCHANGES,  SECURITIES,  ETC.  530 

transfer  was  made  to  cover  the  particular  claim,  and  not  all 
his  claims  in  the  aggregate  against  the  maker;9  and  finally, 
that  the  security  be  given  while  the  indorser's  liability  con- 
tinued.10 If  he  had  already  been  discharged  by  a  failure  to- 
give  him  notice,  he  may  take  security  with  impunity.  It 
seems  that  if  the  assignment  is  to  a  third  party  in  trust  to 
pay  the  indorser  and  others,  there  is  no  waiver.11  But  an 
assignment  of  all  the  maker's  property  to  a  trustee  for  the 
purpose  of  paying  all  the  debts  of  the  maker  ought  to  be 
equivalent  to  a  waiver,  since  the  theory  of  this  rule  as  to 
indemnity  is  that  the  indorser  has  no  remedy  over  against 
the  drawer.12  The  whole  rule  is  illogical,  but  since  it  is 
established  it  ought  to  be  consistent.  Since  the  indorser, 
under  the  rule,  is  entitled  to  all  the  property  of  the  maker, 
where  the  indemnity  is  insufficient,  a  transfer  to  the  indorser 
of  part  of  the  maker's  property,  if  it  be  insufficient  to  cover 
the  indorser's  liability,  is  not  a  waiver,  although  it  should 
turn  out  to  be  all  the  property  of  the  maker  at  maturity.13 
The  taking  of  indemnity  was  in  one  court  construed  to  be 
a  provision  against  a  liability,  provided  the  liability  should 
be  fixed  by  demand  and  notice.14 

§  301.  Waiver  after  maturity. —  The  waiver  of  demand 
and  notice  after  maturity  presupposes  that  the  indorser  has 
already  been  released.  For  such  a  waiver  there  would  seem 
to  be  no  consideration,  if  it  is  gratuitous.  But  the  question 
is:  Is  a  waiver  a  contract?  One  set  of  courts  replies  to  the 
question  that  demand  and  notice  are  but  steps  in  the  rem- 

9 Van  Norden  v.  Buckley,  5  CaL  "Denny  v.  Palmer,  5  Ired.  610. 

283;  Haskell  v.  Boardman,  90  Mass.  See  Coddington  v.  Davis,  8  Denio, 

38  (here  all  the  property  was  con-  16;  Creamer  v.  Perry,  17  Pick.  332. 

veyed);  Carlisle  v.  Hill,  16  Ala.  398.  "See  Ray  v.  Smith,  17  Wall  411, 

See  Barton  v.  Baker,  1  S.  &  R.  334.  and  cases  in  note  3,  and  Second 

10  Tower  v.  Durell,  9  Mass.  332;  Nat.  Bank  v.  Maguire,  33  Ohio  St 

Sanderson  v.  Sanderson,  20  Fla.  292 ;  295 ;  Woodbury  v.  Crum,  1  Biss.  284. 

Carlisle  v.  Hill,  16  Ala.  398;  Wai-  13  Brandt  v.  Mickle,  28  Md.  436. 

ters  v.  Munroe,  17  Md.  154;  Peets  14Selby  v.  Brinkley,  17  a  W.  R. 

v.  Wilson,  19  La.  478;  Moore  v.  Co-  479.    But  see  cases  in  notes  1, 2  and 

field,  1  Dev.  247;  Swan  v.  Hodges,  3,  supra, 
3  Head,  251. 


-540  BANKS   AND   BANKING.  [§  302. 

edy,  and  may  be  waived  at  any  time  without  any  necessity 
for  a  consideration  appearing.1  The  other  set  of  courts 
maintains  that  it  is  a  contract,  and,  after  maturity,  must  be 
supported  by  a  consideration,  or  by  a  new  and  valid  prom- 
ise to  pay,  supported  by  a  consideration.2  But  all  the  courts 
admit  that  a  waiver  before  maturity  needs  no  consideration 
to  support  it.3  They  do  not  find  it  necessary  to  seek  out  a 
consideration  from  the  fact  that  the  waiver  has  been  acted 
upon,  and  hence  the  position  of  those  courts  which  deny 
efficacy  to  a  waiver  after  maturity  has  no  support  in  their 
own  reasoning.4  But  an  agent  could  not  bind  his  principal 
by  a  waiver  after  maturity,5  unless  he  had  express  authority 
to  waive,-or  unless  his  act  were  ratified.  A  bankrupt  in- 
dorser  may  waive  demand  and  notice,  prior  to  the  choice 
of  an  assignee,  either  before  or  after  maturity,  and  without 
consideration  in  those  jurisdictions  which  do  not  require  a 
consideration  for  a  waiver  after  maturity.6 

|  302.  New  promise  after  maturity. —  A  n,ew  promise 
to  pay  the  note  after  maturity,  made  by  the  indorser  with 
knowledge  of  his  release,  is  binding  upon  him  as  a  new  and 
valid  contract,1  dispensing  with  the  proof  of  demand  and 

1  Yeager  v.  Farwell,  13  Wall.  6  Teague,  52  N.  C.  573;  Robinson  v. 

(this  is  a  rambling  sort  of  an  opin-  Barret,  19  Fla.  670,  semble;  Wyckoff 

ion  by  Justice  Davis);    Matthews  v.  Andrews,  50  N.  Y.  Super.  Ct  196. 

v.  Allen,  16  Gray,  594;  Harrison  v.  3See  the    foregoing    cases,  and 

Bailey,  99  Mass.  620;  Rindge  v.  Kim-  Neal  v.  Wood,  23  Ind.  523. 

ball,  124  Mass.  209;   Lockwood  v.  4  If  the  waiver  is  made  af  ter  in- 

Bock,  50  Minn.  142;  Cheshire  v.  Tay-  dorsement  and  before  maturity,  no 

lor,  29  Iowa,  492;  Barclay  v.  Weaver,  extension  being  granted,  where  is 

19  Pa.  396;  Pollard  v.  Brown,  57  there  any  consideration  until  the 

Ind.  232 :  Bank  of  Columbia  v.  Mack-  waiver  is  acted  upon  ? 

all,  2  Cranch,  C.  C.  631;  Hoadley  v.  *  Grosvenor  v.  Stone,  8  Pick.  79. 

Bliss,  9  Ga.  303  (if  waiver  of  proof).  6  Ex  parte  Tremont  Nat  Bank,  2 

2Seebree  Bank  v.  Moreland,  96  Low.  409. 

Ky.  150,  semble;  Landrum  v.  Trow-  l  Yeager  v.  Farwell,  13  Wall.  6; 

bridge.  2  Met  (Ky.)  281;  Ralston  v.  Curtis  v.  Sprague,  51  Cal.  239;  Har- 

Bullits,  3  Bibb,  261;  Huntington  v.  mon  v.  Moffett,  6  D.  C.  297,  semble, 

Harvey,  4  Conn.  124;  Walters  v.  are  as  to  indorsers  of  notes;  Stone 

Swallow,    6    Whart    446    (an   ac-  v.  Smith,  30  Tex.  138;  Benoist  v. 

commodation  indorser);  Brown  v.  Creditors,  18  La.  522,  are  as  to  drafts. 


§  302.]  .        EXCHANGES,  SECURITIES,  ETC.  541 

notice.2  But  either  the  promise  must  be  unqualified,'  or,  if 
conditional,  it  must  appear  that  the  condition  has  been  per- 
formed.4 This  rule  applies  to  indorsers  and  drawers  of  all 
kinds  of  commercial  paper.5  The  reason  for  such  a  rule  is 
not  apparent.  The  case  has  no  analogy  to  one  under  the 
statute  of  limitations,  although  it  is  so  treated.  There  is  no 
consideration  for  the  promise,  if  it  is  considered  a  promise, 
not  even  a  moral  or  meritorious  consideration,  because  the 
indorser  was  never  under  any  obligation  to  pay.  The  new 
promise  after  maturity  is  perhaps  considered  as  a  waiver  of 
demand  and  notice,  but  a  promise  to  pay  before  maturity 
required,  as  has  been  seen,  a  consideration  to  support  it  by 
being  acted  upon.6  Probably  it  is  for  the  reason  that  no 
consideration  exists  that  the  promise  after  maturity  must  ap- 
pear to  have  been  made  with  full  knowledge  on  the  indors- 
er's  part  that  he  has  been  released  by  a  failure  to  give  him 
notice  of  demand  and  non-payment.7  One  court  applying 
a  distinction  made  by  Lord  Westbury  between  ignorance  of 
an  abstract  principle  of  law  and  ignorance  of  the  applica- 
tion of  the  principle  to  the  facts  has  held  that  the  indorser 
must  know  not  only  that  no  demand  has  been  made  or  no- 
tice not  given  to  him,  but  must  also  know  all  other  facts 
material  to  form  a  conclusion  as  to  his  liability.8  The  prom- 
ise to  pay  is  presumptive  evidence  of  demand  and  notice,9 

See  also  cases  in  note  7,  infra.    As  v.  Dresser,  90  Mass.  435;  Miller  v, 

to  the  language  of  a  new  promise,  Hackley,  5  Johns.  375;  Landrum  v. 

see  Glendenning  v.  Canary,  5  Daly,  Trowbridge,  2  Met.  (Ky.)  281,  and 

489;  Martin  v.  Perqua,  65  Hun,  225.  many  other  cases.    But  negligence 

2  Campbell  v.  Varney,  12  Iowa,  as  to  means  of  knowledge    may 
43,  and  cases  in  the  last  note.  amount  to  knowledge.    Hayes  v. 

3  See  next  note.  Werner,  45  Conn.  246. 

*  Keith  v.  Mackey,  5  Rob.  (La.)  8Low  v.  Howard,  10  Gush.  159. 
277;  Turnbull  v.  Maddox,  68  Md.  See  Matthews  v.  Allen,  16  Gray,  594, 
579;  Campbell  v.  Varney,  12  Iowa,  and  Breen  v.  Buttorf,  3  Tenn.  Clu 
43.  285  (this  case  is  absolutely  wrong). 

*  See  cases  in  note  1,  supra.  9  Yeager  v.  Farwell,  13  Wall  6, 
6  See  §  299,  ante.                                and  the  cases  in  note  1,  supra,  and 
'Thornton  v.  Wynn,  12  Wheat.    Pierson  v.   Hooker,  8  Johns.    68; 

183;  Walker  v.  Rogers,  40  111.  278;     Breed  v.  Hillhouse,   7  Coiin.   523; 
Moore  v.  Cofield,  1  Dev.  247;  Arnold    Hazard    v.    White,    26   Ark.  155; 


M2  BANKS    AND   BANKING.  [§  303 

and  it  follows  from  the  fact  of  such  a  promisa  appearing 
that  the  burden  is  thrown  upon  the  indorser  to  show  that 
he  had  no  knowledge  of  his  release.10  But  so  far  is  the  mat- 
ter of  necessity  of  knowledge  on  the  indorser's  part  carried, 
that  a  note  given  by  the  indorser  for  a  draft  upon  which  the 
indorser  had  been  released  is  invalid  for  want  of  considera- 
tion if  the  indorser  did  not  know  that  he  was  released.11 
The  transfer  of  the  note  after  dishonor  by  the  indorsers,12  or 
the  act  of  the  indorsers  in  causing  the  holder  to  take  the 
note  overdue,"  is  a  waiver  of  demand  and  notice.  The  rule 
at  common  law  is  that  the  admission  of  liability  by  one  joint 
contractor  binds  his  co-contractor.14  The  same  rule  would 
probably  apply  to  a  new  promise.  "Where  a  failure  to  notify 
one  joint  indorser  has  released  all  the  indorsers,  the  new 
promise  of  one  released  imposes  the  liability  to  pay  upon 
all.15  The  new  promise  must  be  made  just  as  a  waiver  must 
be  made,  to  some  one  interested  in  the  paper,16  who  can  hold 
that  indorser  liable  upon  the  paper,  and  it  inures,  perhaps,  to 
the  benefit  of  all  the  holders  of  the  paper  to  whom  he  is  liable.17 

§  303.  Part  payment  after  maturity. —  A  partial  pay- 
ment of  the  note  by  the  indorser  is  equivalent  to  a  new 
promise  to  pay,1  if  the  money  to  make  payment  came  from 

Walker  v.  Laverty,  6  Munf.  487;  "Libbey  v.  Pierce,  47  N.  EL  309. 

Lewis  v.  Brehme,  33  Md.  412;  Rob-  »  Dickerson  v.  Turner,  12  Ind.  223. 

bins  v.  Pinckard,  5  Smedes  &  M.  51.  15  See  Sherer  v.  Easton  Bank,  33 

10  This  presumption  ceases  as  soon  Pa.  134,  as  to  a  partial  payment, 
as  it  appears  that  the  notice  was  16Olendorf  v.  S warty,  5  Cal.  480; 
defective,  it  is  said,  but  certainly  Gassaway  v.  Jones,  2  Cranch,  C.  C. 
incorrectly.  See  Newberry  v.  Trow-  834;  Clark  v.  Tryon,  23  N.  Y.  Supp. 
bridge,  13  Mich.  263.    That  is  the  780;  Caldwell  v.  Porter,  17N.H.27. 
principle  which  is  applied  to  an  ac-  17  McKennon  v.  McEae,  7  Port.  175; 
knowledgment  of  due  service  of  Little  v.  Blunt,  9  Pick.  488;  and  see 
notice.    But  an  agreement  to  con-  last  case  in  preceding  note. 

sider  the  demand  and  notice  as        l  Curtiss  v.  Martin,  20  III  557; 

good  is  practically  a  new  promisa  Washer  v.  White,  16  Ind.  136:  Frost 

Duryee  v.  Denison,  5  Johns.  248.  v.  Harrison,  8  La.  Ann.  123;  Sigour- 

Todd  v.  Neal,  49  Ala.  266.    See  Boll-  ney  v.  Witherell,  6  Met  553;  Bibb 

ing  v.  Mackenzie,  89  Ala.  470.  v.  Peyton,  11  Smedes  &  M.  275; 

11  Fernald  v.  Bush,  131  Mass.  591.  Johnson  v.  Crane,  16  N.  H.  68;  Shaw 
i-'St  John  v.  Roberts.  31  N.  Y.  441.  v.  McNeill,  95  N.  C.  535;  Levy  v. 


§  304.]  EXCHANGES,  SECURITIES,  ETC. 

the  indorser,2  and  if  the  indorser  knew  that  he  had  been  re- 
leased.3 The  partial  payment  without  more  appearing  is 
presumptive  proof  of  demand  and  notice,  just  as  a  new  prom- 
ise is,4  and  the  burden  is  upon  the  indorser  to  show  that  he 
had  no  knowledge  of  his  release.5  A  confession  of  judg- 
ment, or  a  judgment  by  default  suffered  by  the  indorser  for 
the  amount  of  the  note,  may  be  considered,  perhaps,  in  the 
light  of  a  partial  payment,  for  it  is  certainly  not  a  new  prom- 
ise to  pay,  because  it  creates  a  g'twwz-contract,  not  an  actual 
contract.  The  absolute  presumption  of  waiver  resulting 
arises  rather  from  the  rule  of  law  that  a  party  having  had 
an  opportunity  to  plead  a  certain  defense,  and  failing  to  do 
so,  is  forever  concluded,  or  it  results  from  the  form  of  the 
authority  to  confess  judgment.  It  is  an  absolute  waiver  of 
demand  and  notice,  or,  what  is  the  same  thing,  absolute  proof 
thereof.6  At  common  law  a  partial  payment  by  one  joint 
indorser  released  would  bind  perhaps  the  other  indorsers.7 
There  is  a  difficulty  here,  however,  in  the  fact  that  the  in- 
dorser who  makes  the  payment  may  have  knowledge  that 
he  is  released,  while  the  other  joint  contractors  may  not 
have  such  knowledge.  In  the  latter  case  probably  they 
would  not  be  bound.  A  partial  payment  inures  to  the  bene- 
fit of  all  the  holders  of  the  paper.8 

§  304.  Acknowledgment  of  liability.— An  unconditional 
acknowledgment  of  liability  upon  the  paper  after  its  matu- 
rity, made  with  knowledge  of  a  release,  operates  as  a  waiver 

Peters,  9  S.  &  R.  125.    See,  however,  case  becomes  a  conclusive  and  in- 

for  a  partial  payment  in  depreci-  disputable  presumption, 
ated   paper,    Newberry    v.    Trow-       «  Hall  v.  Jones,  82  HI.  88;  Winn 

bridge,  13  Mich.  263.  v.  Levy,  2  How.  (Miss.)  903;  Grigsby 

2Reinke  v.  Wright,  93  Wis.  368;  v.  Ford,  3  How.  (Miss.)  184.     But  it 

Whitaker  v.  Morrison,  Branch,  25.  is  said  to  be  merely  prima  facie 

3  Buckley  v.  Bentley,  42  Barb.  646;  proof.    Eichter  v.  Selin,  8  S.  &  It 
Shaw  v..McNeill,.95  N.  C.  535.  425. 

4  See  preceding  section.  'Sherer  v.  Easton  Bank,  38  Pa. 

5  See  preceding  section.    If  the  134.    But  see  note  14  to  preceding 
knowledge  existed,  the  prima  facie  section. 

8  Johnson  v.  Crane,  16  N.  H.  68. 


544:  BANKS   AND   BANKING.  [§  304. 

by  an  indorser  or  a  drawer  of  demand  and  notice.1  This 
waiver  may  arise  either  from,  a  party's  words  or  his  acts.2 
A  promise  to  give  a  note  for  the  amount,3  or  the  giving  of  a 
note  for  the  amount,  by  the  indorser,  being  an  acknowledg- 
ment of  liability,  is  a  waiver,4  provided  it  be  done  by  one 
who  has  knowledge  of  his  release.  But  there  is  some  author- 
ity which  might  seem,  but  really  is  not,5  to  the  contrary ; 
and  certain  rulings  have  been  made  which  might  seem  to 
dispute  the  general  rule.  Thus,  an  admission  after  maturity 
of  due  service  of  protest  did  not  bind  the  indorser  as  by  a 
waiver  apparently,  for  it  was  held  that  such  an  admission 
was  prima  fade  evidence  of  notice  of  protest,  rebutted  as 
soon  as  it  appeared  that  there  was  in  fact  no  legal  protest.6 
But  an  agreement  by  an  indorser  to  give  security  for  his  liabil- 
ity, although  it  was  made  after  maturity,  was  not  a  waiver.7 
This  decision  can  be  justified  on  the  ground  that  there  was 
no  proof  of  the  indorser's  knowledge.  The  giving  of  secu- 
rity raises  a  presumption  of  waiver.8  If  it  were  given  with 
knowledge,  that  presumption  becomes  absolute.  As  soon  as 
the  fact  appears,  the  burden  is  thrown  on  the  indorser  to 
show  his  lack  of  knowledge.  Therefore  the  decision  is  wrong, 
for  judgment  on  this  question  should  have  been  for  the  plaint- 
iff, the  burden  of  proof  being  on  the  defendant.  The  offer 
to  indorse  another  note  was  not  a  waiver,  because  it  was  not 
perhaps  an  unconditional  admission  of  liability.9  Nor  can 
an  offer  of  payment  in  depreciated  bank  bills,10  or  in  Confed- 

!Bogart  v.  McClung,  11  Heisk.  «  Todd  v.  Neal,  49  Ala.  266.    And 

105;  Leonard  v.  Gary,  10  Wend,  see    Newberry  v.  Trowbridge,   13 

504;  Oglesby  v.  Stacy,  10  La.  Ann.  Mich.  263  (wrong). 

117  (after  suit  brought);  Parsons  v.  7  Carter  v.  Burley,  9  N.  H.  558. 

Dickinson,  23  Mich.  56.  8  Union  Bank  v.  Govan,  10  Smedes 

2  Staylor  v.  Ball,  24  Md.  183;  Par-  &  M.  333. 

sons  v.  Dickinson,  23  Mich.  56.  9  Laporte  v.  Landry,  5  Mart.  (N.  S.) 

3  Fell  v.  Dial,  14  S.  C.  247.    This    359,  4  Mart.  (N.  S.)  125.    But  this  is 
could  be  considered,  perhaps,  as  a    a  questionable  ruling. 

new  promise.  10  Newberry    v.    Trowbridge,    13 

4  Leonard  v.  Hastings,  9  Cal.  236  Mich.  263.  Or  in  Confederate  money, 
(made  with  knowledge,  possibly).  Tardy  v.  Boyd,  26  Grat  631. 

5  See  the  cases  following. 


§  305.]  EXCHANGES,  SEC  DEITIES,  ETC.  545 

erate  money,"  be  considered  a  waiver,  since  neither  acknowl- 
edgment is  unqualified.  An  offer  to  pay  part  of  the  note  at 
the  time  of  the  offer  and  a  part  later  raised  no  presumption 
of  waiver.12  On  the  other  hand,  an  admission  of  the  justice 
of  the  claim,  even  after  suit  brought,13  and  a  statement  by 
the  indorser  to  the  holder  that  he  expected  to  have  to  pay, 
coupled  with  a  request  for  the  holder  to  keep  on  trying  to 
collect  from  the  maker,14  were  both  held  to  be  waivers.  In 
all  cases  of  acknowledgments  which  are  not  new  promises 
after  maturity,  or  partial  payments  after  maturity,  or  ex- 
press waivers  after  maturity,  it  is  the  rule  that,  if  made  with 
full  knowledge,  the  admission  becomes  absolute.1"  The  ac- 
knowledgment alone  appearing,  the  defendant  indorser  may 
rebut  the  prima  facie  case  by  proof  of  his  lack  of  knowl- 
edge, or  by  showing  that  the  admission  was  a  mistake.16 

ARTICLE  YI. —  PROTEST  AND  CERTIFICATE. 

§  305,  Meaning  and  form  of  protest.— -  The  word  "pro- 
test" as  used  by  judges  and  lawyers  has  two  meanings: 
one,  those  acts  necessary  to  charge  a  drawer  or  indorser;1 
the  other,  the  formal  certificate  drawn  up  by  a  notary  or  some 
one  acting  in  place  of  a  notary,  which  shows  the  demand 
and  dishonor  with  the  accompanying  proof  of  notice,  if  any.2 
The  form  and  sufficiency  of  the  certificate  of  protest  is  nec- 
essarily governed  by  the  law  of  the  place  where  the  protest 
is  made.3  The  admissibility  of  the  certificate  in  evidence 

11  See  the  last  case  cited.  l  White  v.  Keith,  97  Ala.   668; 

12  Barkalow  v.  Johnson,  16  N.  J.    Ayrault  v.  Pacific  Bank,  47  N.  Y. 
Law,  397.  570. 

is  Oglesby  v.  Stacy,  10  La.  Ann.  2  Townsend   v.    Lorain  Bank,  2 

117.  Ohio  St.  345. 

»  Parsons  v.  Dickinson,  23  Mich.  3  Neederer  v.  Barber,  Fed.  Cos. 

56.  No.  10,079;  Tickner  v.  Roberts,  11 

is  The  preceding  cases  treat  the  La.  114;  Carter  v.  Burley,  9  N.  H. 

matter  in  this  light  558;  Chew  v.  Read,  11  Smedes  & 

i«A  mistaken  admission  maybe  M.  182;  D wight  v.  Richards 

corrected.    Commercial    Bank    v.  Smedes  &  M.  325. 
Clark,  28  Vt  325. 
35 


546  BANKS   AND   BANKING.  [§  306. 

is  governed,  however,  by  the  law  of  the  place  of  trial  of  the 
action.4  In  the  certificate  the  paper  protested  must  be  in- 
telligibly described.5 

§306.  Execution  of  the  certificate. —  The  certificate 
should  be  made  by  a  notary l  or  by  some  one  who  has  no- 
tarial powers;  it  may  be  a  justice  of  the  peace,2  or,  where 
there  is  no  notary,  by  a  private  person  in  the  presence  of 
witnesses.3  The  certificate  need  not  be  under  seal4  unless 
the  statute  require  it.5  It  need  not  be  under  oath  unless 
the  statute  so  provide.8  In  some  jurisdictions  it  must  be 
witnessed,7  but  the  witnesses  need  not  be  present  at  the 
act  of  protest.8  The  notices  need  not  be  actually  annexed 
to  the  certificate  by  the  notary.9  The  certificate  may  be 
drawn  up  in  due  course  of  business,10  some  authorities  re- 
quiring it  to  be  done  on  the  same  day.11  A  second  certifi- 
cate may  be  made  if  the  first  is  lost.12  The  original  protest 
may  be  issued.  The  certificate  need  not  appear  to  be  a  tran- 
script from  some  record,13  unless  the  statute  require  a  rec- 
ord. 

4  See  §  307,  post.  7  Allain    v.    Whitaker,    5    Mart. 

5  Lionberger   v.    Meyer,  12   Mo.    (N.  S.)  511 ;  Gale  v.  Kemper,  10  La. 
App.  575;  Fulton  v.   Maccracken,    205. 

18  Md.  528;  Collins  v.  Bank,  4  Bast.  8  Bradford  v.  Cooper,  1  La.  Ann. 
422.  325,  and  cases  in  last  case  of  last 

1  See  §§  247,  278,  ante,  as  to  the    note  cited. 

notary's  deputy  or  clerk.  9  Jones  v.  Berry  hill,  25  Iowa,  289; 

2  Austin  v.  Miller,  5  McLean,  153.  Barstow  v.  Hiriart,  6  La.  Ann.  98. 

3  See  §  246,  ante.  See  Jordan  v.  Long,  109  Ala.  414. 

4  Lambeth   v.  Caldwell,  1    Rob.  and  Winchester  v.   Winchester.  4 
(La.)  61;  Bank  of  Kentucky  v.  Purs-  Humph.  51. 

ley,  3T.  B.  Mon.  238;  Second  Nat.  10  Bailey  v.  Dozier,  6   How.   23; 

Bank  v.  Chancellor,  9  W.  Va.  69.  Chatam  Bank  v.  Allison,  15  Iowa, 

See  Morris  v.  Foreman,  1  Dall.  193.  357. 

»  Rindskoff  v.  Malone,  9  Iowa,  540.  "  Aiken  v.  Cathcart,  2  Spears,  642 ; 

A  statute  may  require  the  certifi-  Commercial  Bank  v.  Barksdale,  36 

cate  to  be  verified.    See  Dorsey  v.  Mo.  563. 

Merritt,  6  How.  (Miss.)  390;  Faulk-  12  Killam  v.  McKoon,  31  Hun,  510. 

ner  v.  Faulkner,  73  Mo.  327.  "Starr  v.  Sandford,  45  Pa.  193. 

6  See  last  two  cases  cited. 


§  307.]  EXCHANGES,  SECURITIES,  ETC.  547 

§  307.  Certificate  as  evidence.—  A  certificate  of  protest 
by  a  notary  upon  foreign  bills  proves  a  demand  of  payment 
and  notice,  if  it  so  recites;1  but  if  the  protest  certificate  is 
made  by  some  other  officer  than  a  notary,  his  authority  to 
protest  must  be  proven  as  a  fact  under  the  foreign  law.2 
The  allowance  of  such  proof  by  certificate  upon  foreign  pro- 
test exists  by  virtue  of  the  law  merchant,  and  foreign  protest 
can  be  proven  in  no  other  way.3  But  there  are  numerous 
statutes  of  various  states  which  permit  protest  of  other  paper 
than  foreign  bills,  and  there  are  various  statutes  which  pre- 
scribe the  effect  of  such  protest  as  evidence.  These  statutes 
may  be:  1st.  A  statute  which  allows  within  the  particular 
state  the  protest  of  other  paper  than  foreign  bills  and  makes 
the  certificate  thereof  evidence  either  of  demand  or  of  notice 
and  demand.  Such  a  statute,  it  is  plain,  would  have  no  bear- 
ing upon  paper  protested  out  of  the  state,  and  would  have 
no  bearing  upon  the  admissibility  of  a  certificate  made  out 
of  the  state.4  2d.  A  statute  may  make  all  protests  in  another 
jurisdiction  admissible  in  evidence  when  made  upon  paper 
not  properly  protestable  by  a  notary.5  In  such  case  it  makes 
no  difference  whether  the  law  of  the  other  jurisdiction  where 
the  protest  was  made  provides  for  such  protest  or  not.6  3d.  A 
statute  in  the  jurisdiction  where  the  protest  is  made  may 
provide  for  protest  upon  paper  other  than  foreign  bills,  but 
the  protest  may  be  offered  in  evidence  in  another  state 
where  there  is  no  statute  which  makes  the  certificate  evi- 
dence. In  the  latter  case,  since  the  protest  is  valid  where 
made,  according  to  the  principle  hareinbefore  stated,7  the 

1  Dickens  v.   Beal,   10  Pet.  572;  » Rush  worth  v.  Moore,  26  N.  H. 
Pierce  v.  Indseth,  106  U.  S.  546.  188;  Dakin  v.  Graves,  48  N.  H.  45; 

2  So  of  a  French  huissier.    Cha-  Daniel  v.  Downing,  26  Ohio  St.  578; 
noine  v.  Fowler,  3  Wend.  173.  Douglas  v.  Bank  of  Commerce,  97 

3 See  §  246,  ant e,  note  1.  Tenn.   133;    Bradley    v.    Northern 

« White  v.  Engelhard,  2  Smedes  Bank,  60  Ala.  252. 

&  M.  38;  Sims  v.  Hundley,  6  How.  1.  8  Union  Bank  v.  Middlebrook,  83 

Such  a  statute  would  not  make  Conn.  95;  Kern  v.  Von  Phul,  7  Minn. 

good  a  certificate  of  a  state  notary  426. 

acting  outside  of  his  state.  Dutchess  7  Townsley  v.  Sumrall,  2  Pet  170. 

Co.  Bank  v.  Ibbotson,  5  Denio,  110. 


548  BANKS   AND   BANKING.  [§  308. 

certificate  ought  to  be  admissible  in  evidence  when  supple- 
mented with  proof  of  the  foreign  law,  if  the  paper  was  pay- 
able where  protested,8  but  this  position  is  apparently  denied 
in  other  courts;  no  reason  is  given,  but  it  must  be  for  the 
reason  that  no  sovereignty  can  prescribe  rules  of  evidence 
for  another  one's  courts.9  If  the  certificate  is  admissible  it 
needs  no  proof  of  its  execution ;  it  proves  itself.10  And  this 
is  true  both  of  protest  on  a  foreign  bill  and  of  protest  per- 
mitted by  a  statute.  If  the  notary  be  dead,  the  books  of  the 
notary,11  or  certified  extracts  from  them  made  by  competent 
authority,12  are  in  all  cases  admissible  to  prove  the  notary's 
demand  and  notice,  provided  the  notary  made  the  entries 
himself,  and  they  were  not  made  by  some  one  who  is  alive.13 
A  statute,  also,  on  this  subject  exists  in  some  jurisdictions.14 

§  308.  Recitals  of  certificate. —  The  certificate  to  be  suf- 
ficient as  proof  of  demand  and  notice  should  state  in  some 
way  that  a  demand  was  made,  that  payment  was  refused, 
and  that  notice  of  non-payment  was  given.1  The  fact  of  de- 
mand should  be  stated,  but  the  certificate  Deed  not  state  the 
hour.2  If  it  states  that  demand  was  made  at  a  place  of  busi- 

8Carruth  v.  Walker.  8  Wis.  252;  "Austin  v.  Wilson,  24  Vt.  630; 

Lawson  v.  Pinckney,  40  N.  Y.  Super.  Nichols  v.  Webb,  8  Wheat.   326; 

Ct  187.  See  Teconic  Bank  v.  Stack-  Bank  of  Wilmington  v.  Cooper,  1 

pole,  41  Me.  302;  Carter  v.  Burley,  9  Har.  10. 

N.  H.  558.    Both  these  cases  treat  a  12Portas  v.    Painboeuf,    1    Mart, 

promissory  note   indorsed   in   an-  (O.  S.)267;  Halliday  v.  Martinet,  20 

other  state  as  a  foreign  bilL    Dunn  Johns.  168  (sworn  copy);  Homes  v. 

v.  Adams,  1  Ala.  527,  semble.  Smith,  16  Me.  181;  Bodley  v.  Scar- 

9  Corbin  v.  Planters'  Bank,  87  Va.  borough,  5  How.  (Miss.)  729.     Con- 

661;  Etting  v.  Schuylkill  Bank,  2  tra,  Williamson  v.  Patterson,  2  Mc- 

Pa.  355;  Schoneman  v.   Fegley,  7  Cord,  132. 

Pa.  433.    See  Union  Bank  v.  Hyde,  13  Wilber  v.  Selden,  6  Cow.  162. 

6  Wheat  572;  McAllister  v.  Smith,  ^McKnight  v,  Lewis,  5  Barb.  681. 

17  III  328;  Sumnerv.  Bowen,  2  Wis.  *Crowley  v.  Barry,  4  Gill,  194; 

524.    The  certificate  can  be  used  Gardner  v.  Bank  of  West  Tennessee, 

as  a  memorandum  by  the  notary  as  1  Swan,  419;  Langley  v.  Palmer,  30 

a  witness.    Bernard  v.  Barry,  1  G.  Me.  467. 

Greene,  388.  2  The  certificate  should  show  pre- 

10  Harrison  v.  Brown,  16  La.  282;  sentment    to    the    proper    person 

Dickens  v.  Beal,  10  Pet.  572;  Shank-  (Duckert  v.  Von  Lilienthal,  11  Wis. 

lin  v.  Cooper,  8  Blackf.  41.  56),  or  presentment  at  his  residence 


§  308.] 


EXCHANGES,  SECURITIES,  ETC. 


549 


ness  it  will  be  presumed  to  have  been  during  business  hours.1 
If  it  states  that  a  demand  was  made  at  a  bank,  for  example, 
it  need  not  state  upon  what  officer'it  was  made.4  But  a  de- 
mand upon  a  partnership  made  upon  one  partner  must  show 
the  names  of  the  partners,  and  the  name  of  the  particular 
partner  upon  whom  the  demand  was  made.5  If  the  person 
upon  whom  demand  is  made  has  more  than  one  place  of 
business,  the  certificate  should  state  at  which  place  the  de- 
mand was  made,  if  the  paper  was  payable  at  a  particular 
one  of  the  two  places.6  If  the  demand  is  stated  to  be  made 
upon  some  one  for  the  maker  or  drawee,  the  place  of  making 
the  demand  ought  to  be  stated,  in  order  to  show  the  demand 
was  at  a  proper  place.7  If  the  certificate  states  a  present- 
ment, it  will  be  presumed  that  the  demand  was  in  accord- 
ance with  the  tenor  of  the  paper.8  The  certificate  may  state 
along  with  the  usual  statements  all  that  transpired  at  the 
demand,9  and  it  has  been  held  that  if  payment  was  refused 
the  reason  given  for  refusal  should  be  stated.10  It  must  ap- 


or  place  of  business.  See  notes  4 
and  12,  infra.  It  is  said  that  the 
certificate  should  show  a  present- 
ment of  the  paper  (Musson  v.  Lake, 

4  How.  262);  but  the  better  rule  is 
that  the  fact  stated  as  to  the  paper 
being  in  his  possession  is  sufficient 
(Warren  v.  Briscoe,  12  La.  472 ;  Union 
Bank    v.   Fowlkes,  2    Sneed,  555; 
Nailor  v.  Bowie,  3  Md.251) ;  and  even 
this  is  not  required.  Ross  v.  Bedell, 

5  Duer,  462;  Bank  of  La.  v.  Satter- 
field,  14  La.  Ann.  80.    In  case  of 
paper   payable   at   a   bank,  it    is 
enough  to  say  that  the  paper  was 
at  the  bank.    Seneca  Co.  Bank  v. 
Neass,  5  Denio,  329;  Barbaroux  v. 
Waters,  3  Met.  (Ky.)  304  (not  neces- 
sary); Cayuga  Co.  Bank  v.  Hunt,  2 
Hill,  635;  Adams  v.  Wright,  14  Wis. 
408,  as  to  the  hour. 

3  Bank  of  Louisiana  v.  Satterfield, 
14  La.  Ann.  80;  Fleming  v.  Fulton, 


6  How.  (Miss.)  473;  De  Wolf  v.  Mur- 
ray, 2  Sandf.  166. 

4  Hildeburn  v.  Turner,  5  How.  69. 
See  Stix  v.  Matthews.  75  Mo.  96. 
The  certificate  need  not  state  the 
name  of  the  bookkeeper  to  whom 
presented  at  the  maker's  counting 
room.    Austin  v.  Latham,  19  La.  88. 
And  see  McFarland  v.  Pico,  8  Cal. 
626. 

5  Otsego  Co.  Bank  v.  Warren,  18 
Barb.  291. 

e  Brooks  v.  Higby,  11  Hun,  235. 

7  Saul  v.  Brand,  1  La.  Ann.  95. 

8  Dakin  v.  Graves,  48  N.  H.  45. 

»  Reapers'  Bank  v.  Willard,  24  III 
439. 

10Dupre  v.  Richard,  11  Rob.  (La.) 
495.  This  is  certainly  not  the  law. 
A  mere  statement  of  payment  re- 
fused is  sufficient  See  note  1, 
supra. 


550  BANKS   AND   BANKING.  [§  308. 

pear  that  the  demand  was  made  on  the  right  day  "  and  at 
the  proper  place,12  but  misnomers  as  to  a  name  or  a  place  of 
business  will  not  vitiate  the  certificate.  The  certificate  as 
proof  of  notice  should  recite  the  fact  of  giving  notice.13  In 
stating  the  giving  of  notice  the  certificate  should  state  the 
day  of  giving  personal  notice  and  the  place.14  It  is  enough 
to  state  that  the  notice  was  left  at  the  place  of  business  of 
the  person  to  be  charged,15  and  it  need  not  state  with  whom 
it  was  left.16  In  case  of  notice  by  mail,  the  place  of  address 
of  the  notice  sent.,17  and  that  it  was  the  postoffice  of  the  per- 
son to  be  charged.18  The  burden  is  then  upon  the  other 
party  to  show  that  the  place  was  not  his  postoffice,19  and  in 
rebuttal  thereto  the  notary  should  show  due  diligence.  The 
day  of  giving  of  notice  but  not  the  date  of  the  letter  need 
be  given.20  The  postoffice  at  which  the  notice  was  mailed 
should  be  stated,21  and  the  notice  should  show  that  the  mail- 
ing or  the  giving  of  notice  was  in  proper  time.22  The  cer- 
tificate need  not  state  that  postage  was  prepaid  upon  a 

11  Walmsley  v.Acton,  44  Barb.  312;  to  the  day  both  for  personal  and 
Nailor  v.  Bowie,  3  Md.  251.  mail  notice. 

12  At  residence  is  sufficient   Man-      15  Gardner  v.  Bank  of  Tennessee,  I 
due  v.   Kitchin,  3  Rob.  (La.)  261;  Swan,  420;  and  see  note  3,  supra. 
Louisiana  State  Bank  v.  Dumar-      1(i  See  note  4,  supra,  as  to  demand, 
trait,  4  La.  Ann.  483.    At  office.       17  Curry  v.  Bank  of  Mobile,  8  Port. 
Curry  v.  Bank  of  Mobile,  8  Port  360. 

360.    See  Coster  v.  Thomason,  19  18  Peabody  Ins.  Co.  v.  Wilson,  29 

Ala.  717.    Misnomers  as  to  name  of  W.  Va.  528.  But  see  Legg  v.  Vinal, 

bank.  Worley  v.  Waldron,  3  Sneed,  165  Mass.  555. 

548;  Whittington  v.  Farmers'  Bank,  19  Wamsley  v.  Rivers,  34  Iowa,  463. 

5Har.  &  J.  489;  Stix  v.  Matthews,  75  It  need  not  be  stated  that  it  was 

Mo.  96.    Other  misnomers  see  Reid  the  nearest  postoffice.    Gas  Bank 

v.  Reid,  11  Tex.  585;  Branch  Bank  v.  Desha,  19  La.  459.    But  contra, 

v.  Rhodes,  11  Ala.  283.  The  location  Rogers  v.  Jackson,  19  Wend.  383. 

of  the  bank  need  not  be  stated.  See  Barber  v.  Ketchum,  7  Hill,  444. 

Thatcher  v.  Goff,  13  La.  360.  20  Palmer  v.  Lee,  7  Rob.  (La.)  537; 

13  If  it  is  silent  upon  the  point  of  Knox  v.  Buhler,  6  La.  Ann.  104. 
notice  it  proves  simply  the  demand.  21  Pritchard  v.  Hamilton,  6  Mart 

"  Palmer  v.  Lee,  7  Rob.  (La.)  537;    (N.  S.)  457. 

Knox  v.  Buhler,  6  La.  Ann.  104,  as      w  Menard  v.  Winthrop,  2  La.  Ann. 

333  (wrong). 


§  309.]  EXCHANGES,  SECURITIES,  ETC.  551 

letter,23  and  if  it  states  a  mailing  the  prepayment  of  postage 
will  be  presumed.24  But  if  the  certificate  states  without 
giving  any  particulars  that  the  person  was  notified  or  duly 
notified,  it  will  be  sufficient  as  stating  a  fact,25  unless  a  stat- 
ute requires  a  more  particular  statement.26  If  due  diligence 
is  relied  upon  as  an  excuse  for  a  failure  to  demand  or  notify, 
the  facts  constituting  the  diligence  should  be  set  forth.27 
Whatever  would  be  evidence  of  proper  notification  if  stated 
by  a  witness  upon  the  stand  would  be  evidence  of  notice 
when  stated  in  a  certificate ; M  therefore  the  rules  stated  in 
the  previous  sections  upon  notice  w  and  upon  demand  would 
hold  good  here.30 

§  309.  Facts  of  which  certificate  is  evidence. —  The  cer- 
tificate of  protest,  where  it  is  admissible  as  evidence,  either 
under  the  general  law  or  by  reason  of  a  statute,  is  competent 
to  prove  demand,  refusal  of  payment,  and  notice.1  The  cer- 
tificate, therefore,  ought  to  be  competent  proof  of  all  facts 
connected  with  and  a  part  of  the  demand  and  giving  of  no- 
tice. Thus,  the  recital  that  the  paper  was  presented  at  or 

23  Pier  v.  Heinriohshofen,  6  Cent,  the  con  verse  of  the  rule  given  above, 

L.  J.  285.  for  the  great  weight  of  authority 

-4  Brooks  v.  Day,  11  Iowa,  46.  is  that  conclusions  may  be  stated 

25  Orons  Bank  v.  Wood,  49  Me.  26;  in  a  certificate.    But  the  courts  of 
Bettis  v.  Schrieber,  31  Minn.  329;  Louisiana,  Tennessee  and  Maryland 
O'Niel  v.  Dickson,  11  Ind.  253;  Rob-  hold  the  contrary.    See  Reier  v. 
erts  v.   State  Bank,  9  Port.  312;  Strauss,    54  Md.  278;    Cockrill  v. 
Fuller  v.  Dingman,  41  Iowa,  506;  Lowenstine,  9  Heisk.  206. 

Case  v.  Getchell,  21  Pa.  503;  Seneca  29  See  §  269,  ante,  et  seq. 

Co.  Bank  v.  Neass,  3  N.  Y.  442;  80  See  §  245,  ante,  et  seq. 

Simpson  v.  White,  40  N.  H.  540.  '  Nichols  v.  Webb,  8  Wheat  826. 

Contra,    Bank    of   Alexandria   v.  While  this  case  states  the  rule  as 

Wilson,  2  Cranch,  C.  C.  5;  Union  to  a  deceased  notary's  notice  on 

Bank  v.  Humphreys,  48  Me.  172.  paper  not  protestable,  it  shows  that 

26  See  Burk  v.  Shreve,  39  N.  J.  L.  214.  the  rule  is  the  same  on  paper  prop- 

27  Bauragardner  v.  Rieves,  35  Pa.  erly  protestable.  Townsley  v.  Sum- 
250.    See  Nailor  v.  Bowie,  4  Md.  rail,  2  Pet.  170;  Sims  v.  Hundley,  0 
290  (this  case  is  wrong  as  to  the  How.  1;  Brandon  v.  Loftus,4  How. 
contents  of  the  notice).  127.    The  learned  Justice  Catron  in 

28  See  Saul  v.  Brand,  1  La.  Ann.  95.  this  case  talks  about  "  fixing  an  in- 
But  this  case  is  wrong  in  stating  dorser." 


552  BANKS   AND   BANKING.  [§  310. 

notice  sent  to  the  place  of  business  or  residence  of  an  in- 
dorser  or  drawer  is  competent  proof  of  the  fact  of  residence, 
and  is  prima  facie  sufficient.2  So  it  is  of  the  fact  as  to  whom 
the  paper  is  presented  and  of  his  relation  to  ttoe  indorser,8 
and  as  to  the  time,4  and  of  the  reasons  for  not  making  a  per- 
sonal demand,5  such  as  that  the  person  was  absent  or  that 
the  office  was  closed.  But  the  certificate  is  not  proof  of  col- 
lateral facts  stated  therein,  such  as  that  the  person -upon 
whom  the  demand  was  made  or  notice  served  was  an  agent 
of  the  person  who  should  have  received  the  demand  or  the 
notice;6  nor  are  the  statements  of  hearsay  contained  in  the 
certificate  proof  of  anything  more  than  that  such  statements 
were  made;  they  are,  of  course,  not  sufficient  to  prove  the 
truth  of  the  matters  of  fact  stated  by  way  of  hearsay.7 

§  310.  Conchisiveness  of  the  certificate. —  The  certifi- 
cate, whether  it  be  of  a  protest  of  domestic  paper  made 
evidence  by  statute  or  a  foreign  protest,  is  not  conclusive, 
but  it  is  prima  facie  evidence.1  The  statements  contained 
therein  may  be  contradicted,  whether  as  to  the  fact  of  de- 
mand or  the  recitals  of  demand  or  notice  contained  in  the 
certificate,2  but  the  evidence  to  contradict  must  be  legally 

2  Bell  v.  Lunt,  24  Wend.  230.  1  Nichols  v.  Webb,  8  Wheat.  326; 

a  Elliot  v.  White,  51  N.  C.  98.  But  Gordon  v.  Price,  10  Ind.  385  (under 

see  note  6,  infra.  statute);  Cockrill  v.  Lowenstine,  9 

4  See  the  preceding  section.  Heisk.  206. 

6  See  note  27  to  preceding  section,  2  See  cases  in  last  note  and  Spence 

and  Bell  v.  Lunt,  24  Wend.  230.  v.  Crockett,  5  Baxt.  576;  Adams 

But  see  Reier  v.  Strauss,  54  Md.  278,  v.  Wright,  14  Wis.  408;  Orono 

and  Weems  v.  Bank  of  Maryland,  Bank  v.  Wood,  49  Me.  26;  Kellogg 

15  Md.  231.  v.  Pacific  Box  Factory,  57  Cal.  327; 

6Coleman  v.  Smith,  26  Pa,  255;  Applegarth  v.  Aybott,  64  Cal.  459; 

O'Connel  v.  Walker,  1  Port.  263;  Sather  v.  Rogers,  10  Iowa,  231.  The 

Fortin  v.  Field,  17  La.  587.  Com-  certificate,  it  seems,  may  be  im- 

pare  Elliot  v.  White,  51  N.  C.  98.  peached  by  particular  or  general 

"Dumont  v.  Pope,  7  Blackf.  367;  malpractice  of  the  notary.  Wood 

Moore  v.  Worthington,  2  Duv.  307;  v.  Am.  Ins.  Co.,  7  How.  (Miss.)  609; 

Adams  v.  Wright,  14  Wis.  408;  Seltzer  v.  Fuller,  6  Smedes  &  M. 

Maccoun  v.  Atchafalaya  Bank,  13  185.  As  to  evidence  see  Buckley  v. 

La.  342.  See  Gage  v.  Dubuque  R.  Seymour,  30  La.  Ann.  1341;  Young 

Co.,  11  Iowa,  310.  v.  Pattison,  11  Rob.  (La.)  7;  Fales 


§  310.]  EXCHANGES,  SECURITIES,  ETC.  553 

sufficient  for  that  purpose;  for,  as  we  have  seen,  the  fact, 
standing  alone,  that  notice  was  not  received  has  no  tendency 
to  contradict  the  fact  that  it  was  mailed.3  But  it  has  been 
held  that  the  notary  himself  cannot  impeach  his  own  cer- 
tificate,4 and  it  has  been  held  that  he  can.  The  certificate 
of  protest  upon  a  foreign  bill  of  exchange  is  necessary,  and 
the  certificate,  while  it  may  be  contradicted,  cannot  be 
added  to  or  helped  out  by  parol  evidence.5  But  upon  do- 
mestic paper  the  statutes  permitting  protest  are  permissive, 
not  compulsory.6  So  the  certificate  of  protest  upon  domes- 
tic paper  not  only  may  be  contradicted,  but  may  be  added 
to,  explained  or  assisted  by  parol  evidence.7  Whatever  facts 
the  certificate  fails  to  state  may  be  added  by  the  oral  testi- 
mony of  any  witness  competent  and  able  to  testify  upon 
the  point.8 

v.  Wadsworth,  23  Me.  553 ;  Caruth-  4  Gartkwaite  v.  Seipe,  23  La.  Ann. 

ers  v.  Harbert,  5  Cold.  362.  218.    Contra,  Adams  v.  Wright,  14 

» Wilson  v.  Richards,  28  Minn.  Wis.  408. 

337;  Roberts  v.  Wold,  61  Minn.  291.  8  Ocean  Nat,  Bank  v.  Williams, 

Contra,  Townsendv.  Auld,31  N.  Y.  102   Mass.    141:  Carter   v.    Union 

Supp.  29.    The  court's  statement  is  Bank,  7  Humph.  548. 

really  dictum.    There  was  evidence  6  See  cases  in  note  1,  supra. 

to  show  that  the  notice  was  never  7  Dickerson  v.  Turner,  12  Ind.  223; 

deposited    in   the    postoffice.    See  Applegarth  v.  Aybott,  64  CaL  459. 

also  Young  v.   Pattison,  11    Rob.  8Saul  v.  Brand,  1  La.  Ann.  95. 

(La.)  7.  See  Morris  v.  Foreman,  1  Dall.  193. 


CHAPTER  XI. 

CIRCULATING  NOTES. 

§  311.  Power  to  issue  circulating  notes.—  The  power  to 
issue  bank-notes  by  an  incorporated  bank  must  always  be  a 
question  of  statute.  In  the  case  of  a  private  banker  it  must 
always  be  an  inquiry  as  to  a  statutory  prohibition.  As  to  a 
corporation  it  is  a  question  of  grant  of  power,  although  the 
want  of  a  grant  is  to  be  inferred  either  from  a  failure  to 
grant  the  power  or  a  prohibition  against  its  exercise.  Cer- 
tificates of  deposit  are  not  forbidden^by  the  prohibition  of 
the  issuance  of  bank-notes,1  nor  a  time  certificate  of  deposit 
forbidden  by  a  prohibition  directed  against  post-notes.2  A 
bank  must  have  an  existence  in  order  to  make  a  contract, 
and  hence  the  bills  of  an  unconstitutional  bank  are  void.5 
A  banking  corporation  with  general  banking  powers  may 
issue  bank-notes  or  post-notes,4  but  the  power  to  receive  de- 
posits and  give  acknowledgments  therefor  does  not  author- 
ize the  issuance  of  certificates  to  circulate  as  money.5  An 
insurance  company,6  or  a  canal  company,7  or  a  loan  corn- 

1  Talladega  Ins.  Co.  v.  Landers,  43  4  Campbell  v.  Mississippi  Bank,  6 

Ala.  115;  Hargroves  v.  Chambers,  How.  (Miss.)  625.  The  power  to  issue 

30  Ga.  580.    Compare  Mum  ford  v.  notes  is  one  of  the  ordinary  funo 

American  Life  Ins.  Co.,  4  N.  Y.  463.  tions  of  a  bank;  but  if  post-notes 

But  see  In  re  Homer,  10  Leigh,  700.  are  forbidden  they  are  void  when 

2 See  notes  5  and  6  to  §  125,  ante,  issued.    Swift  v.  Biers,  3  Denio,  70; 

But  compare  National  Life  Ins.  Co.  Leavitt  v.  Blatchford,  3  N.  Y.  19. 

v.  Beebe,  7N.  Y.  364;  Weed  v.  Snow,  So  as  to  a  post-dated  draft   Oneida 

3  McLean,  265.  Bank  v.  Ontario  Bank.  21  N.  Y.  490. 

3  Skinner  v.  Doming,  2  Ind.  558.  8  Bliss  v.  Anderson,  31  Ala.  612. 

See  §30,  ante.  While  the  bills  might  Compare  People  v.  River  Raisin  Co., 

in  this  case  be  considered  worth-  12  Mich.  389. 

less,  yet   a   remedy   would   exist  6  In  re  Ohio  Life  Ins.  Co.,  9  Ohio, 

against  the  corporators   or  those  291. 

conducting  the  business.    See  §  30,  7  Lawler  v.  Walker,  18  Ohio,  151. 

ante.  But  its  bonds,  although  negotiable, 


§  311.1  CIRCULATING   NOTES.  555 

pany8  cannot  issue  bills,  where  such  power  is  either  not 
granted  or  forbidden  to  all  except  banks ;  but  an  army  sutler 
seems  to  be  able  to  issue  currency  in  spite  of  law.  But  this 
might  be  called  another  case  of  the  "  war  power,"  by  one 
who  had  a  sense  of  humor.  At  any  rate  he  does  not  fall 
within  the  terms  of  the  prohibition.9  Drafts  issued  by  a 
bank  to  circulate  as  money  are  not  unlawful  unless  expressly 
forbidden  by  a  valid  law ; 10  but  under  a  prohibition  against 
bills  to  circulate  as  money,  which  are  not  made  payable  in 
gold  or  silver,  certificates  payable  in  current  bank-bills,  and 
of  course  drafts  or  notes  to  circulate  as  money,  payable  in 
bills,  are  forbidden.11  If  forbidden  to  issue  bills  not  for  im- 
mediate circulation,  a  bank  which  issues  its  notes  upon  the 
understanding  that  they  are  not  to  be  returned  for  a  period 
violates  the  prohibition.12  Municipal  corporations  have  no- 
pOAver  to  issue  bills  to  circulate  as  money,  where  all  corpo- 
rations except  banking  corporations  are  forbidden  to  do  so, 
and  it  would  seem  even  if  there  were  no  such  prohibition  l3 
The  state  may  incorporate  a  state  bank  and  own  all  the 
stock14  and  pledge  the  faith  of  the  state  to  redeem  the  notes ;  '* 
and  yet,  as  we  are  informed  by  the  bench  that  decided  the 
Dred  Scott  case,  would  not  violate  the  prohibition  of  the 
Federal  Constitution  directed  against  the  issuance  by  a  state 

are  not  forbidden.    McMasters  v.  Wall.  349;  Cothranv.  City  of  Rome, 

Reed,  1  Grant  Cas.  36.  77  Ga.  582.   Contra,  Allegheny  City 

8  Southern  Loan  Co.  v.  Morris,  2  v.  McClurken,  14  Pa.  81 ;  Devely  v. 
Pa.  175  (the  bill  was  negotiable  and  Cedar  Falls,  27  Iowa,  227. 
unlawful).  14  Lampton     v.    Commonwealth 

9  Weston  v.  Myers,  33  III  424  (the  Bank,  2  Litt.  300;  Briscoe  v.  Bank 
documents  were  due-bills  purport-  of    Commonwealth,   11    Pet.    257; 
ing  to  call  for  so  much  money).  Woodruff  v.  Trapnall,  10  How.  190. 

10  King  v.  Dedham  Bank,  15  Mass.  Contra,  Bank  of  Commonwealth  v. 
447;  State  v.  Mathews,  48  N,  C.  451.  Clark,  4  Mo.  59;  Linn  v.  State  Bank, 
But  see  as  to  checks,  Utica  Ins.  Co.  2  111.  87.   These  last  two  cases  were 
v.  Cadwell,  3  Wend.  296.  right.    See  §  16,  ante,  note  5. 

11  Darden  v.  Banks,  21  Ga.  297.  is  Darriugton  v.  State  Bank,  13 

12  Commonwealth  v.  Bank  of  Mut.  How.  12.    This  is  perhaps  the  wild- 
Redemption,  86  Mass.  1.  est  decision   ever    made  by  that 

13  Thomas  v.  City  of  Richmond,  12  court. 


556  BANKS   AND   BANKING.  [§  312. 

•of  bills  of  credit.16    Two  state  decisions  very  properly  held 
otherwise.17 

§  312.  Statutory  prohibitions. — Where  there  is  a  prohi- 
bition against  the  issuance  of  bank-notes,  in  order  to  show  a 
violation  of  the  act  where  the  paper  in  itself  is  not  a  viola- 
tion of  the  act,  an  intent  to  do  so  must  be  shown;1  but  the 
fact  that  the  document  did  circulate  as  money  is  proof  of  its 
adaptation  to  that  purpose.2  Sometimes  the  statute  is  di- 
rected not  against  the  issuance  of  such  paper,  but  against  the 
putting  of  it  in  circulation.3  But  the  issuance  of  orders  upon 
a  store  payable  in  goods,4  whether  issued  by  the  store 5  or  by 
some  one  else,6  or  tickets  upon  railroads  good  for  one  trip,7 
or  dray  tickets,8  are  not  violations  of  such  acts.  But  even 
though  the  note  be  issued  unlawfully,  it  is  proof  of  an  in- 
debtedness,9 but  the  notes  themselves  are  no  consideration 
for  a  contract.10  If  the  holder  of  such  unlawful  bills  is  in 
pari  delicto  with  the  bank  or  the  person  or  corporation  issu- 
ing the  bill,  there  can  be  no  recovery  on  the  debt;11  yet  if 
there  be  a  penalty  imposed  only  on  the  person  or  corporation 
issuing  the  notes,  the  holder  is  not  in  pari  delicto  with  the 
issuer.12 

16  The  bench  that  decided  Barring-  7  United  States  v.  Monongahela 
ton  v.  State  Bank,  supra,  was  prac-  Bridge  Co.,  Fed  Cas.  No.  15,796. 
tically  the  court  that  decided  the  8  State  v.  Teak,  8  Sneed,  695. 
Dred  Scott  case.  9  Parmley  v.  Tenth  Ward  Bank, 

17  Bank    of     Commonwealth    v.  3  Edw.  Ch.  895. 

Clark,  4  Mo.  59;  Linn  v.  State  Bank,  1°  Skinner  v.  Deming,  2  Ind.  558; 

2  111.  87.  Bank  of  Commonwealth  v.  Clark, 

1  State  v.  Humphreys,  2  Dev.  &  B.  4  Mo.  59;  Pratt  v.  Adams,  7  Paige, 
555.     But  a  due-bill  for  money  is  a  615;   Doty  v.  Knox  Co.  Bank,  16 
violation  of  the  act  in  itself.   Hazle-  Ohio  St.  133;  Wilson  v.  Spencer,  1 
ton  Coal  Co.  v.  Megargal,  4  Pa.  324.  Rand.  76;  Hamtramck  v.  Selden,  12 

2  Barnett  v.  State,  54  Ala.  579.          Grat  28.    See  Reznor  v.  Hatch,  7 
» Norvell  v.  State,  50  Ala.   174;    Ohio  St.  248. 

Downing  v.  State,  4  Mo.  572.  "  Thomas  v.  Richmond,  12  Wall 

4  Durr  v.  State,  59  Ala.  24.  349;  Root  v.  Godard,  3  McLean,  102. 

8  United  States  r.  Van  Auken,  96  See  g§  27,  32,  ante. 

U.  S.  366.  12  Atlas  Bank  v.  Nahant  Bank,  3 

•  Durr  v.  State,  59  Ala.  24  Met.  581;  Buffalo  City  Bank  v. 


§§  313,  314.]  CIRCULATING   NOTES.  557 

§  313.  State  bank  tax. —  The  state  bank  tax  applies  to 
amounts  paid  out  by  the  bank  in  its  previously  issued  notes, 
as  well  as  to  payments  in  the  notes  of  other  banks.1  But  it 
applies  only  to  notes  payable  in  money.2  Due-bills  upon 
stores  payable  in  goods  or  upon  railroads  payable  in  money 
are  not  taxable  under  it.3  Certificates  of  deposit  nor  drafts 
of  one  bank  upon  another,  nor  any  other  evidence  of  indebt- 
edness not  intended  to  circulate  as  money,  would  be  subject 
to  the  tax.  But  there  do  not  seem  to  have  been  any  attempts 
to  evade  the  tax  by  state  banks,  nor  any  attempt  to  put  their 
paper  into  circulation.4  The  pitiful  attempts  of  the  states  by 
penalties  imposed  to  compel  state  banks  to  maintain  their 
notes  at  par5  or  to  pay  specie  for  them6  are  good  illustra- 
tions of  the  utter  worthlessness  of  the  old  state  bank  cur- 
rency. 

§  314.  Payment  of  notes. —  A  bank  note  is  an  engage- 
ment by  the  bank  to  pay  bearer  a  certain  amount  of  specie 
upon  demand.1  Being  negotiable  it  passes  by  delivery; 
hence  if  it  be  lost  the  holder  loses  his  cause  of  action,  if  the 
note  passes  to  a  bonafide  holder.2  But  if  a  bank-note  is  lost 

Codd,  25  N.  Y.  163;  Thomas  v.  Rich-  These  certificates  are  as  a  matter 

mond,  12  Wall  349,  and  cases  of  law  taxable  under  the  state  bank 

therein  cited.  tax,  but  it  is  not  likely  that  the  law 

1  Deposit  Sav.  Ass'n  v.  Mayer,  Fed.  will  be  enforced.  See  §§  366  and 

Cas.  No.  3813.  367,  post,  for  contrary  decisions  ap- 

*  In  re  Aldrich,  16  Fed.  R.  369.  parently. 

3  United  States  v.  White,  19  Fed.  s  Hurrisburg  Bank  v.  Common- 
R.  723.    Due-bills  to  railroad  em-  wealth,  26  Pa,  451 ;  Bank  of  Cham- 
ployees  for  wages,  though  used  as  bersburgv.  Common  wealth,  2  Grant 
money,  are  not  taxable  under  this  Cas.  384 

tax.  Phila.  R.  R.  Co.  v.  Pollock,  19  6  Bank  of  Kentucky  v.  Thorn- 
Fed.  R.  401.  And  see  United  States  berry,  8  B.  Mon.  519;  Bryant  v. 
v.  Wilson,  106  U.  S.  620.  Damariscotta  Bank,  18  Me.  240; 

4  A  clearing-house  being  a  volun-  Brown  v.  Penobscot  Bank,  8  Mass, 
tary  association  of  banks,  whether  445;  Wendell  V.Washington  Bank, 
national  or  state,  is  a  private  insti-  5  Cow.  161 ;  State  v.  Banks,  12  Rich, 
tution.   It  issues  certificates  which  Law,  609. 

are  used  as  money.    In  fact  in  1893        1  Suffolk  Bank  v.  Lincoln  Bank,  3 

in  New  York  city  the  banks  would    Mason,  1. 

use  nothing  else  for  large  sums.        2City  Bank  v.   Farmers'  Bank, 


558 


BANKS    AND   BANKING. 


[§  314. 


or  stolen,  the  holder,  like  the  holder  of  any  negotiable  paper, 
may  recover  from  the  bank,  if  the  bank  has  not  paid  the 
note,  upon  giving  indemnity.3  If  the  notes  are  destroyed, 
they  may  be  sued  for  at  law  and  a  recovery  had,4  without 
proof  of  a  preliminary  affidavit  of  loss,5  although  such  proof 
would  have  a  bearing  upon  the  question  of  interest.6  But 
a  demand  is  necessary,7  at  least  to  the  recovery  of  interest.8 
It  was  once  a  common  practice  to  cut  notes  in  two  for  safety 
in  sending  through  the  mail.  If  half  of  the  note  should  be 
lost  the  holder  was  entitled  to  recover,  certainly  in  equity, 
upon  proof  of  loss  and  his  ownership.9  Whether  he  was 
required  to  give  security  or  not  is  questionable.  Some 
courts  held  that  half  of  a  bank-note  was  not  negotiable  and 
hence  no  security  was  needed.10  Other  courts  held  that  in- 


Fed.  Cas.  No.  2738.  This  has  been 
the  settled  law  ever  since  Miller  v. 
Race,  1  Burr.  452. 

3  Waters  v.  Bank  of  Georgia,  R. 
M.  Charlt  193.   But  see  Hinsdale  v. 
Orange  Bank,  6  Wend.  379.    But 
where  bank-notes  are  passing  fr.om 
hand  to  hand  in  the  manner  of  na- 
tional bank-notes,  which  are  never 
presented  for  redemption,  no  recov- 
ery should  be  permitted.    Mobile 
Bank  v.  Meagher,  33  Ala.  622.    No 
such  suit  could  be  brought  on  ac- 
count of  the  difficulties  in  the  proof. 

4  Bank  of  Louisville  v.  Summers, 
14  B.  Mon.  2-17;  Wade  v.  New  Or- 
leans Banking  Co.,  8  Rob.  (La.)  140; 
Hagerstown  Bank  v.  Adams  Exp. 
Co.,  45  Pa.  419;   Ross  v.  Bank  of 
Burlington,  1  Aiken,  43.    If  it  were 
proved  that  the   notes   were    de- 
stroyed    no    indemnity    was    re- 
quired.   Mobile  Bank  v.  Meagher, 
33  Ala.  622;  Hagerstown  Bank  v. 
Adams  Exp.  Co.,  45  Pa  419.    But 
if  the  proof  were  doubtful  it  was 
required.    Wade  v.  New  Orleans 
Banking  Co.,  8  Rob.  (La.)  140. 


5  Bank  of  Mobile  v.  Williams,  13 
Ala.  544     Contra,  Ross  v.  Bank  of 
Burlington.  1  Aiken,  43. 

6  No  liability  to  pay  would  arise 
until  proof  of  loss  to  the  bank. 
Farmers'*Bank  v.  Reynolds,  4  Rand. 
186. 

7Streater  v.  Bank  of  Cape  Fear, 
55  N.  C.  31;  Ross  v.  Bank  of  Bur- 
lington, 1  Aiken,  43.  See  §  310, 
post. 

8  There  is  no  default  and  hence 
no  liability  for  interest. 

9  Allen  v.  State  Bank,  21  N.  C.  1; 
Bank  of  Virginia  v.  Ward,  6  Munf. 
166;     Arrnat    v.    Union    Bank,    2 
Cranch,  C.  C.  180;  State  Bank  v. 
Aersten,  4  111.  135;  Hinsdale  v.  Bank 
of  Orange,  6  Wend.  378;  Patton  v. 
State  Bank,  2  Nott  &  McC.  46  i; 
Union  Bank  v.  Warren,  4  Sneed, 
167. 

"•Mobile  Bank  v.  Meagher,  33 
Ala.  622:  United  States  Bank  v. 
Sill,  5  Conn.  106;  Murdock  v.  Union 
Bank,  2  Rob.  (La.)  112;  Hinsdale  v. 
Orange  Bank,  6  Wend.  379.  So  held 
where  the  part  of  a  note  torn  off 


§  314:.]  CIRCULATING   NOTES.  559 

demnity  was  necessary  and  the  remedy  therefore  in  equity." 
The  fact  that  the  bank  had  given  notice  that  it  would  not 
pay  the  notes  unless  the  whole  note  was  produced  would 
have  no  effect,12  nor,  it  is  conceived,  would  a  law  forbidding 
the  mutilation  of  a  note.13  But  if  the  mutilation  was  fraudu- 
lently made,  or  for  a  fraudulent  purpose,  the  bank  could  not 
be  compelled  to  pay  upon  the  production  of  part  of  a  note.14 
"Worn-out  notes  are  governed  by  the  same  rules.15  Forged 
notes  upon  a  bank  are  adopted  by  the  bank  when  it  receives 
them  without  objection,16  but  it  cannot  be  made  liable  upon 
them  when  it  merely  receives  them  for  examination,17  nor 
by  the  fact  that  it  was  negligent  in  the  manner  in  which  it 
kept  its  blank  notes.18  Notes  of  a  bank  issued  contrary  to 
law  bind  it  in  the  hands  of  bona  fide  holders.19  A  bank  in 
paying  its  own  notes  must  pay  specie.  It  cannot  pay  an- 
other bank  presenting  the  notes  and  demanding  specie  in 
bills  of  the  latter  bank.20  If  it  gives  a  draft  for  the  notes 
the  draft  is  not  payment,  unless  it  is  made  so  by  express 
agreement,  and  such  an  agreement  is  vitiated  by  fraud.21 
But  the  bank  may  set  off  a  debt  of  the  holder  to  the  bank.22 
It  must  pay  the  face  value  of  the  notes  to  one  who  took  the 
notes  below  par.23  But  the  bank  may  pay  the  notes  in  legal 

was  not  negotiable.  Martin  v.  Ely-  10  Wheat,  333;  Third  Nat.  Bank  v. 
denburgh,  I  Daly,  314.  Allen,  59  Mo.  310. 

11  Allen  v.  State  Bank,  1  Dev.  &       n  Salem  Bank  v.  Gloucester  Bank, 

B.  Eq.  3;  State  Bank  v.  Ward,  6    17  Mass.  1. 
Munf.   166;    Commercial   Bank  v.       18  See  last  case. 

Benedict,  18  B.  Mon.  307;  and  see  ^McDougald  v.  Bellamy,  18  Ga. 
note  9.  411. 

12  Martin  v.  Bank  of  U.  S.,  4  Wash.       20  Suffolk  Bank  v.  Lincoln  Bank, 

C.  C.  253;  United  States  Bank  v.  3  Mason,  1.    The  rule  would  be  dif- 
Sill,  5  Conn.  106.  ferent  where  a  statute  compelled 

13  This  would  be  so  unless  the  stat-  the  bank  to  take  its  own  notes  as 
ute  made  the  note  void.  a  tender. 

14  Northern     Bank    v.    Farmers'  21  Bank  of  St.  Mary's  v.  St.  John, 
Bank,  18  B.  Mon.  506.  25  Ala.  566. 

15  Miner  v.  Bank  of  Louisiana,  1  22  Long  v.  Farmers'  Bank,  1  Clark, 
Mart.  (O.  S.)  20;  Note  Holders  v.  284. 

Funding  Board,  84  Tenn.  46.  23  Robinson  v.  Beall,  26  Ga.  17; 

16  Bank  of  U.  S.  v.  Bank  of  Georgia,    Taylor  v.  Cook,  14  Iowa,  500;  Dab- 


560 


BANKS   AND    BANKING. 


[§  314 


tender  where  they  are  not  made  payable  in  a  particular 
medium  of  payment.24  If  foreign  coin  is  tendered  it  may 
be  taken  by  weight  at  its  intrinsic  value.25  Silver  coin  of 
this  country  would  not  be  a  valid  tender  unless  the  silver 
were  a  legal  tender;26  but  each  note  may  be  considered  a 
separate  debt  as  to  payment  in  silver,  where  silver  is  a  legal 
tender  for  a  debt  up  to  a  certain  amount.27  Interest  must 
be  paid  upon  the  notes  from  the  date  of  a  demand  and  a  re- 
fusal of  payment,28  but,  as  to  mutilated  paper,  proof  of  owner- 
ship must  first  be  made.29  A  refusal  to  redeem  may  be 
inferred  from  an  evasive  and  dilatory  method  resorted  to 
by-  the  bank  for  the  purpose  of  delaying  or  harassing  the 
holder.30  Sometimes  the  state  took  upon  itself  the  redemp- 
tion of  state  bank  notes  out  of  deposited  securities.31  In  one 


ney  v.  State  Bank,  3  Rich.  124; 
Olinstead  v.  Winstead  Bank,  32 
Conn.  278.  But  see  Collins  v.  Cen- 
tral Bank,  1  Kelly,  435. 

24  Treasury  notes  good  payment 
Reynolds  v.   State  Bank,  18  Ind. 
467;    Metropolitan    Bank    v.    Van 
Dyck,  27  N.  Y.  400.    These  state 
decisions  were  in  accord  with  the 
judgment  that  prevailed.    Knox  v. 
Lee,  12  Wall.  457,  overruling  Hep- 
burn v.  Griswold,  8  Wall.  603.   The 
power  to  pass  the  legal  tender  act 
was  originally  justified  as  a  war 
measure.     But  it  is  constitutional 
even  in  time  of  peace.    Juilliard  v. 
Greenman,  110  U.  S.  421.    But  the 
best  opinion  on  the  subject,  singu- 
larly enough,  is  found  in  a  maga- 
zine article.    See  1  Harv.  Law  Rev. 
73,  by  Prof.  Jas.  B.  Thayer. 

25  Suffolk  Bank  v.  Lincoln  Bank, 
3  Mason,  1. 

26  Silver  prior  to  1853  was  a  legal 
tender.    It  is  now.    After  1873,  for 
a  time,  it  was  a  limited  tender. 
Silver  notes  are  not  made   legal 
tender  by  law;  but  treasury  cer- 
tificates for  silver  purchases  are. 


27  Boatman's    Sav.  Inst.   v.  State 
Bank,  33  Mo.  497.    The  allegation 
of  a  tender  of  silver  must  allege  it 
to  be  legal  tender   silver,  where 
some  coins  are  legal  tender  and  oth- 
ers are  not.    State  Bank  v.  Lock- 
wood,  16  Ind.  306.    And  see  Strong 
v.  Farmers'  Bank,  4  Mich.  350. 

28  Crawford  v.  Bank  of  Wilming- 
ton, 61  N.  C.  136;  Ringo  v.  Biscoe, 
13  Ark.  563.     But  a  suspension  was 
held  not  to  start  interest.    Bank  of 
Louisiana  v.  Fowler,  10  Rob.  (La.) 
196.    See  also,  contra,  Attwood  v. 
Bank  of  Chillicothe,  10  Ohio,  526, 
which  states  a  better  rule. 

29  Farmers'  Bank  v.  Reynolds,  4 
Rand.  186.    The  same  rule  as  to 
preliminary  proof  would  apply  to 
lost  or  destroyed  paper. 

30  People  v.  Whittemore,  4  Mich. 
27;  Reapers'  Bank  v.  Millard,  24  111. 
433.    These  two  cases  illustrate  the 
state  bank  system  in  all  its  vicious- 
ness. 

si  Willard  v.  Dubois,  29  111.  48; 
People  v.  Whittemore,  4  Mich.  27; 
People  v.  Holmes,  3  Mich.  544.  The 
national  government  now  redeems 


§  315.]  CIRCULATING   NOTES.  501 

instance  the  bank  made  a  valid  agreement  with  a  third  per- 
son to  redeem  its  notes.32 

•  §  315.  Stockholders'  liability. —  If  the  association  is  un- 
incorporated, each  of  the  members  of  it  is  liable  for  all  notes 
issued  while  he  was  a  member.1  This  liability  is  not,  it  seems, 
varied  by  an  express  notice  that  the  terms  of  the  partnership 
are  otherwise,  nor  by  prior  notice  to  all  creditors  that  by 
becoming  creditors  they  disavow  any  recourse  upon  the  asso- 
ciates.2 Stockholders  in  a  corporation  must  be  made  liable 
for  anything  beyond  their  subscription  by  the  charter  or 
statute.3  If  the  liability  be  to  the  extent  of  the  par  value  of 
the  stock  held  by  the  stockholder,  it  is  in  proportion  to  the 
number  of  shares  held,4  but  if  all  the  shares  are  not  issued 
it  will  be  in  proportion  to  the  issued  shares.5  The  liability 
arises  whenever  the  bank  refuses  to  pay  its  notes  or  is  noto- 
riously insolvent.6  A  perpetual  injunction  against  the  bank's 
doing  business  dissolves  the  charter  of  the  bank,7  but  the  lia- 
bility survives  the  dissolution  of  the  charter,8  and  the  lia- 
bility extends  in  favor  of  those  who  took  the  bills  after  the 
expiration  of  the  charter.9  There  must  first  be  an  exhaus- 
tion of  the  assets,  including  the  state  deposit,  of  the  bank,10 

all  national  bank  notes.    From  the  8Wiswell  v.   Starr,  48  Lie.   401. 

destruction  of  national  bank  notes  This  question  could  not  arise  where 

of  the  national  banks  that  have  the  whole  capital  was  required  to 

failed,  the  government  has  made  a  be  subscribed  and  paid  in. 

handsome  profit.  6  Terry  v.  Tubman,  92  U.  S.  156; 

32  Central  Bank  v.  Empire  Stone  and  see  §  71,  ante. 

Co.,  26  Barb.  23.  ?Wiswell  v.  Starr,  48  Ma  401; 

1  Riggs  v.  Swan,  8  Cranch,  C.  C.  Dane  v.  Young,  61  Me.  160.    This 
183.  is  sometimes   a    substitute  for  a 

2  Riggs  v.  Swan,  supra,  and  Hess  judgment  of  dissolution. 

v.  Werts,  4  S.  &  R.  356,  semble.  See  8  Thornton  v.  Lane,  11  Ga.  459; 

§  13,  ante,  Robinson  v.  Lane,  19  Ga.  337. 

3  This  must  be  understood  in  con-  9  Crease  v.  Babcock.  10  Met.  525. 
nection  with  §§  48,  58,  59, 63  et  seq.,  But  there  is  no  liability  for  interest 
ante,  10Toucey  v.   Bowen,   1  Biss.  81; 

4  Lane  v.  Harris,  16  Ga.  217;  Ad-  Crease   v.  Babcock,  10   Met  525. 
kins  v.  Thornton,  19  Ga.  325;  Wis-  Under  a  different  system,  see  Hatch 
well  v.  Starr,  48  Me.  401.    And  see  v.  Burrows,  1  Woods,  439.    Some- 
the  sections  ante  cited  in  last  note,  times  the  liability  accrues  upon  in- 

36 


562  BANKS   AND    BANKING.  [§  316. 

unless  the  bank  is  insolvent,  but  a  return  of  nulla  lona  is 
said  not  to  be  conclusive  against  the  stockholders.11  But 
if  the  bill  holder  fails  to  present  his  claim  to  the  bank  re- 
ceiver, he  can  recover  from  the  stockholders  only  the  amount 
remaining  after  deducting  what  he  would  have  received  had 
he  presented  his  claim.12  If  stock  is  owned  by  the  bank  it 
does  not  increase  the  liability  of  the  stockholders.13  The 
stockholders,  unless  made  jointly  liable  by  statute,  are  sever- 
ally liable; M  and  it  was  held  in  one  state  that  a  stockholder's 
voluntary  redemption  of  notes  was  a  pajnnent  of  his  liability 
pro  tanto™  but  this  cannot  be  correct.16  Where  the  directors 
are  also  made  liable  for  the  notes  of  the  bank,  the  liability 
of  the  stockholders  is  not  thereby  made  secondary  to  that 
of  the  directors.17  On  the  theory  of  a  joint  liability  the  re- 
lease of  a  director  was  held  to  release  the  stockholders.18 

§  316.  Remedies  for  refusal  to  pay  notes. —  The  action 
against  the  bank  upon  its  notes  should  be  at  law,  and  under 
a  statute  it  may  be  for  money  had  and  received ; l  and  the 
action  for  destroyed  notes,  where  no  indemnity  is  needed,  is 
at  law.2  Where  the  action  is  against  the  stockholders,  if  at 
law,  the  first  judgment  creditor  would  obtain  a  preference, 

solvency  or  dissolution.    See  §  62,  This  could  not  be  the  rule  if  the 

ante.  liability  was  several,  and  where 

11  Lane  v.  Harris,  16  Ga.  217.    But  the  remedy  can  only  be  pursued  in 
in  almost  every  statutory  system  it  equity  and  no  creditor  can  obtain 
is  conclusive.    See  §  69,  ante.  a  priority,  it  is  difficult  to  see  how 

12  Grew  v.  Breed,  10  Met  569.  such  a  release  could  be  effective 

13  Crease  v.  Babcock,  10  Met.  525.  unless  made  by  all  the  creditors. 

14  Crease  v.  Babcock,  10  Met.  525.  Most  of  the  states  have  statutes, 
See  §  64,  ante.  however,  abolishing  this  rule  as  to 

15  Belcher  v.  Wilcox,  40  Ga.  391 ;  joint  debtors. 

Branch  v.  Baker,  53  Ga.  502.    But  l  Goodenow  v.  Duffield,  Wright, 

the  general  rule  is  otherwise.    Sac-  455;  Attwood  v.   Bank  of  Chilli- 

ramento  Bank  v.  Pacific  Bank,  56  cothe.  10  Ohio,  526.    See  People  v. 

Pac.  R  787.    This  ruling  destroys  New  York  C.  P.,  19  Wend.  113.    The 

the  equality  among  the  note  hold-  note-holders  are  not  assignees  in 

ers.  any  sense  of  the  term.    Wood  v. 

16  See  §  59,  ante,  note  10.  Dummer,  3  Mason,  308. 

*T  McDougald  v.  Lane,  18  Ga.  444.        2  Bank  of  Mobile  v.  Meagher,  33 
is  Robinson  v.  Bealle,  20  Ga.  275.    Ala.  622. 


§  316.]  CIRCULATING   NOTES.  563 

but  this  action  is  generally  in  equity.8  There  is  no  limita- 
tion upon  the  action  while  the  notes  are  in  circulation,4  but 
it  has  been  unadvisedly  said  that  after  the  notes  have  ceased 
to  circulate  the  rule  is  different.5  The  proper  rule  is  that 
the  statute  should  begin  to  run  from  a  demand,6  and  a  fail- 
ure of  the  bank  dispenses  with  a  demand ; 7  yet  it  is  not  suffi- 
cient to  put  the  statute  in  motion.8  Where  the  notes  are 
payable  generally  it  is  not  necessary  to  allege  a  demand  at 
the  banking  house  or  at  all,9  although  if  they  are  payable 
at  the  banking  house  it  is  necessary  to  allege  a  demand 
there.10  Failure  of  the  bank,11  as  just  stated,  or  a  state  of 
war  preventing  a  demand,12  dispenses  with  the  necessity. 
The  proper  party  plaintiff  is  the  owner  of  the  bills,  though 
he  holds  them  as  trustee,13  and  the  proper  party  defendant 
is  the  bank.  If  it  be  a  suit  to  hold  the  stockholders,  the 
proper  parties  must  be  determined  according  to  the  rules 
stated  in  a  former  section.14  In  pleading  upon  the  bank- 
notes it  is  not  necessary  to  describe  the  notes  by  their  num- 
bers nor  letters,15  nor  dates,  nor  where  payable,16  but  they 
must  be  sufficiently  described  to  show  that  the  bank  issued 

'Lowry  v.  Parsons,  52  Ga.  356.  Law,  382;  Bryant  v.  Damariscotta 

See  §§  67-69,  ante.  Bank,  18  Me.  240;  Haxton  v.  Bishop, 

4  Dougherty  v.  Western  Bank,  1.3  3  Wend.  13;  Dougherty  v.  Western 

Ga.  287;  Long  v.  Bank  of  Yancey-  Bank,  13  Ga.  287. 

ville,  81  N.  C.  41.  10  Bank  of  Kentucky  v.  Hickey,  4 

»Kimbro  v.  Bank  of  Fulton,  49  Litt.225;  Bank  of  Uticav.  Magher, 

Ga.  419.     Contra,  State  v.  Bank  of  18  Johns.  341. 

Tennessee,  5  Baxt.  101. .  See  Bullard  J1  See  note  7,  supra,  and  Taylor  v. 

v.   Bell,  1  Mason,  252;  Ballard  v.  Cook,  14  Iowa,  501. 

Green  bush,  24  Me.  336;  Solomons  v.  12  Hall  v.  Bank  of  Virginia,  14  W. 

Bank  of  England,  13  East,  135.  Va.  584 

6  Thurstonv.  Wolf  borough  Bank,  i»Grew    v.  Breed,  10    Met    569. 
18  N.  H.  391;  Bank  of  Memphis  v.  And  the  beneficiaries  need  not  be 
White,  2  Sneed,  482.  joined. 

7  Lane  v.  Morris,  8  Ga.  468.    See  14  See  §§  67-69,  ante.  And  see  Wil- 
as  to  certificates  of  deposit,  §  169,  son  v.  Bank  of  Lexington,  72  N.  C. 
ante.  621. 

8  See  two  cases  in  note  6,  supra..  15  Carey  v.  Greene,  7  Ga.  79. 
Contra,  Samples  v.  Bank,  1  Woods,  16  Bank  of  Mobile  v.  Meagher,  83 
r>23,  following  the  rule  in  Georgia.  Ala.  622. 

9  State  Bank  v.  Van  Horn.  4  N.  J. 


564  BANKS  AND  BANKING.  [§  316 

them.17  If  the  notes  are  alleged  to  be  destroyed  it  is  doubt- 
ful whether  such  a  description  would  be  sufficient.18  Cer- 
tainly in  proof  the  contents  should  be  proven  by  something 
more  than  the  aggregate  amount.19  Since  the  liability  of 
the  stockholders  or  directors,  as  engaged  in  the  corporation, 
arises  from  the  charter,  it  must  be  proven,20  unless  the  court 
takes  judicial  notice  of  the  existence  of  the  charter.-1  It  is 
not  a  matter  of  defense  against  note-holders,  either  in  plead- 
ing or  proof,  that  the  organization  was  not  properly  made 
by  paying  the  capital  stock  in  full,  either  on  behalf  of  the 
bank  or  its  stockholders.22  It  has  been  said  that  if  the  note- 
holder took  the  notes  with  the  agreement  that  they  were 
not  to  be  put  into  circulation,  he  cannot  hold  the  stockhold- 
ers,23 but  this  conclusion  is  very  properly  denied.24 

17Irwin    v.    Planters'    Bank,    1  court  say  the  corporation's  exist- 

Humph.  145.  ence  was  not  proven. 

18  The  record  would  fail  to  show  21  This  must  be  the  case  wherever 
what  notes  were  recovered  upon.  the  liability  is  created  by  statute, 

19  Bank  of  Mobile  v.  Meagher,  33  unless  the  court  in  the  particular 
Ala.  622.    Circumstantial  evidence  jurisdiction  refuses  to  take  judicial 
of  loss  was  held  insufficient.  Tower  notice  of  a  private  act 

v.  Appleton   Bank,  85  Mass.  387.  22  Johnston  v.  Southwestern  Bank, 

Under  such  circumstances  indem-  3  Strob.  Eq.  263. 

nity  will  not  be  permitted.     See  M  Johnston  v.  Southwestern  Bank, 

last  case.  supra. 

20  Gardner  v.  Post,  43  Pa.  19.   The  **  Grew  v.  Breed,  10  Met  569. 


CHAPTEK  XII. 


DISSOLUTION  AND  INSOLVENCY., 

§  317.  Surrender  of  charter. —  The  charter  having  been 
granted  by  the  state,  it  may  be  surrendered  with  the  con- 
sent of  the  state,1  but  not  without  it.2  This  consent  may  be 
given  by  a  special  act 3  or  in  accordance  with  a  general  law.4 
The  state  may  accept  the  surrender,  but  continue  the  cor- 
poration for  a  time  for  the  purpose  of  settling  its  affairs,5 
and  during  such  time  a  cashier  may  be  appointed6  and  a 
commissioner  for  winding  up  its  affairs  may  sue  in  the 
name  of  the  corporation.7  The  appointment  of  a  receiver 
or  of  trustees  does  not  dissolve  the  corporation.8  It  may 
appoint  officers,9  sue 10  and  be  sued.11  The  corporation  does 


1  Savage  v.  Walshe,  26  Ala.  619. 
There  is  often  a  general  statute  in 
accordance  with  which  the  bank, 
may  dissolve  even  by  action  of  the 
directors.    People  v.  Olmstead,  45 
Barb.    644     Under   the    national 
bank  act  the  two-thirds  majority 
of  the    stockholders  can  dissolve 
against  the  wishes  of  the  minority. 
Watkins  v.  National  Bank,  51  Kan. 
254. 

2  Mechanics'  Bank  v.  Heard,  87 
Ga.  401. 

3  Many  instances  will  be  noticed 
in  cases  cited  in  this  section. 

4  See  note  1,  supra, 

5  Cooper  v.   Curtis,  80   Ma  488. 
This  is  absolutely  necessary  to  pre- 
vent the  destruction  of  the  rights 
of  the  corporation. 

6  Cooper  v.  Curtis,  supra. 

1  Commercial  Bank  v.  Villavoso, 
6  La.  Ann.  542. 
8  Merchants'  Nat.  Bank  v.  Gaslin, 


41  Minn.  552;  Central  Bank  v.  Con- 
necticut Mut.  Life  Ins.  Co.,  104 
U.  S.  54;  Ahrens  v.  State  Bank,  3 
S.  C.  401.  A  bank  is  not  dissolved 
although  it  has  gone  into  volun- 
tary liquidation,  has  transferred 
all  its  assets  to  another  bank, 
which  assumed  its  debts,  and  has 
given  up  its  organization  and  its 
business.  Pritchard  v.  First  Nat. 
Bank,  76  N.  W.  R.  1106. 

9  Richards  v.  Attleborough  Bank, 
148  Mass.  187. 

10  See  cases  cited  in  note  8,  supra. 

"Merchants'  Nat.  Bank  v.  Ma- 
sonic Hall,  65  Ga.  603.  But  if  a  re- 
ceiver is  appointed  in  Maine  it  is 
provided  that  the  bank  cannot  be 
sued.  Leathers  v.  Shipbuilders' 
Bank,  40  Me.  386.  But  the  bank  may 
sue.  American  Bank  v.  Cooper, 
54  Me.  438.  As  to  national  banks, 
see  §  334,  post. 


566  BANKS   AND    BANKING.  [§  318. 

not  cease  to  exist  except  by  decree  of  dissolution,12  or  a  stat- 
ute having  such  effect,13  or  by  expiration  of  the  charter.14 
After  such  a  dissolution  the  corporation  ceases  to  exist;  a 
judgment  against  it  is  void;15  any  action  taken  in  its  name 
is  nugatory,16  in  the  absence  of  a  statute  providing  a  differ- 
ent rule. 

§318.  Reorganization  and  consolidation. —  A  reorgan- 
ization of  a  bank  or  consolidation  of  banks  can  take  place 
only  under  statutory  authority.  The  national  bank  act  per- 
mits the  reorganization  of  a  state  bank  into  a  national  bank.1 
The  new  national  bank  is  the  same  corporation  under  an- 
other name.2  The  new  bank  may  sue  on  a  claim  or  prose- 
cute an  appeal  of  the  old  bank.8  The  national  bank  is  liable 
for  all  the  liabilities  of  the  state  bank  out  of  which  it  was 
reorganized.4  There  is  no  closing  of  the  business  of  a  state 
bank  under  such  a  reorganization,  so  as  to  release  it  under 
a  statute  on  bills  not  presented  within  six  years.5  But  the 
corporate  existence  of  a  former  state  bank  ceases  on  the 
expiration  of  three  years  from  its  reorganization,  its  exist- 
ence as  a  national  bank  having  also  expired.6  The  liability 
on  a  continuing  guaranty  continues  in  favor  of  the  new  na- 

12  National  Bank  v.  Onondaga  Co.  2  Coffey  v.  National  Bank,  46  Mo. 
Bank,  7  Hun,  549.  140. 

13  Even    where    the   statute   dis-  3  Atlantic  Nat.  Bank  v.  Harris, 
solves  the  corporation  the  affairs  118  Mass.  147;  Claflin  v.  Farmers' 
thereof  must  be  wound  up  under  Bank,  54  Barb.  228. 

the  direction  of  a  court  unless  the  *  Kelsey  v.  National  Bank,  69  Pa. 

act  lodges  that  duty  in  certain  per-  426. 

sons.  6  Metropolitan  Nat.  Bank  v.  Clag- 

"  This,  of  course,  ends  the  corpo-  gett,  141  U.  S.  520,  125  N.  Y.  729. 

rate  existence,  unless   it  be  con-  It  is  not  a  payment  for  its  stock. 

tinued  for  certain  purposes.  Maynard  v.  Mechanics'  Nat.  Bank, 

15  Hayden  v.  Bank  of  Syracuse,  1  Brewst.  483. 

15  N.  Y.  Supp.  48;  Hodgson  v.  Mo-  6  Hayden  v.  Bank  of  Syracuse,  15 

Kinstrey,  3  Kan.  App.   412.    But  N.  Y.  Supp.  48.    See  §  20,  ante.    But 

there  was  no  dissolution  in  this  under  22  Stat  167,  §  7,  a  national 

case.  bank  does  not  cease  to  be  able  to  sue 

16  Bank  of  U.  S.  v.  McLaughlin,  2  and  to  be  suable   until  its  affairs 
Cranch,  C.  C.  20.  are  settled.    Farmers'  Nat  Bank  v. 

1  See  §  20,  ante.  Backus,  77  N.  W.  R  142  (Minn.). 


§  318.]  DISSOLUTION    A.ND   INSOLVENCY.  507 

tional  bank.7  The  new  bank  is  liable  for  the  costs  of  a  scire 
facias,  although  it  was  properly  issued  on  a  judgment  in 
favor  of  the  old  bank  in  the  name  of  that  bank.8  But  rights 
of  the  state  over  the  bank,  such  as  to  require  a  payment  of 
a  bonus  upon  its  business,  cease  upon  reorganization.9  When 
a  national  bank  is  reorganized  into  a  state  bank,  all  property 
rights  of  the  national  bank  pass  to  the  new  state  bank,10  and 
when  one  national  bank  is  reorganized  into  another  national 
bank  it  is  liable  for  deposits  in  the  old  bank,11  and  special 
deposits  of  bonds  recognized  by  the  payment  of  interest  on 
the  bonds  by  the  bank  become  special  deposits  in  the  new 
bank.12  In  case  of  such  a  change,  where  the  affairs  of  the 
former  bank  were  liquidated,  and  all  but  one  stockholder 
has  taken  part  in  the  organization  of  the  new  bank,  the 
omitted  stockholder  having  accepted  dividends  from  assets 
of  the  old  bank  cannot  claim  to  be  a  stockholder  in  the  new 
one.13  Similarly  where  a  state  savings  association  is  reor- 
ganized into  another  state  bank,  those  depositors  who  took 
stock  in  the  new  bank  for  their  deposits  and  participated 
in  the  new  bank  are  estopped  from  saying  that  their  sub- 
scription to  the  stock  of  the  new  bank  was  conditional  upon 
all  the  depositors  taking  stock  in  the  new  bank  for  their  de- 
posits.14 A  defect  in  the  reorganization  under  a  new  char- 
ter cannot  be  set  up  by  a  debtor  to  the  old  bank  against  his 
liability.15  If  the  reorganization  consists  in  a  liquidation  of 

7  City  Bank  v.  Philips,  86  N.  Y.       u  Eaves  v.  Exchange  Bank,  79  Mo. 
484.  182. 

8  Thomas  v.  Farmers'  Bank,  46       12  First  Nat  Bank  v.  Strang,  28 
Md.  43.  Ill  App.  325. 

9 State  v.  National  Bank,  33  Md.  "First  Nat  Bank  v.  Marshall,  26 

?•").    The  conversion  of  state  into  111.  App.  440. 

national  banks  was   strongly  op-  14  Dallemand  v.  Odd  Fellows'  Sav. 

posed  because  the  state  derived  a  Bank,  74  Cal.  598. 

large  benefit  in  some  instances  from  15Spahr  v.  Farmers'  Bank,  94  Pa. 

those  banks.    Until  the  national  434.    This  was  a  case  of  an  original 

banking  law  was  supplemented  by  usurious  note  taken  up  by  renew- 

the  state  bank  tax,  there  was  little  als,  which  passed  to  the  new  bank, 

success  in  the  national  banking  act.  The  indorser  was  not  permitted  to 

10  First  Comm.  Bank  v.  Talbert,  plead  the  usury  of  the  old  against 

103  Mich.  625.  the  new  bank. 


568  BANKS   AND   BANKING.  [§  319. 

the  affairs  of  the  old  bank,  even  though  the  new  bank  with 
the  same  name  as  the  old,  and  with  generally  the  same 
stockholders,  receives  bills  of  the  old  bank  and  pays  them 
out,  the  new  bank  does  not  become  responsible  for  all  the 
bills  of  the  old  bank,16  but  simply  those  very  notes  which 
were  received.17  A  depositor  in  the  old  bank  does  not  re- 
lease it,  unless  he  consents  to  the  change.18  Nor  does  a  cor- 
poration formed  by  the  consolidation  of  a  bank  with  another 
corporation,  where  trustees  are  appointed  to  wind  up  the 
affairs  of  the  bank,  become  liable  by  the  act  of  consolidation 
for  the  debts  of  the  bank  without  some  express  assumption 
of  the  debts.19 

§  319.  Forfeiture  of  charter. —  The  state  has  the  right 
to  forfeit  a  charter  either  for  failure  to  observe  the  law  in 
forming  the  corporation  or  for  acts  done  in  violation  of  law 
after  the  corporation  is  formed;  thus,  a  failure  to  pay  in 
the  capital  stock  as  required  by  law,1  or  any  other  failure  to 
observe  the  provisions  of  the  law  governing  the  formation 
of  the  corporation.  But  the  commoner  grounds  of  forfeiture 
are  those  based  upon  acts  done  by  the  corporation  after  the 
formation  thereof.  But  the  act  must  be  the  act  of  the  cor- 
poration. The  unauthorized  act  of  the  cashier  is  no  ground 

16  Bellows  v.   Hallowell  Bank,  2  tion  without  paying  value  there- 
Mason,  31.  for. 

17  Wyman  v.  Hallowell  Bank,  14  l  People  v.  City  Bank,  7  Colo.  226; 
Mass.  62.    It  is  needless  to  say  that  People  v.  Nat.  Sav.  Bank,  129  111. 
these  last  two  cases  were  not  cases  618.   Compare  Commercial  Bank  v. 
of  a  transformation  of  one  bank  State,  6  Smedes  &  M.  599,  which 
into   another  bank.    The   change  held  that  a  failure  to  sell  stock  on 
from  one  bank  to  another  does  not  account  of  non-payment  of  an  in- 
release  the  old  corporation  unless  stalment  thereon  was  not  a  ground 
the  creditor  consents.    Ray  v.  Bank  of  forfeiture.    Chief  Justice  Shar- 
of  Kentucky,  10  Bush,  344  key  found  himself  in  such  an  astoii- 

18  See  the  last  note.  ishing  state  of  mental  fog  that  he 

19  Donally  v.  Hearndon,  41  W.  Va.  held  that  the  state  by  suing  the 
519.    If  the  statute  or  agreement  corporation  in  quo  warranto  for  a 
imposes  a  liability  on  the  new  cor-  forfeiture  admitted  the  due  and 
poration,  the  rule  is  just  the  oppo-  regular  incorporation  of  the  bank, 
site.    So  it  is  if  the  new  corporation  This  error  was  not  indorsed  by  the 
receives  assets  of  the  old  corpora-  other  judges. 


§  319.] 


DISSOLUTION   AND    INSOLVENCY. 


5G9 


for  forfeiture.2  Nor  do  the  acts  as  to  which  a  discretion 
may  be  said  to  exist,  such  as  the  propriety  of  selling  stock 
for  a  failure  to  pay  assessments.8  The  grounds  of  forfeiture 
will  be  as  various  as  are  the  devices  of  men  to  escape  statutory 
restrictions  or  their  capabilities  in  the  way  of  poor  banking. 
But  the  corporation  by  abandoning  its  corporate  franchises 
and  surrendering  its  assets  certainly  incurs  a  liability  for 
forfeiture.4  Suph  ground  would  be  an  assignment  of  all  its 
effects  for  creditors,5  or  the  failure  to  hold  an  annual  elec- 
tion of  officers  for  five  years.6  Its  refusal  to  report  its  con- 
dition as  required  by  the  law,7  its  suspension  of  specie  pay- 
ments continued  for  a  long  period,  or  absolutely  and  gener- 
ally,8 but  not  a  suspension  for  a  short  period ; 9  exchanging 
bills  contrary  to  law;10  the  making  of  unauthorized  loans  by 


2  State  v.   Commercial  Bank,   5 
Smedes  &  M.  218. 

3  Commercial    Bank  v.  State,  6 
Smedes  &  M.  599. 

4  State  v.  Seneca  Co.  Bank,  5  Ohio 
St.  171. 

8  State  v.  Real  Estate  Bank,  5 
Ark.  595;  People  v.  Hudson  Bank, 
6  Cow.  217.  But  State  v.  Commer- 
cial Bank,  21  Miss.  569,  holds  that 
an  assignment  of  all  its  property  is 
not  sufficient,  and  that  the  bank 
must  reach  such  a  condition  that  it 
cannot  fulfill  its  purposes.  Capital 
and  assets  seemed  not  to  be  neces- 
sary to  a  bank  m  those  halcyon 
times  "  befo'  the  wall."  This  opin- 
ion is  the  joint  effort  of  Chief  Jus- 
tice Sharkey  and  another  judge. 
It  is  impliedly  reversed  in  the  next 
case  cited. 

6  State  v.  Commercial  Bank,  33 
Miss.  474 

7  State  v.  Seneca  Co.  Bank,  5  Ohio 
St.  171. 

8  State  v.  Real  Estate   Bank,  5 
Ark.  595;  State  v.  Commercial  Bank, 
50  Ohio,  535;  Commercial  Bank  v. 


State,  6  Smedes  &  M.  599;  State  v. 
Bank  of  South  Carolina,  1  Spears, 
433;  Planters'  Bank  v.  State,  7 
Smedes  &  M.  163.  Compare  State  v. 
Louisiana  Savings  Co.,  12  La.  Ann. 
568;  and  State  v.  Tombeckbee  Bank, 
2  Stew.  30,  is  contra.  Under  statutes. 
Bank  of  Circleville  v.  Iglehart,  6 
McLean,  568;  State  v.  New  Orleans 
Gas  Co.,  2  Rob.  (La.)  529;  Lockhart 
v.  U.  S.  Bank,  2  Ashm.  406;  Atcha- 
falaya  Bank  v.  Dawson,  13  La.  497. 
Payment  of  legal  tenders  was,  of 
course,  not  a  ground  of  forfeiture. 
Reynolds  v.  Bank  of  State,  18  Ind. 
467.  A  statute  might  require  specie 
payments  from  a  bank  chartered 
before  the  statute  was  passed. 
Commercial  Bank  v. State, 6  Smedes 
&  M.  599;  but  contra,  State  v.  Tom- 
beckbee Bank,  2  Stew.  30.  But  for- 
feiture statutes  are  not  retroactive. 
People  v.  Niagara  Bank,  6  Cow.  196. 

9  State  v.  Comrn.  Bank,  10  Ohio, 
535. 

!°  Bank  Comm'rs  v.  Buffalo  Bank, 
C  Paige,  497. 


570  BANKS   AND   BANKING.  [§  320. 

the  directors;11  the  contraction  of  debts  or  the  issuance  of 
bills  to  an  amount  greater  than  allowed  by  its  charter; 12  the 
declaration  of  large  dividends,  while  suspending  specie  pay- 
ments, or  the  embezzlement  of  special  deposits,13  have  been 
held  grounds  for  forfeiting  the  charter.  Insolvency  and  a 
refusal  to  pay  its  debts,  united  with  violations  of  its  char- 
ter,14 or  "gross  and  illegal"  mismanagement  under  a  stat- 
ute,15 or  without  a  statute,  are  sufficient  grounds  for  forfeit- 
ure. Usurious  agreements  have  been  held  to  be  no  ground 
for  forfeiture.16  Under  the  national  banking  act  forfeitures 
are  incurred  by  a  violation  of  the  various  provisions  of  law 
applicable  to  the  national  banks.17  The  act  charged,  what- 
ever it  may  be,  must  be  alleged,  as  to  national  banks,  to  have 
been  done  by  the  directors  or  with  their  knowledge.18  Stat- 
utes providing  for  forfeitures  do  not  apply  to  acts  done  be- 
fore their  passage,19  but  banks  may  be  required  to  make  their 
payments  in  specie,  though  chartered  before  the  passage  of 
the  law.20 

§320.  "Waiver  or  remission  of  forfeiture. —  Whenever 
a  forfeiture  has  been  incurred  it  may  be  remitted  by  the 
state  by  legislative  act,1  and  it  seems  by  borrowing  money 
from  the  bank  after  a  forfeiture  has  been  incurred.2  The 
forfeiture  for  insolvency  is  waived  where  the  bank  resumes 

11  See  last  case  and  State  v.  Sen-      18Trenholm  v.  Comm.  Nat  Bank, 
eca  Co.  Bank,  5  Ohio  St.  171.    But    38  Fed.  R  323. 

usurious  loans  were  not  ground  for  19  People  v.  Niagara  Bank,  6  Cow. 

forfeiture.    State  v.  Com  in.  Bank,  196. 

10  Ohio,  535.      Contra,  Common-  2°  See  note  8,  supra, 

wealth  v.  Comm.  Bank,  28  Pa.  383.  1  Bank  of  Missouri  v.  Bredow,  31 

12  State  Bank  v.  State,  1  Blackf,  Mo.  523;  Atchafalaya  Bank  v.  Daw- 
270.  son,  13  La.  497;  Nevitt  v.  Bank  of 

13  See  last  case.  Port  Gibson,  6  Smedes  &  M.  513; 

14  Attorney-General    v.    Oakland  State  v.  Bank  of  Charleston,  2  Mo- 
Co.  Bank,  Walk.  Ch.  90.  MuL  439. 

!5  Bank  Comm'rs  v.  Central  Bank,  2  State  v.  Real  Estate  Bank,  5 

5  R  I.  12.  Ark.  595.    This  seems  to  be  the 

16  See  note  10,  supra,  species  of  estoppel  noticed  by  the 

17  See  sec.  5239,  Rev.  Stat  United  States  Supreme  Court  in 

the  "  sugar  bounty  "  case. 


§  321.]  DISSOLUTION    AND   INSOLVENCY.  571 

payment  before  a  suit  is  begun.8  A  forfeiture  is  not  waived 
by  laches,4  but  the  limitation  as  to  a  suit  for  forfeiture  in 
the  case  of  a  national  bank  is  five  years.5  The  legislature 
may  suspend  proceedings  already  begun,  and  if  the  suspen- 
sion of  the  proceeding  is  conditional,  the  bank  by  perform- 
ing the  condition  has  contracted  with  the  state.6  The  court 
itself,  it  has  been  held,  may,  in  effect,  waive  the  forfeiture 
by  refusing,  in  its  discretion,  to  enforce  it.7 

§321.  Proceedings  to  forfeit. —  The  action  to  forfeit  a 
charter  is  an  action  at  law  on  behalf  of  the  state  in  a  direct 
proceeding  for  that  purpose  unless  a  different  procedure  is- 
fixed  by  statute.1  The  proceeding  is  of  a  civil  nature  and 
is  not  a  criminal  proceeding.2  The  courts  of  equity  have  no- 
power  to  dissolve  a  corporation,3  unless  the  power  be  given 
by  statute.4  An  ancillary  injunction  is  sometimes  permitted 
by  statute,5  and  in  the  nature  of  things,  if  the  state  could 
show  sufficient  grounds  therefor,  there  is  no  reason  why  it 
should  not  have  an  injunction  without  a  statute  from  a  court 

3  People  v.  Niagara  Bank,  6  Cow.    See    Commonwealth   v.   Bank    of 
196.     Contra,  Comm.  Bank  v.  State,    Mutual  Redemption,  86  Mass.  1. 

6  Smedes  &  M.  599.  2  Commercial  Bank  v.  Rodney,  4 

4  People  v.  Bank  of  Pontiac,  12  Smedes  &  M.  439.    Historically  this 
Mich.  527.  is  not  true  as  to  quo  warranto,  be- 

5  Welles  v.  Graves,  41  Fed.  R.  459.  cause  a  fine  could  be  imposed  as 

6  Long  v.  Farmers'  Bank,  1  Clark,  well  as  a  judgment  of  ouster  en- 
284.  2  Pa.  Law  J.  230.  forced.    The  proceeding  was  in  the- 

7  Bank  Commissioners  v.  Bank  of  name  of  the  sovereign  in  the  nat- 
Buffalo,  6  Paige,  497.  ure  of  a  writ  of  right  superseded 

1  Attorney-General    v.    Bank    of  by  information. 

Niagara,  Hopk.  Ch.  354;  Murphy  v.  3This  is  the  general  rule.    There 

Farmers'  Bank;  20  Pa.  415;  State  is  but  one  case  which  directly  holds 

Bank  v.  Snelling,  35  Mo.  190;  Hunt-  otherwise,  and  that  case  is  wholly 

ington  v.  Crescent  City  Bank,  18  unsound. 

La.  Ann.  350.    A  court  of  equity  4Such    statutes    are   numerous, 

has  no  such  power  except  by  stat-  See  note  1,  siipra;  and  se^  Mitchell 

ute.  Such  statutes  sometimes  make  v.  Bank  of  St.  Paul,  7  Minn.  252. 

an  injunction  a  dissolution  of  the  'Attorney-General   v.    Bank   of 

charter.    Wiswell  v.  Starr,  48  Me.  Chenango,  Hopk.  Ch.  596;  Cora  mon- 

401;  Dane  v.  Young,  61  Ma  160.  wealth  v.  Bank  of  Mutual  Redemp- 
tion, 86  Mass.  1. 


572 


BANKS    AND    BANKING. 


[§  322. 


of  equity  or  from  the  same  court,  where  the  equitable  and 
common-law  jurisdictions  are  amalgamated.6  Sometimes 
the  power  to  sue  for  a  forfeiture  is  given  to  bank  commis- 
sioners,7 but  under  one  act  it  was  held  that  the  court  on  the 
application  of  the  commissioners  was  given  no  power  to  ap- 
point a  receiver  or  to  grant  an  injunction  exparte  where  the 
statute  required  a  hearing.8  In  other  cases  trustees  or  com- 
missioners were  nominated  by  acts  of  the  legislature,  but 
their  powers  were  so  various  that  it  would  serve  no  useful 
purpose  to  review  these  decisions.9 

§  322.  Declaration  of  forfeiture. —  There  has  been  an 
instance  where  the  statute  itself  has  operated  to  declare  the 
forfeiture;1  but  the  forfeiture  under  statutes  which  define 
grounds  for  a  forfeiture  must  be  declared  by  a  court.2  Until 
that  declaration  no  one  can  plead  the  forfeiture  as  against 
the  bank.3  A  decree  finding  the  bank  insolvent  and  ap- 
pointing a  receiver  is  not  a  declaration  of  forfeiture.4  The 


6  This  is  a  very  old  proceeding 
in  chancery,  and  was   originally 
brought  by  information.    It  would 
remain  unless  abolished.     But  At- 
torney-General v.  Bank  of  Niagara, 
Hopk.  Ch.  354,  denies  this  on  the 
authority  of  Attorney-General  v. 
Utica  Ins.  Co.,  2  Johns.  Ch.  371. 

7  People  v.  Superior  Court,   100 
CaL  105;    Bank  Commissioners  v. 
Central  Bank,  5  R  L  112;   Bank 
Commissioners  v.  Bank  of  Buffalo, 
6  Paige,  497. 

8  Murray  v.  American  Surety  Co., 
70  Fed.  R  341,  44  U.  a  App.  43; 
People's    Sav.    Bank    v.    Superior 
Court,  103  CaL  27. 

9  See  Long  v.  Superior  Court,  102 
Cal.  449;    Saltmarsh    v.   Planters' 
Bank,  17  Ala.  761 ;  Jemison  v.  Plant- 
ers' Bank,  23  Ala.  168;  Savage  v. 
Walshe,  26  Ala.  619;    Atwood  v. 
€aldwell,    12    111.    96;    Morris    v. 
Thomas,  17  III  112;  Miners'  Bank 


v.  Thomas,  4  G.  Greene,  336;  Martin 
v.  Belmont  Bank,  13  Ohio,  250. 

1  Wilson  v.  Tisson,  12  Ind.  285. 
See    United   States   v.   Church,  5 
Utah,  361. 

2  Atchafalaya  Bank  v.  Dawson, 
13  La.  497;  Huntsville  Bank  v.  Mc- 

-Geehee,  1  Stew.  &  P.  306;  City 
Ins.  Co.  v.  Commercial  Bank,  68 
111.  348;  Union  Bank  v.  McDonald, 
15  La.  25;  Bank  of  Louisiana  v. 
Green,  20  La.  Ann.  214;  People  v. 
Bank  of  Pontiac,  12  Mich.  527; 
Montgomery  v.  Merrill,  18  Mich. 
338. 

3  Hughes  v.  Bank  of  Somerset,  5 
Litt.  45;  Farmers'  Bank  v.  Gasten, 
34   Mo.    119.     Contra,   North    Ma 
River  Bank  v.  Winkler,  33  Mo.  354 

«  Ahrens  v.  State  Bank,  3  S.  C. 
401;  Richards  v.  Attleborough,  148 
Mass.  187;  Central  Bank  v.  Con- 
necticut Life  Ins.  Co.,  104  U.  S.  54. 


§  323.] 


DISSOLUTION   AND   INSOLVENCY. 


573 


bank  still  has  a  corporate  existence.5  So,  under  the  national 
banking  act,  the  appointment  of  a  receiver  does  not  dissolve 
the  corporate  franchises.6  Suits  pending  against  the  bank 
are  not  affected  by  the  appointment,  except  that  the  receiver 
may  be  substituted.7  The  bank  may  be  sued  in  spite  of  the 
appointment  of  the  receiver.8 

§  323.  Effect  of  forfeiture  or  expiration  of  charter. — 

When  a  charter  has  been  duly  declared  forfeited,  the  bank 
has  no  longer  any  corporate  existence.  The  bank  only  has 
such  powers  as  are  given  to  it  by  the  statute.1  It  is  exactly 
the  same  with  the  expiration  of  the  charter  or  its  repeal.2 
Unless  the  statute  preserves  some  right,  all  debts  owing  to 
the  bank  are  extinguished  at  law,3  and  all  suits  pending 
against  the  bank  are  abated.4  But  where  the  statute  gives 
certain  rights  after  forfeiture  or  expiration  of  the  charter, 
the  corporation  may  exercise  them.5  Yarious  statutory 
schemes  of  liquidating  banks  and  various  special  acts  have 


6  It  may  be  sued.  Merchants'  Nat. 
Bank  v.  Gaslin,  41  Minn.  552.  See 
National  Bank  v.  Onondaga  Co. 
Bank,  7  Hun,  549.  And  see  cases 
in  last  note. 

6  Nat.  Pahquioque  Bank  v.  First 
Nat.  Bank,  36  Conn.  325;  First  Nat. 
Bank  v.  Nat.  Pahquioque  Bank,  14 
Wall.  383;  Chemical  Nat.  Bank  v. 
Hartford  Deposit  Co.,  161  U.  S.  1; 
Chemical  Nat.  Bank  v.  Hartford 
Deposit  Co.,  156  111.  522.    The  ap- 
pointment supersedes  the  power  of 
directors  to  carry  on  the  bank. 

7  See  cases  cited  in  last  note  and 
American  Bank  v.  Cooper,  54  Me. 
438. 

8  See  note  6,  supra,  as  to  national 
banks.    But  in   Maine   the   bank 
cannot  be  sued  after  a  receiver  is 
appointed.    Leathers  v.  Shipbuild- 
ers' Bank,  40  Ma  386. 

1  Smith  v.  Frye,  5  Cranch,  C.  C. 
515;  Folger  v.  Chase,  18  Pick.  63; 


Saltmarsh  v.  Planters'  Bank,  14 
Ala.  668;  Wilson  v.  Tesson,  12  Ind. 
285 ;  Cunningham  v.  Clark,  24  Ind.  7. 

2  Pomeroy  v.  State  Bank,  1  Wall. 
23;  Whitman  v.  Cox,  23  Me.  335; 
Merrill  v.  Suffolk,  31  Ma  57;  Bank 
of  Mississippi  v.  Duncan,  56  Miss. 
166;  Fox  v.  Horah,  1  Ired.  Eq.  358. 

3  Commercial  Bank  v.  Chambers, 
8  Smedes  &  M.  9;  Coulter  v.  Rob- 
ertson, 24  Miss.  278. 

<  Bank  of  U.  S.  v.  McLaughlin,  2 
Cranch,  C.  C.  20.  But  in  case  of 
national  banks  it  is  not  so.  Bank 
of  Montreal  v.  Fidelity  Nat.  Bank, 
1  N.  Y.  Supp.  852, 112  N.  Y.  667. 

6  It  may  defend  a  suit  (Pomeroy 
v.  State  Bank,  1  Wall.  23),  or  assign 
paper  (Hallowell  Bank  v.  Hamlin, 
14  Mass.  178).  And  see  also  Cun- 
ningham v.  Clark,  24  Ind.  7;  Folger 
v.  Chase,  18  Pick.  63;  Smith  v. 
Frye,  5  Cranch,  C.  C.  515. 


574  BANKS   AND   BANKING.  [§§  324,  325. 

been  passed.6  Trustees  are  sometimes  appointed  as  required 
by  the  statutes.7  In  the  case  of  national  banks  a  dissolution 
of  the  bank  by  a  decree  does  not  affect  a  pending  action.8 
But  a  judgment  of  forfeiture  and  appointment  of  trustees 
under  a  state  statute  vested  the  assets  in  the  trustees.9 

§  324.  Insolvency. —  A  bank  is  insolvent  when  it  is  un- 
able to  meet  its  obligations  out  of  its  assets  in  the  due  course 
of  business.1  A  general  suspension  of  specie  payments,  or 
notorious  and  continued  inability  to  pay  its  debts,  is  insolv- 
ency,2 but  not  necessarily  a  suspension  in  a  sudden  crisis.3 
When  a  bank  suspends  or  is  insolvent,  the  assets  are  not  so 
much  a  trust  fund  that  the  bank,  where  permitted  to  make 
such  an  assignment  at  all,  cannot  make  an  assignment  with 
preferences.4  But  an  assignment  for  creditors  or  a  suspen- 
sion is  proof  of  insolvency,  or  any  other,  admission  by  the 
corporation  of  insolvency,  even  though  the  assets  are  suffi- 
cient to  pay  all  the  debts  of  the  bank.5 

§325.  Assignments  for  creditors. —  There  is  no  doubt 
of  the  right  of  the  directors  of  a  bank  to  make  assignments 
for  creditors,  unless  such  an  act  be  forbidden  by  statute.1 

6  See  cases  cited  in  note  9  to  §  321,  i  See  §§  85,  90,  ante,  and  see  Har- 
ante.  manson  v.  Bain,  1  Hughes,  188;  Ex- 

7  See  People  v.  Ridgley,  21  111.  65;  change  Bkg.  Co.  v.  Mudge,  6  Rob. 
Commercial  Bank  v.  Chambers,  8  (La.)  387. 

Smedes  &  M,  9.    Unless  a  trustee  -Godfrey  v.  Terry,  97  U.  S.  171; 

or  receiver  be  appointed  within  the  In  re  Empire  City  Bank,  10  How. 

time  after  dissolution  by  forfeiture  Pr.  498. 

the  bank's  claim  is  extinguished  at  3  Livingston    v.    Bank   of    New 

law.    Conwell  v.  Pattison,  28  Ind.  York,  26  Barb.  304 

509.    See  Bank  of  U.  S.  v.  Leathers,  *  Catlin  v.  Eagle  Bank,  6  Conn. 

8  B.  Mon.  127.  233. 

8  Bank    of  Montreal  v.  Fidelity  8  Dodge  v.  Mastin,  17  Fed.  R.  6GO; 
Nat  Bank,  1  N.  Y.  Supp.  852,  112  State  v.  Mechanics'  Bank,  35  La. 
N.  Y.  667.    See   also   McCann    v.  Ann.  562. 

Rogers,  15  Ky.  Law  R.  127.   The  re-  1  Union  Bank  v.  Ellicott,  6  Gill 

ceiver  may  be  substituted  as  a  mat-  &  J.  363;  Town  v.  Bank,  2  Doug, 

ter  of  course.  530;  Chew  v.  Ellingwood,  86  Mo. 

9Nevitt  v.  Bank  of  Port  Gibson,  260;  Haxton  v.  Bishop,  3  Wend.  13; 

6  Smedes  &  M.  5ia  Farmers'  Bank  v.  Willis,  7  W.  Va. 


§  325.]  DISSOLUTION    AND    INSOLVENCY.  575 

There  is  also  no  doubt  of  the  bank's  right  to  prefer  creditors 
where  such  an  act  is  not  forbidden  by  statute.2  Whether 
such  preferences  are  valid  or  invalid  in  the  absence  of  a 
prohibitory  statute  must  depend  upon  the  rule  held  in  the 
particular  jurisdiction  as  to  such  assignments.  It  is  not  our 
purpose  to  examine  that  question,  nor  the  other  question  as 
to  whether  the  assignment  is  void.  But  there  are  two  cases 
peculiar  to  banking  law  which  ought  to  be  noticed.  A  bank 
on  the  eve  of  insolvency  extended  a  debt  owed  by  a  stock- 
holder by  taking  his  notes  due  in  two  and  three  years,  with 
the  president  of  the  bank  as  sole  surety.  The  act  was  held 
to  be  fraudulent,  and  that  the  bank  could  proceed  directly 
against  the  debtor  in  equity,  without  a  judgment  at  law  or 
a  garnishment.3  This  case  is  called  one. of  preference,  but 
it  is  really  an  act  to  hinder  and  delay  creditors,  and  there- 
fore a  fraudulent  conveyance.  In  another  case  it  was  held 
that  a  power  given  to  the  assignee  to  pledge  the  assets  of 
the  bank  did  not  render  the  assignment  fraudulent  at  law.4 
Certainly,  however,  such  a  power  would  be  void,  whatever 
might  be  held  .as  to  the  fraud  in  the  assignment.  Assum- 
ing, however,  that  the  assignment  is  a  valid  one,  a  court 
will  not  take  the  assets  from  the  assignee  and  give  them  to 
a  receiver  afterward  appointed.5  The  court,  however,  in 
the  exercise  of  a  chancery  jurisdiction,  might,  if  the  receiver 

81.    But  an  assignment  made  after  3  Bank  of  St.  Mary's  v.  St.  John, 

the  appointment  of  a  receiver,  or  25  Ala.  566. 

proceedings  therefor,  is  not  good.  4  Montgomery   v.    Galbraith,   11 

State  v.  Bank  of  New  England,  55  Smedes  &  M.  555.    The  reservation 

Minn.  139.    But   see,   in  Pennsyl-  of  a  surplus  after  paying  creditors 

vania,  In  re  Banking  Co.,  12  Phila.  is  lawful.     Dana  v.  Bank  of  U.  S., 

469.  5  Watts  &  S.  223. 

2  Preferences  may  be  either  ex-  5  Garden  City  Banking  Co.  v.  Geil- 

pressly    or    impliedly    forbidden,  fuss,  86  Wis.  616.    Under  some  stat- 

Compare  Dana  v.  Bank  of  U.  S.,  5  utes  the  approval  of  the  court  is 

Watts  &  S.  223;   Bank   Commis-  required  for  the  assignee's  appoint- 

sioners  v.  Bank  of  Brest,  Har.  100;  ment.    See  Ex  parte  Banking  Co., 

Shryock  v.  Bashore,  11  Phila.  565;  34  Leg.  Int.  204,  230,  12  Phila.  214, 
Exchange  Bank  v.  Knox,  19  Grat.  .  469.  When  approved  by  the  court, 

739,  semble;   Ex  parte  Con  way,  4  the  receiver  must  turn  over  the 

Ark.  302.  assets  to  the  assignee.    In  re  Union 


576  BANKS   AND   BANKING.  [§  325. 

was  appointed  and  the  assignee  an  improper  person,  substi- 
tute the  receiver  for  the  assignee,  even  though  the  assign- 
ment was  not  held  to  be  fraudulent.  But  if  the  assignment 
was  made  after  the  appointment  of  a  receiver  or  notice  of 
proceedings  therefor,  the  assignment  would  not  prevail.* 
The  assignment,  when  expressed  to  be  general,  will  convey 
all  property  of  the  bank,  though  it  be  not  mentioned  in  the 
schedule.7  It  transfers  all  the  property  of  the  bank,  though 
checks  are  outstanding  against  the  deposits,  whether  ac- 
cepted or  unaccepted;8  but  in  those  states  which  recognize 
the  presentation  of  a  check  as  a  sub  modo  assignment,  the 
situation  is  peculiar.  The  courts  speak  of  the  check  pre- 
sented, where  funds  are  to  the  credit  of  the  drawer,  as  an 
assignment  of  the  money.  If  that  were  true,  the  money  in 
the  bank  to  the  amount  of  the  check  belongs  to  the  holder 
of  the  check.  But  even  an  accepted  check  only  creates  the 
relation  of  debtor  and  creditor  between  the  bank  and  the 
check-holder  in  these  very  states.  So  the  relation  of  debtor 
and  creditor  must  exist  between  the  bank  and  the  check- 
holder  after  presentation.  Therefore  the  bank's  assignment 
would  transfer  the  money  in  the  bank  against  outstanding 
checks  in  those  states  which  speak  of  the  check  as  an  assign- 
ment.9 Under  the  national  bank  act  an  assignment  for 

Banking  Co.,  12  Phfla.  469.  A  stock-  check  dpes  not  appropriate  any  par- 
holder  may  be  assignee.    Creditors  ticular  portion  of  the  assets  or  ore- 
may  object,  but  cannot  appoint,  ate  a  special  deposit.    See  note  4 
News  v.  Shackamoxon    Bank,   16  to  §  163,  ante. 
Wkly.  Notes  Gas.  307.  9  This  reduces  the  check  to  an  as- 

6  State  v.  Bank  of  New  England,  signment  of  a  portion  of  a  credit, 

55  Minn.  139.  or  a  partial  assignment  of  a  chose 

7Eppright  v.  Nickerson,  78  Mo.  in  action.    This  whole  theory  of 

482.    This  is  the  general  rule.   This  the  states  spoken  of  above  seems 

particular  case  is  wrong  in  not  ad-  to  be  a  case  of  what  the  biologists 

mitting  that  the  schedule  is  a  part  call  reversion    to   an   antecedent 

of  the  deed.  type,  to  the  idea  that  a  depositor 

8  Coates  v.   First  Nat  Bank,  91  has  money  in  the  bank.    This  idea 

N.  Y.  20.    This  case  was  decided  on  is  noticed  in  daily  speech.    Thus, 

the  ground  of  an  assignment,  of  under  bequests  of  ready  money  or 

which  the  check  was  considered  money  on  hand,  credit  in  the  bank 

merely  a  voucher.    An  accepted  passes.    Langdale  v.  Whitefield,  2T 


§  326.]  DISSOLUTION   AND   INSOLVENCY.  577 

creditors  by  a  national  bank  is  a  vain  proceeding,  because 
the  comptroller  at  once  takes  possession. 

§  326.  Preferences. — A  preference  by  a  bank  in  an  assign- 
ment for  creditors  is  permissible,  unless  forbidden  by  law.1 
Such  is  the  great  weight  of  authority  in  spite  of  the  protests 
of  some  courts  and  text  writers.  But  preferences  may  be 
created  by  other  means  than  an  assignment  for  creditors 
general  in  its  nature.  Statutes  are  numerous  which  forbid 
any  preference  in  contemplation  of  insolvency.2  The  na- 
tional bank  act  has  fixed  the  rule  for  national  banks  that 
all  such  preferences  and  all  acts  that  amount  to  preferences 
are  void.  That  act  does  not  preserve  the  rights  of  lonafide 
transferees,  but  other  acts  do.3  There  is  no  question  under 
these  statutes  that  any  transfer  to  a  transferee  with  or  with- 
out notice  of  insolvency,  if  it  be  made  by  the  bank  with  an 
intent  to  prefer,  is  absolutely  void,4  and  if  void  the  assignee 
receives  no  title.*  Thus  transfers  to  a  director  by  the  bank 
for  his  stock  after  he  had  heard  rumors  of  insolvency  are 
void;6  or  transfers  to  a  creditor  not  in  the  ordinary  course  of 
business,  being  notice  to  him  from  the  nature  of  the  trans- 
action, are  void.7  Payments  to  depositors  or  others,  if  made 
in  the  regular  course  of  business  to  persons  who  have  no 

L.  J.  Ch.  795;  Stein  v.  Richardson,  5  Brighton  v.  White,  128  Ind.  320. 

37  L.  J.  Ch.  369.  6  Roan  v.  Winn,  93  Mo.  503.    In 

xRingo  v.  Trustees  of  Bank,  13  this,  case    there   was   no  statute. 

Ark.  563;  Arthur  v.   Commercial  Other  states  permit  a  preference 

Bank,  9  Smedes  &  M.  394;  Catlin  v.  to  a  director  under  some  circum- 

Eagle  Bank,  6  Conn.  233.    See  note  stances.    Thus  it  was  so  held  as  to 

2  to  §  325.  a  transfer  to  a  corporation  whose 

2  See  Gillett  v.  .Moody,  3  N.  Y.  479 ;  officer  had  knowledge.    O'Brien  v. 
Leavitt  v.  Tyler,  1  Sandf."  Ch.  207;  Bridge  Co.,  55  N.  Y.  Supp.  206. 
Hill  v.  Western  R.  Co.,  86  Ga.  284;  7  Atkinson  v.  Rochester  Printing 
Exchange  Bank  v.  Knox,  19  Grat  Co.,  114  N.  Y.  168;  Lamb  v.  Cecil,  25 
739.  W.  Va.  288.     A  transfer  to  secure 

3  See  Hill  v.  Western  R  Co.,  86  a  loan  to  a  creditor  without  knowl- 
Ga.  284.  edge  is  good  as  to  the  loan  though 

4  Case  v.  Citizens'  Bank,  2  Woods,  it  is  also  security  for  past  advances. 
23;  Nat.  Security  Bank  v.  Price,  129  Stapylton  v.  Stockton,  91  Fed.  R 
U.  S.  223;  Stone  v.  Jenison,  70  N.  326  (C.  C.  A.). 

W.  R.  149. 
37 


578  BANKS   AND   BANKING.  [§  326. 

notice  of  the  insolvency  of  the  bank,  are  not  preferential.8 
So  it  was  held  under  the  national  bank  act  even  where  the 
depositor  was  a  director.9  But  difficult  cases  arise  where 
"  runs  "  are  made  upon  banks.  The  very  fact  that  a  "  run  " 
is  made  is  proof  positive  that  doubts  as  to  the  solvency  of 
the  bank  are  abroad.  Every  depositor  who  draws  his  money 
does  it  because  he  thinks  the  bank  unsafe.  If  the  bank  fails, 
can  depositors  who  have  drawn  their  money  be  required  to 
repay  to  the  bank's  representative  on  the  ground  of  a  fraud- 
ulent preference  ?  The  bank  may  not  have  been  insolvent 
when  the  "  run  "  upon  it  began,  but  sometime  during  the 
course  of  the  run  the  bank  became  insolvent.  How  is  that 
particular  time  to  be  fixed  ?  Not  one  of  the  depositors  could 
say  that  he  had  no  notice  of  the  insolvent  condition,  and  he 
certainly  secured  his  deposit  in  contemplation  of  insolvency. 
The  question  is  one  of  the  greatest  difficulty.  This  much 
seems  plain.  If  the  bank  was  really  insolvent  when  the 
"run"  began,  all  payments  made  were  in  violation  of  the 
statute.  It  was  the  duty  of  the  bank  officers  to  close  its 
doors.  If,  however,  the  bank  was  solvent  when  the  "  run  " 
was  initiated,  the  fair  rule  would  seem  to  be  that  as  long  as 
the  bank  officers  keep  open  its  paying  teller's  window  and 
pay  checks  or  depositors,  relying  in  good  faith  upon  the 
bank's  capacity  to  withstand  the  "  run,"  all  payments  ought 
to  be  treated  as  payments  in  due  course  of  business  and  not 
preferential.10  The  last  depositor  paid  before  the  window 
was  closed  ought  to  be  in  the  same  condition  as  the  first 
depositor  paid  during  the  run.  But  all  payments  made  to 

"Dutcher  v.  Imp.  &  Trad.  Nat  S.   W.  R  439.    It.  was   curiously 

Bank,  59  N.  Y.  5;  Hayden  v.  Chem-  enough  held  that  a  transfer  by  a 

ical  Nat.  Bank,  84  Fed.  R  874  (C.  C.  cashier  and  a  stockholder  to  a  cred- 

A.),  a  transmission  of  remittances  itor  was  void  because  not  for  the 

in  ordinary  course  of  business.  And  benefit  of  all  the  creditors,  on  the 

see  McDonald  v.  Williams,  174  U.  S.  singular  ground  that  it  would  give 

397.  a  right  of  set-off  against  the  bank. 

•  Hayes  v.  Beardsley,  136  N.  Y.  Gatch  v.  Fitch,  34  Fed.  R  566.  The 

299.  decision  represents  an  aberration 

10  Stone  v.  Jenison,  70  N.  W.  R  of  an  exceedingly  able  lawyer. 
149.    See  also  McAfee  v.  Bland,  11 


§  327.]  DISSOLUTION    AND    INSOLVENCY.  579 

depositors,  upon  withdrawals  from  intimations  by  the  bank 
officers  are,  of  course,  fraudulent  preferences.  An  instance 
occurred  in  a  western  state  which  permits  preferences,  where 
a  bank  had  large  deposits;  all  the  bank  officers  as  well  as 
the  other  large  depositors  withdrew  their  deposits.  A.n 
assignment  was  then  made  and  the  bank  was  found  to  have 
but  nine  dollars  in  cash.  Yet,  miraculous  as  it  may  appear, 
no  one  was  sued  by  the  assignee.  The  small  depositors, 
with  but  few  exceptions,  bore  the  whole  loss.  One  of  the 
great  advantages  of  the  national  banking  system  is  that  such 
assignees  are  impossible.  The  excuse  of  an  assignee,  in  the 
above  case,  would  be  that  the  bank  could  prefer  creditors  in 
that  way  as  well  as  by  assignment. 

§  327.  Preferences  by  national  banks. —  Sections  5234, 
5236  and  5242  of  the  Eevised  Statutes  of  the  United  States 
forbid  preferences  by  insolvent  national  banks  and  require 
a,  pro  rata  distribution  of  its  assets  among  its  general  cred- 
itors after  prior  claims  are  satisfied.  Every  transfer  in  con- 
templation of  insolvency,  as  well  as  transfers  by  insolvent 
banks,  are  declared  void.  Insolvency  under  this  statute  is 
the  general  meaning  of  the  phrase,  not  such  an  act  alone  as 
gives  the  comptroller  the  right  to  close  the  bank.1  The 
bank  is  insolvent  when  it  is  reasonably  certain  that  it  must 
suspend.2  But  the  payment  to  a  depositor,  though  a  director, 
by  a  bank  insolvent,  though  long  before  suspension,  in  the 
ordinary  course  of  business,  has  been  held  to  be  no  prefer- 
ence.3 The  rules  governing  the  payments  to  depositors,  dur- 

1  Irons    v.    Manufacturers'   Nat.  be  fraudulent.    But  Stapylton  v. 
Bank,  6  Biss.  301.  Stockton,  91  Fed.  R.  326,  lends  some 

2  Roberts  v.  Hill,  24  Fed.  R.  571,  little  countenance  to  this  idea.  An 
which  was  a  rehearing  of  Roberts  Alabama  court  held  that  renewals 
v.  Hill,  23  Fed.  R.  311,  where  the  of  notes,  where  the  originals  were 
court  delivered  itself  of  the  fol-  not  given  up,  were  not  evidences  of 
lowing  astounding  proposition:  A  debt  under  the  statute.    First  Nat. 
transfer  of  collateral  to  prevent  Bank    v.    Johnston,  97    Ala,    655. 
a  failure  is  not  fraudulent,  even  "Hand    equidem    invideo,    miror 
though  the  bank  is  insolvent;  but  magis." 

a  transfer  in  order  to  keep  the  3  Hayes  v.  Beardsley,  136  N.  Y. 
securities  out  of  the  assets  would  299.  See  the  next  note. 


580  BANKS    AND   BANKING.  [§  327. 

ing  the  course  of  a  run,  would  be  those  stated  in  the  last 
section.  If  insolvency  actually  exists,  known  to  the  di- 
rectors, any  transfer  which  results  in  a  preference  is  con- 
clusively presumed  to  be  fraudulent.4  The  creditor's  igno- 
rance of  the  insolvency  is  immaterial.8  Thus,  a  clearing-house 
which  has  issued  loan  certificates  had  in  its  possession  paper 
for  collection  upon  which  it  had  no  lien  when  it  received, 
notice  of  the  bank's  insolvency.  It  also  held  what  might 
be  termed  due-bills  for  balances  on  settlements  for  former 
days  as  a  set-off  against  proceeds  of  collections.  It  natu- 
rally desired  to  offset  against  the  proceeds  of  collections  the 
due-bills  and  the  loan  certificates  which  the  insolvent  bank 
owed.  After  the  circuit  court  of  the  United  States  and  the 
circuit  court  of  appeals  had  both  entangled  themselves  in 
errors  upon  the  question,  the  Supreme  Court  held  that  the 
clearing-house  could  set  off  the  due-bills  against  the  pro- 
ceeds of  the  collections  made  after  notice  of  the  insolvency, 
but  not  the  loan  certificates.8  The  propriety  of  the  holding 
was  obvious,  but  the  diverse  rulings  of  the  lower  courts  show 
the  uncertainty  of  judicial  conclusions.  In  another  case  a 
certain  bank  used  a  second  bank  as  its  clearing  agent.  On 
Saturday  evening  the  directors  determined  to  close  the  first 
bank.  The  comptroller  appointed  a  receiver  at  ten  o'clock 
on  Monday  morning,  but  a  half  hour  before  that  time  the 
cashier  of  the  insolvent  bank  sent  to  the  clearing  agent  a 
lot  of  checks  and  drafts  and  its  check  for  its  deposit  with 
the  clearing  agent,  and  the  clearing  agent  sent  back  its  ne- 

4  Nat  Security  Bank  v.  Price,  129        6  Yardley  v.  Philler,  167  U.  S.  344, 
U.   S.  223.    Although  this  is  the  reversing  both  62  Fed.  R.  645,  and 
statement  of  this  case  a  late  decis-  58  Fed.  R  746.    The  case  of  Philler 
ion  of  the  court  should  be  con-  v.  Jewett,  166  Pa.  456,  is  distin- 
sulted.    It  seems  that  any  payment  guishable    because    the   clearing- 
made  while  the  bank  is  a  going  house  there  had  a  lien.    So  it  may 
concern,  in  the  due  course,  without  be  said  of  Philler  v.  Patterson,  168 
any  intent  to  prefer,  is  not  forbid-  Pa.  468.   But  it  may  be  said  that  the 
den.    See  McDonald  v.  Williams,  clearing-house    arrangement    was 
174  U.  S.  397.  made  because  the  bank  was  in  dif- 

5  Case  v.  Citizens'  Bank,  2  Woods,  ficulties,  and  hence  there  was  no- 
23.  tice  of  insolvency. 


§  327.]  DISSOLUTION   AND    INSOLVENCY.  581 

gotiable  certificate  for  the  amount.  At  the  time  the  clear- 
ing agent  held  the  first  bank's  certificate  of  deposit.  This 
attempt  to  give  the  clearing  agent  an  offset  against  its  cer- 
tificate in  the  hands  of  the  insolvent  bank  was  frustrated  by 
the  holding  that  it  was  an  attempt  to  fraudulently  prefer.7 
But  this  statute  does  not  invalidate  liens,  equities  or  rights 
between  parties  which  arose  prior  to  and  were  not  insti- 
tuted in  contemplation  of  insolvency;8  nor  does  it  in  validate 
a  set-off  which  another  bank  has  against  the  insolvent  bank.9 
It  has  been  held  that  security  given  to  protect  a  loan  which 
was  perfectly  legal  at  the  time  it  was  made  is  not  invali- 
dated though  the  creditor  knew  of  the  threatened  insolv- 
ency.10 This  ruling  can  be  justified  on  the  ground  that 
insolvency  was  not  certain ;  otherwise  it  gives  a  preference 
as  to  certain  assets.  Another  case  held  that  after  a  sus- 
pended bank  had  resumed  with  the  consent  of  the  comp- 
troller, and  in  order  to  lift  an  attachment  gave  a  bond  with 
sureties,  the  bank  transferring  property  to  the  sureties,  this 
preference  of  the  sureties  was  not  unlawful.11  The  fallacy 
of  this  case  is  that  the  attachment  was  not  good,12  and  the 
comptroller's  action  was  no  proof  that  the  bank  was  not  in- 
solvent. The  fact  is  that  this  statute  ought  always  to  be  so 
construed  as  to  defeat  any  inequality  among  creditors.  It 
is  the  duty  of  the  courts  to  be  exceedingly  vigilant,  and 
every  doubt  ought  to  be  resolved  against  the  creditor  who 
obtains  an  advantage.  Many  and  devious  will  be  the  ways 
in  which  it  will  be  attempted  to  avoid  this  statute,  for  even 
if  men  are  made  upright  some  of  them  are  capable  of  seek- 
ing out  "  many  inventions." 

'Nat.  Security  Bank  v.  Butler,  Bank,  41    Fed.  R  234;    Casey  v. 

129  U.  S.  223.    But  the  clearing  Credit  Mobilier,  2  Woods,  77. 

agent  ought  to  have  been  permitted  u  Price  v.  Coleman,  22  Fed.  R  694. 

to  set  off  the  first  bank's  deposit  12  It  was  against  a  national  bank, 

See  note  9  to  this  section.  which  is  protected  from  an  attach- 

8  Scott  v.  Armstrong,  146  U.  S.  ment  either  from  a  state  court  or 
499.  from  a  United  States  court    See 

9  In  re  Armstrong,  41  Fed.  R  381.    §  336,  post. 
10  Armstrong   v.    Chemical    Nat 


582  BANKS   AND   BANKING.  [§  328. 

§  328.  Receivers  or  trustees  for  state  bants. —  However 
a  receiver  or  assignee  or  trustee  may  be  appointed,  he  ac- 
quires title  to  the  bank's  assets.1  The  appointment  under  a 
statute  of  trustees,  the  appointment  of  an  assignee  by  deed 
in  trust  for  creditors,  or  the  appointment  of  a  receiver  by  the 
court,  are  all  methods  of  attaining  this  result.  The  suit  to 
secure  the  appointment  of  a  receiver  may  be  brought  by  a 
creditor  or  a  stockholder,  with  the  proper  averments  to  show 
the  necessity.2  The  bank  is  the  necessary  defendant ;  the 
officers  need  not  be  made  parties.3  Where  the  suit  is  by  a 
creditor,  it  is  on  behalf  of  all  other  creditors,4  and  after 
other  creditors  have  come  in  the  plaintiff  cannot  discontinue 
the  suit  without  their  concurrence.5  Only  one  suit  of  the 
kind  can  be  maintained;  other  creditors  must  come  into 
that  particular  suit.6  Sometimes  a  judgment  at  law  must 
have  been  obtained  and  at  other  times  not.7  The  control- 
ling statute  determines  this  fact.  Where  the  stockholders 
sue  for  a  receiver  on  account  of  corporate  mismanagment, 
they  must  show  their  inability  to  obtain  relief  in  the  corpo- 
ration itself.8  But  if  the  suit  is  for  the  purpose  of  winding 
up  the  corporation,  or  of  obtaining  the  stockholders'  liabil- 
ity, the  suit  will  not  be  brought,  except  by  a  creditor.  In 

1  Nevitt  v.  Bank  of  Port  Gibson,       4  See  §  86  et  seq.,  ante. 

6  Smedes  &   M.  513;    Haxton  v.  5  Atlas  Bank  v.  Nahant  Bank,  23 

Bishop,  3  Wend.  13;   De  Wolf  v.  Pick.  480. 

Sprague  Mfg.  Co.,  11  R  L  380.  But  SHurlbut  v.  Kelley,  62  Wis.  590. 
in  some  states  he  holds  only  an  Compare  Palmer  v.  Bank  of  Zum- 
equitable  title.  Chicago  Co.  v.  brota,  65  Minn.  90.  A  special  pro- 
Park  Nat.  Bank,  44  III  App.  150;  cedure  is  sometimes  given  by  stat- 
Crews  v.  Farmers'  Bank,  31  Grat  ute.  SeelnreShackamoxonBank, 
348.  4  Pa.  Co.  Ct  R  194;  Tefft  v.  North 

2  See  §  86,  ante.  River  Bank,  14  N.  Y.  Supp.  8. 

3  But  in  practice  they  will  al-  7  See  g  86  et  seq.,  ante.    Compare 
ways  be  made  parties,  because  re-  Am.  Sav.  Ass'n  v.  Bank,  65  Minn, 
lief  will  be  asked  against  them.  139. 

When  the  right  to  a  receiver  arises  8  This  rule  is  embodied  in  the 
upon  insolvency,  the  bank  is  the  ninety-fourth  equity  rule  of  the 
only  necessary  defendant  Attor-  United  States  Supreme  Court.  Use- 
ney-General  v.  Columbia  Bank,  1  ,  lessness  of  such  an  application  is 
Paige,  51 L  an  excuse  for  not  making  it 


§  329.]  DISSOLUTION   AND    INSOLVENCY.  583 

such  a  suit  where  a  receiver  is  appointed,  it  is  really  imma- 
terial as  to  the  defendants  who  are  served  whether  the  suit 
for  the  stockholders'  liability  should  be  brought  by  the  cred- 
itors or  the  receiver.  The  relief  is  granted  in  the  one 
action.  Where  a  receiver  may  be  sued  for  by  a  state  officer, 
such  as  an  auditor  of  state,9  or  bank  commissioners,10  the 
courts  are  not  ousted  of  their  jurisdiction  to  grant  a  receiver 
on  the  application  of  creditors  or  stockholders.11  A  receiver 
may  be  appointed  by  the  court  ex  parte^-  where  the  stat- 
ute does  not  require  notice.13  Where  there  is  no  corporate 
management u  or  where  the  corporation  is  dissolved,15  a  re- 
ceiver is  appointed  as  a  matter  of  course.  Where  two  courts 
attempt  to  appoint  receivers,  the  right  depends  upon  the 
priority  of  judicial  action.16  The  number  of  receivers  is  dis- 
cretionary with  the  court.17  If  he  acts,  his  failure  to  take 
an  oath  is  no  bar  to  his  action.18  The  payment  allowed  for 
his  services  is  to  be  determined  by  the  responsibility  as- 
sumed, the  skill  and  labor  expended  and  the  rate  of  com- 
pensation usually  allowed  for  services  of  a  like  character.19 
His  bond  is  liable  for  his  defaults.20 

§  329.  Bights  of  receivers  or  trustees  of  state  banks. — 

The  rights  of  an  assignee  in  insolvency  are  determined  by 
the  deed  of  assignment  unless  a  statute  controls  his  action. 

9  Dickerson  v.  Cass  Co.  Bank,  64       w  See  United  States  v.  Church,  5 
N.  W.  R  395.  Utah,  361,  136  U.  S.  1. 

10  People's  Sav.  Bank  v.  Superior      16  People  v.  Central  City  Bank,  53 
Court,  103  Cal.  27;  Bank  Commis-    Barb.  412. 

sioners  v.  Bank  of  Buffalo,  6  Paige,  "Wiswell  v-  Starr,  50   Me.  381, 

497;  Bank  Commissioners  v.  Cen-  under  a  statute;  but  the  rule  is  the 

tral  Bank,  5  R  L  12.  same  without  a  statute. 

"Dickerson  v.  Cass  Co.  Bank,  64  18  Day  ton  v.  Borst,  7  Bosw.  115. 

N.  W.  R  395.  w  Bank  Comm'rsv.  Franklin  Sav. 

»  Warren  v.  Fake,  49  How.  Pr.  430.  Inst.,  11  R  L  557. 

13  People's  Sav.  Bank  v.  Superior  20  But  only  for  the  original  ap- 
Court,  103  Cal.  27.    Compare  Mur-  pointment,  where  the   bond  was 
ray  v.  Am.  Surety  Co.,  70  Fed.  R  executed  for  that  purpose.    Gov- 
341.  ernor  v.  Bowman,  44  III  499;  Qov- 

14  Day  ton  v.  Borst,  7  Bosw.  115;  ernor  v.  Lagow,  43  III  134 
Dobson  v.  Simonton,  78  N.  C.  63. 


584:  BANKS   AND   BANKING.  [§  329. 

A  receiver  upon  his  appointment  takes  the  title  that  the 
bank  possessed,  no  more  and  no  less.1  But  where  a  fraudulent 
conveyance  has  been  made  by  the  corporation  or  a  fraudu- 
lent preference  has  been  given,  the  receiver  may  sue  to  set 
it  aside.2  "Where  the  statute  forbids  preferences  by  an  in- 
solvent bank,  the  receiver's  title  is  superior  to  an  attach- 
ment levied  while  the  bank  was  insolvent.8  It  would  also 
be  an  unlawful  preference.4  The  receiver  will  not  be  es- 
topped by  the  fact  that  he  has  paid  part  of  the  claim  with- 
out knowledge  thereof.5  He  becomes  an  assignee  of  the 
assets,6  and  represents  both  the  bank  and  its  creditors.  He 
may  revive  a  judgment  in  favor  of  the  bank  though  a  for- 
feiture has  been  decreed.7  He  may  sue  upon  the  note  of 
directors  given  to  the  bank  to  replace  reduced  capital.8  He 
supersedes  the  officers  of  the  bank  in  the  management  of 
it,9  and  may,  of  course,  be  substituted  in  all  actions  pending 
against  the  bank.10  He  is  entitled  to  seek  the  advice  of  the 
court,11  and  one  case  has  held  that  he  can  transfer  the  as- 
sets of  the  bank  in  payment  of  claims  against  it.12  There  is 

1  Casey    v.    Credit    Mobilier,    2  Bank,  7  Met.  340;  Arnold  v.  Wei- 
Woods,  77;  Lincoln  v.  Fitch,  42  Me.  mer,  40  Neb.  216.    Foreign  receiv- 
456;  Hubbard  v.  Hamilton  Bank,  ers  are  not  protected  against  at- 
7  Met.  340;  Bank  of  Lyons  v.  Dun-  tachment.    Hibernia  Nat.  Bank  v. 
more,  Hill  &  D.  Supp.  398.  Lacombe,  84  N.  Y.  367. 

2  Carey  v.  Giles,  10  Ga.  9;  Casey        5  Lamb  v.  Cecil,  25  W.  Va.  288. 
v.  Cavaroc,  96  U.  S.  467;  Lamb  v.        6  Bradford  v.  Jenks,  2  McLean, 
Cecil,  25  W.  Va.  288.    These  two  130.    Holders  of  notes,  on  the  other 
cases  were  suits  by  the  assignee,  hand,  are  not  assignees.    Wood  v. 
There  is  some  authority  to  the  ef-  Dummer,  3  Mason,  308. 

feet  that  an  assignee  cannot  sue  to  7  Robertson  v.  Agricultural  Bank, 

set  aside  the  assignor's  fraudulent  28  Miss.  237. 

conveyance.    Leavitt   v.   Yates,  4  8  Sickles  v.  Herold,  36  N.  Y.  Supp. 

Edvr.  Ch.  139;  Atkinson  v.  Roch-  488. 

ester  Printing  Co.,  114  N.  Y.  168.  9This  follows  from  the  order  ap- 

8  Crane  v.  Pacific  Bank,  106  Cal.  pointing  the  receiver. 

64    Compare  New  Orleans  Imp.  Co.  10  This  is  usually  upon  motion  in 

v.  Citizens'  Bank.  10  Rob.  (La.)  14  the  action. 

But  contra,  Dodson  v.  Wightman,  "In  re  Van  Allen,  37  Barb.  225; 

49  Pac.  R.  790  (Kan.  App.) ;  and  see  People  v.  St.  Nicholas  Bank,  76  Hun, 

cases  in  the  next  note.  522. 

4  But  see  Hubbard  v.  Hamilton  12  Atkinson  v.  Davidson,  2  Pin.  48. 


§  330.]  DISSOLUTION   AND   INSOLVENCY.  585 

one  other  species  of  claim  which  a  receiver  may  sue  for  under 
some  statutes,13  while  under  other  systems  he  cannot.14  It 
is  useless  to  seek  to  reconcile  the  decisions  upon  this  subject, 
but  the  clear  weight  of  authority  is  that  the  stockholders' 
liability  belongs  to  the  creditors,  and  a  receiver  without  an 
express  statute  or  a  fair  implication  from  a  statute  cannot 
sue  for  this  liability.15  But  since  this  liability  will  not  be 
enforced  except  when  the  bank  is  insolvent,  and  since  the 
rule  of  equality  ought  to  prevail  among  general  creditors, 
the  rule  ought  to  be  that  the  receiver  can  sue.  Yet  in  those 
states  which  permit  a  creditor  to  sue  a  stockholder  at  law 
and  gain  a  preference,  this  suit  by  the  receiver  cannot  well 
be  allowed.16  But  in  all  those  jurisdictions  which  permit 
or  require  a  suit  for  the  stockholder's  liability  only  in  equity, 
where  all  the  creditors  and  stockholders  are  parties,  the  re- 
ceiver and  no  one  else  ought  to  be  permitted  to  bring  the 
action.17  And  this  may  be  said  to  be  the  general  trend  of 
the  cases 

§  330.  Right  of  set-off  as  to  insolvent  bank. —  The  de- 
positor's right  of  set-off  has  already  been  noticed,1  as  well  as 
the  bank's  right  against  the  depositor.2  The  debtor  to  the 

13  See  §  65,  ante,  note  1.    The  case  be  achieved  by  a  suit  in  equity 
of  Steinke  v.  Loof  bourrow,  54  Pac.  against  all  the  stockholders,  except 
R.  120,  is  a  good  instance  of  the  un-  that  non-resident  stockholders  can- 
certainty  of  the  statute  law.    It  not  be  reached  in  this  way.    See 
held  that  under  the  Iowa  statute  Howarth  v.  Ellwanger,  86  Fed.  R. 
the  receiver  could  not  sue,  yet  at  54. 

about  the  same  time  the  Supreme  16  Both  a  suit  at  law  and  an  equi- 

Court  of  Iowa  held  that  he  could  table  action  are  possible  in  Massa- 

sue.    State  v.  Union  Stock  Yards  chusetts  as   alternative  remedies. 

Bank,  70  N.  W.  R.  752.    See  also  Stebbins  v.  Scott,  52  N.  E.  R.  535. 

Howarth  v.  Ellwanger,  86  Fed.  R.  Equity  has  the  jurisdiction  without 

54  (C.  C.  A.);  Watterson  v.  Master-  the  aid  of  a  statute, 

son,  15  Wash.  511 ;  Ueland  v.  Hau-  17  This  is  to  be  understood  with 

gan,  73  N.  W.  R.  169.  the  qualification  that,  if  the  receiver 

14  See  §  65,  ante,  note  1,  and  cases  will  not  sue,  the  creditors  may  in 
cited  in  Steinke  v.  Loofbourrow,  equity.    Anderson  v.  Seymour,  73 
supra.  N.  W.  R.  171. 

15  See  §  65,  ante,  note  L    But  at  '  See  §  144,  ante. 
the  same  time  the  same  result  can  2See  §  140,  ante. 


586  BANKS    AND   BANKING.  [§  330. 

bank  may  set  off  against  his  debt  owing  to  the  bank  any 
claim  due  to  him  at  the  time  of  insolvency,3  but  not  any 
claims  purchased  by  him  after  insolvency.4  In  equity  he 
may  set  off  any  claim  owned  by  him,  but  not  matured  at  the 
date  of  insolvency,5  but  the  debtor  has  no  right  of  set-off 
upon  an  unliquidated  demand.6  A  claim  for  pay  for  services 
rendered  the  bank  is  a  good  ground  of  set-off.7  The  state 
may  set  off  taxes  due  to  it  against  its  debt  to  the  bank.8 
The  debtor  or  his  surety  may  set  off  against  his  check  upon 
another  bank,  cashed  Toy  the  insolvent  bank,  an  unpaid  draft 
given  for  it,9  or  his  balance  in  the  bank  agreed  by  him  to 
be  appropriated  to  the  debt.10  A  bank  holding  a  cashier's 
check  upon  the  insolvent  bank,  though  only  for  collection, 
may  set  it  off  against  its  debt  to  the  insolvent  bank.11  Cer- 
tified or  accepted  checks  would  no  doubt  be  a  good  set-off.12 
In  a  few  states  where  the  holder  of  a  check  can  sue  upon  it 
after  presentation,  when  the  drawee  has  sufficient  funds,  a 
holder  of  a  presented  check  would  probably  have  the  right 
to  set  it  off.13  But  in  those  states  holders  of  unpresented 

3  Fennell  v.  Nesbit,  16  B.  Mon.  351 ;        9  Armstrong  v.  Warner,  49  Ohio 
Salladin  v.  Mitchell,  43  Neb.  859.    St.  376. 

See  Jackson  v.  Bank  of  Paterson,  1  10  Chase  v.  Petroleum  Bank,  66  Pa. 

Stockt.  205.  169. 

4  Smith  v.  Mosby,  9  Heisk.  501;  n  Farmers'  Dep.   Bank    v.   Penn 
Colt  v.  Brown,  12  Gray,  233;  Davis  Bank,  123  Pa.  283.    The  bank  as 
v.  Knipp,  92  Hun,  297;  In  re  Middle  bailee  had  the  right  to  recover  the 
Dist.  Bank,  1  Paige,  585.    One  case  whole  amount.    See  the  case   of 
allows  a  set-off  where  the  claim  Shryock  v.  Brashore,  33  Leg.  Int.  56, 
was  assigned  to  the  debtor  after  as  to  the  effect  of  notice  of  the  in- 
suspension.     Beers    v.    Hussey,   1  solvency  of  the  drawing  bank  upon 
Bailey,  Eq.  168.    It  is  wrong.  a  bank  draft.    It  becomes  a  check 

5  In  re  Middle  Dist  Bank,  1  Paige,  revoked. 

585;   Arnold  v.  Nies,  36  Leg.  Ink  12  Such  a  check  has  become  a  debt 

437;  Jones  v.Robinson,  26  Barb.  310;  of  the  bank,  but  the  holder  must 

and  see  §  144,  ante,  have  had  it  at  the  date  of  the  bank's 

6  In  re  Van  Allen,  37  Barb.  225.  suspension. 

7  Davis  v.  Industrial  Mfg.  Co.,  114  13  The  theory  is  that  so  much  of 
N.  C.  321.  the  deposit  as  the  check  represents 

8Common wealth  v.Pbcenix  Bank,    passes  to  the  holder  upon  presenta- 
11  Met.  129.  tion.  See  §  147,  ante.  Whether  the 


§  330.] 


DISSOLUTION   AND   INSOLVENCY. 


587 


checks,  perhaps,  and  in  all  the  other  jurisdictions,  including 
the  United  States  courts  in  those  very  states,  holders  of  un- 
accepted or  uncertified  checks  cannot  set  them  off  against 
the  bank's  claim.14  Under  the  national  banking  act  a  set- 
off  does  not  create  an  illegal  preference,  even  if  the  claim 
against  the  bank  is  unmatured.  The  highest  authority  has 
permitted  an  equitable  set-off  where  the  bank  while  insolv- 
ent discounted  a  note  and  placed  the  proceeds  to  the  credit 
of  the  discounter;  the  depositor  was  allowed  a  set-off  for  the 
balance  of  his  deposit,  though  the  bank's  debt  against  him 
was  not  matured.15  But  even  if  the  depositor's  claim  were 
not  connected  with  the  bank's  claim,  he  would  none  the  less 
have  an  equitable  set-off.16  But  the  claim  must  have  be- 
longed to  the  debtor  at  the  date  of  the  suspension  of  the 
bank.17  Ko  demand  for  the  set-off  prior  to  bringing  the 
cross-suit  is  needed  where  the  bank  has  suspended.18  The 
debtor  who  is  entitled  to  a  set-off,  but  pays  the  bank's  claimr 
may  recover  his  demand  in  full,  where  he  paid  under  pro- 


courts  of  Illinois  will  hold  that  the 
holder  of  an  unpresented  check  gets 
no  right  of  set-off  no  one  can  say 
•with  certainty  on  account  of  the 
language  which  that  state's  courts 
hold  in  regard  to  the  check  being 
an  assignment  at  law.  If  it  is,  then 
the  right  of  set-off  arises  because 
the  check  holder  owned  the  claim 
at  the  date  of  insolvency  if  he  then 
had  the  check.  But  imagine  for 
one  moment  the  iniquitous  result. 
A  man  with  a  large  deposit,  who 
has  suspicions  of  the  bank,  can  give 
checks  upon  the  bank  to  the  bank's 
debtors,  who  can  set  them  off 
against  their  debts  to  the  bank, 
thus  enabling  themselves  to  pay 
him  for  the  checks  their  face  value. 
In  this  way  he  would  get  a  full 
preference.  The  courts  must  there- 
fore hold  that  unpresented  checks 
are  not  subjects  of  set-off  by  the 


check  holder,  nor  are  presented 
checks  when  the  holder  or  the 
drawer  has  notice  of  insolvency. 

14  The  holder  has  no  right  of  ac- 
tion against  the  bank,  and  hence 
he  could  not  have  set-off. 

15  Scott  v.  Armstrong,  146  U.  S. 
499,  reversing  36  Fed.  R.  63. 

i«Yardley  v.  Clothier,  51  Fed.  R, 
506,  3  U.  S.  App.  207;  Adams  v. 
Spokane  Drug  Co.,  57  Fed.  R.  888; 
Clots  v.  Bentley,  5  Alb.  Law  Jour. 
286;  Mercer  v.  Dyer,  15  Mont  317. 

I'Venango  Nat.  Bank  v.  Taylor, 
56  Pa.  14;  Beckham  v.  Shackelford, 
8  Tex.  Civ.  App.  660.  In  this  case 
the  receiver  allowed  the  set-off,  and 
the  debtor  gave  up  his  security. 
Contra,  Davis  v.  Knipp,  92  Hun, 
297. 

is  Chemical  Nat  Bank  v.  Bailey, 
12  Blatch.  480. 


588  BANKS   AND   BANKING.  [§  331. 

test.19  The  bank  has  a  right  of  set-off  for  a  bill,  whose  pro- 
ceeds represented  the  claim  of  an  insolvent  depositor,  where 
the  receiver  of  the  bank  had  obtained  the  bill  after  the  in- 
solvency of  the  depositor.20 

§  331.  Allowance  and  payment  of  claims. —  It  is  usual, 
after  a  trustee  or  a  receiver  is  in  possession  of  the  assets  of 
the  bank,  for  such  officer  to  advertise  the  time  for  the  pres- 
entation of  claims.  But  he  may  pass  upon  claims  before 
the  date  fixed  in  the  notice;1  nor  does  one  who  has  failed 
to  present  his  claim  within  the  time  lose  it,  where  he  has 
been  guilty  of  no  laches;2  but  he  loses  his  right  if  the  fund 
is  distributed  and  he  had  knowledge  of  the  proceedings,3 
although,  in  the  absence  of  a  statute  preventing  such  action, 
he  could  still  sue  the  bank,  if  it  had  a  corporate  existence. 
The  claim  may  be  filed  in  the  action  wherein  the  receiver 
is  appointed.4  The  claim  of  a  debtor  is  a  single  one  in  the 
sense  that  he  cannot  claim  the  right  to  have  two  claims 
allowed  for  the  same  claim,  and  have  dividends  upon  each 
until  he  has  received  enough  to  satisfy  the  claim.5  Yet,  if 
he  holds  collaterals,  he  is  entitled  to  the  allowance  of  his 
whole  claim,  without  regard  to  payments  received  by  him 
upon  the  collaterals,  whether  before  or  after  the  insolvency." 
He  is  entitled,  of  course,  to  but  one  satisfaction,  and  the  re- 
oeiver  may  redeem  the  collaterals  if  they  are  more  than  suf- 

"  In  re  Bank  of  Minnesota,  73  N.  6  Merrill  v.  National  Bank,  173 

W.  R  1096.  U.  S.  181;  In  Matter  of  Bates,  118 

*>  Robinson  v.  Hawes,  20  N.  Y.  84.  111.  524;    Chemical  Nat   Bank  v. 

1  Bissell  v.  Heath,  98  Mich.  472.  Armstrong,  59  Fed.  R  372,  16  U.  S. 

2  Glenn  v.  Farmers'  Bank,  80  N.  C.  App.  465,  reversing  50  Fed.  R  798; 
•97.  People  v.  Remington,  121  N.  Y.  336; 

3  Glenn  v.  Farmers'  Bank,  84  N.  C.  Bank  v.  Haug,  47  N.  W.  R  33.  Con- 
631.  tra,  First  Nat.  Bank  v.  Williamson, 

*  Blake  v.   State  Sav.   Bank,  12  35  S.  W.  R  573.    Here  the  creditor 

Wash.  619.    This  decision  is  wholly  had  his  principal  claim,  and  also 

wrong  as  an  authority  on  the  loss  collateral  notes,  indorsed  by  the 

of  the  deposit  in  the  insolvent  bank  bank;  he  claimed  dividends  on  the 

by  mingling.    See  §  344,  post.  principal  debt  and  on  the  collat- 

9Latimer  v.  Wood,  73  Fed.  R  erals. 
1001,  36  U.  a  App.  581. 


§  331.]  DISSOLUTION    AND   INSOLVENCY.  580 

ficient.7  Or,  if  two  corporations,  both  insolvent,  are  liable 
upon  the  same  claim,  the  holder  may  receive  dividends  from 
both  corporations  until  he  receives  one  satisfaction.8  But 
where  the  claim  has  been  actually  satisfied  by  a  recovery 
of  a  judgment  against  a  bank  officer  and  a  satisfaction 
thereof,  the  claim  is  not  entitled  to  allowance.9  Officers  of 
the  bank 10  or  stockholders ll  holding  claims  may  share  in 
the  distribution  for  claims  which  they  hold.  But  a  claim 
based  upon  an  ultra  vires  sale  by  a  stockholder  of  his  stock 
to  the  bank  is  not  entitled  to  allowance.12  Stockholders 
who  have  paid  off  depositors  are  entitled  to  be  subrogated 
to  the  depositors'  rights,13  and  even  though  they  bought  up 
claims  at  a  discount,  they  may  share  in  the  distribution  for 
the  face  value  of  claims,14  although,  of  course,  such  claims 
would  not  be  a  good  set-off  for  their  stockholders'  liability, 
except,  perhaps,  to  the  amount  of  dividends  upon  them.15 
The  allowance  of  a  claim  does  not,  of  course,  satisfy  it  or 
change  its  nature.16  The  creditor  by  submitting  his  claim 
has  been  held  to  waive  the  right  to  raise  a  question  as  to  the 
constitutionality  of  the  appointment  of  the  receiver  or  as- 
signee.17 If  the  claim  is  disallowed  by  the  receiver  the 
holder  may  contest  the  matter  in  the  same  action,18  or  may 
sue  the  bank  if  it  has  any  legal  existence,19  or  may  sue  the 
receiver.20 

7  In  the  Matter  of  Bates,  118  111.  13  City  Bank  v.  Grassland,  65  Ga. 

524.  734. 

«  Bank  v.  Kendrick,  92  Tenn.  437.  14  Appeal  of  Craig,  92  Pa.  396. 

9Dobson  v.  Simonton,  95  N.  C.  15This  would  be  possible  in  an 

312.  equity  suit,  where  the  judgment 

10  In  re  Insurance  Co.,  9  Lane.  Bar,  could  be  so  drawn.    It  would  be 

119.  impossible  at  law. 

"In  re  Humboldt  Trust  Co.,  3  16 Warrensburg  Asso.  v.  Zoll,  83 

Pa  Co.  Ct.  R.  621.    The  agent  of  Mo.  94. 

the  shareholders  of  a  national  bank  17  Dowd  v.  City  Bank,  59  N.  H. 

cannot  set  off  against  the  pledgee  391. 

of  stock  of  a  shareholder  the  stock-  18  Citizens'  Sav.  Bank  v.  Ingham, 

holder's  indebtedness.    McConville  98  Mich.  173. 

v.  Means,  21  Wkly.  Law  Bui.  193.  19See  §  317,  ante. 

12  In  re  Columbian  Bank,  147  Pa.  20  See  §  323,  ante. 
422. 


590  BANKS    AND   BANKING.  [§  332. 

§  332.  Holders  of  notes  of  the  bank. —  The  vicissitudes 
of  holders  of  the  notes  of  insolvent  banks  in  the  days  of  state 
banks  of  issue  form  a  melancholy  chapter  in  the  history  of 
state  banks.  Owing  to  what  may  be  termed  an  inherent 
defect  in  the  article,  they  were  in  a  state  of  chronic  insolv- 
ency. Sometimes  the  holders  of  their  notes  were  given  a 
preference  upon  insolvency.1  At  other  times  they  were  not 
entitled  to  share  in  the  assets  because  the  notes  were  se- 
cured.2 Stockholders  with  bills  were  in  the  same  situation 
as  other  bill  holders.3  The  bank  was  compelled  in  some  way 
to  redeem  its  notes,  yet  some  cases  permitted  the  notes  to  be 
charged  against  the  bank  only  for  the  amount  that  was  paid 
for  them  by  the  holder.4  If  the  note  holder  escaped  this 
calamity  he  was  likely  to  find  that  the  assets  of  the  bank 
had  been  appropriated  by  the  state  for  trustees  to  admin- 
ister upon.  It  is  true  that  he  could  follow  these  assets  into 
the  hands  of  the  trustees,5  and  that  he  would  not  be  preju- 
diced by  the  state's  attempted  embezzlement.6  But  the  notes 
became  worthless  upon  insolvency.  They  could  not  be  sold 
to  debtors  of  the  bank,  because,  whether  transferred  after 
insolvency  or  not,  they  were  not  a  set-off  against  the  as- 
signees in  insolvency 7  or  against  the  receiver,  except  by  stat- 

1  Moses  v.  Ocoee  Bank,  1  Lea,  398;        5Ringo  v.  Real  Estate  Bank,  13 
Woodward  v.  Central  Bank,  4  Ga.     Ark.  563. 

323;  Miller  v.  Andrews,  3  Cold.  380;        6  Barings  v.  Dabney,  19  Wall  1. 
Robinson  v.  Bank  of  Darien,  18  Ga.        7  Eastern    Bank    v.    Capron,    22 

65;  In  re  Pennsylvania  Bank,  39  Pa.  Conn.  639;  Ringo  v.  Biscoe,  13  Ark. 

103.     But  this  preference  did  not  563  (see  29  Am.  Law  Rev.  94,  459); 

apply  to  voluntary  assignments  by  Northampton  Bank  v.  Winder,  3 

the  bank.    Dobbins  v.  Walton,  37  Clark,  284;  In  re  White  Mountain 

Ga.  614.     In  another  state  there  Bank,  46  N.  H.  143.    And  compare 

was    no    preference.      Cochituate  Commercial  Bank  v.  Thompson,  7 

Bank  v.  Colt,  1  Gray.  382.  Smedes  &  M.  443;  Clarke  v.  Haw- 

2  People  v.  Holmes,  3  Mich.  544.  kins,  5  R.  L  219;  Fanners'  Bank  v. 
See  Appeal  of  Hogg,  22  Pa.  479.  Willis,  7  W.  Va.  31;  Gee  v.  Bacon, 

s  Belcher  v.  Willcox,  40  Ga.  391.  9  Ala.  699.   But  under  statutes  they 

4  Griffin  v.  Central  Bank,  3  Ga.  were  held  to  be  a  set-off  against 

371;  Belcher  v.  Willcox,  40  Ga.  391 ;  the  assignee  and  sometimes  with- 

Robson  v.  Benton  Banking  Co.,  7  out  the  aid  of  a  statute.    Robinson 

Smecles  &  M.  724.  v.  Bank  of  Darien,  18  Ga.  65;  Morse 


§  333.]  DISSOLUTION   AND   INSOLVENCY.  591 

ute.  But  if  the  note  holder  was  indebted  to  the  bank,  by  the 
aid  of  a  statute  he  could  set  off  the  notes  which  he  held  as 
against  the  bank,8  provided  he  owned  them  at  the  date  of  in- 
solvency, except  in  one  state,  which  held  that  the  set-off  was 
not  permissible  in  spite  of  the  statute,  because  all  creditors 
should  be  placed  on  an  equality.9 

§  333.  Receivers  of  national  banks. —  The  national  banks 
are  governed  by  the  provisions  of  the  national  banking  act, 
with  the  amendments  thereto.  Whenever  a  national  bank 
has  failed  to  make  specie  payments  upon  its  notes  or  has 
become  insolvent,  the  power  is  given  to  the  secretary  of 
the  treasury,  exercised  in  fact  through  the  comptroller  of 
the  currency,  to  take  possession  of  the  bank  by  a  receiver. 
This  power  has  been  frequently  decided  to  be  not  a  power 
granted  to  the  comptroller  to  perform  a  judicial  act,  so  that 
the  Supreme  Court  of  the  United  States  has  peremptorily 
refused  to  reopen  the  question.1  This  proceeding  may  be 
obviated  where  the  capital  is  simply  impaired  by  the  im- 
position of  a  voluntary  assessment  upon  the  stockholders, 
wherein  the  assessment  is  collectible  only  by  a  forfeiture  of 
the  shares  of  stock.2  The  sale  of  the  stock  is  void  unless  it 
brings  the  amount  of  the  assessment.3  Another  method  of 
meeting  losses  would  be  a  reduction  in  the  capital  stock, 
which  has  been  frequently  resorted  to  in  order  to  obviate  an 
assessment.  But  where  the  comptroller  decides  that  the 

v.  Chapman,  24  Ga.  249;  Belcher  v.  v.  Rosevelt,  9  Cow.  409;   Mann  v. 
Willcox,  40  Ga.  391  (for  what  was  Blount,  65  N.  C.  99;  Clarke  v.  Haw- 
paid  for  them  by  the  holder);  Dun-  kins,  5  R.  I.  219. 
lap  v.  Smith,  12  111.  399;  Exchange  9  Exchange    Bank    v.    Knox,  19 
Banking  Co.  v.  Mudge,  6  Rob.  (La.)  Gratt.  739. 

397;  Union  Bank  v.  Ellicott,  6  Gill  1  Bushnell  v.  Leland,  164  U.  S.  684, 
&  J.  363.    In  Mel  v.  Holbrook,  4  citing  the  former  cases. 
Edw.  Ch.  539,  the  set-off  was  al-  2  This  assessment  is  under  section 
lowed  for  the  same  notes  the  debtor  5205,  Revised  Statutes.   The  direct- 
received  for  his  note.  ors  cannot  levy  it.    Hulitt  v.  Bell, 

8  Williams  v.  Planters'  Bank,  12  85  Fed.  R.  98. 

Rob.  (La.)  125;  American  Bank  v.  3  Merchants'  Nat  Bank  v.  Foucho, 

Wall,  56  Me.   167;    Mandeville  v.  103  Ga.  851. 
Bracy,  31  Miss.  460:  Niagara  Bank 


592  BANKS   AND   BANKING.  [§  334: 

bank  is  insolvent,  his  decision  is  conclusive.4  The  bank- 
ruptcy law  formerly  in  force  did  not  apply  to  national  banks.* 
The  power  of  the  comptroller  to  appoint  a  receiver  applies 
to  the  cases  specified  in  the  national  banking  law  and  no 
others.6  But  the  courts  may  appoint  receivers  at  the  suit  of 
either  the  stockholders  or  creditors,  and  where  a  receiver 
has  been  appointed  the  comptroller  cannot  appoint  another.7 
A  state  court  may  appoint  a  receiver  at  the  suit  of  a  creditor, 
although  the  stockholders  are  applying  for  an  appointment 
in  the  federal  court.8  The  appointment  of  the  receiver  by 
the  comptroller  is  presumed  to  be  made  by  the  secretary  of 
the  treasury.9 

§  334.  Effect  of  appointment  of  receiver  of  national 
bank. —  The  appointment  of  the  receiver  does  not  dissolve 
the  corporation.  The  bank  may  be  sued l  without  joining 
the  receiver,2  but  he  may  be  substituted  and  then  the  bank 
becomes  merely  a  nominal  party.3  But  the  receiver  maybe 
sued  also  with 4  or  without  the  bank  being  joined.5  But  he 
supersedes  the  officers  of  the  bank  in  its  management,  and 
the  title  to  all  the  assets  of  the  bank  vests  in  him.6  He  may 

<Cadle  v.  Baker,  20  Wall  650;  (C.  C.  A.).    See  Wolf  v.  National 

Washington  Nat.  Bank  v.  Eckels,  Bank,  178  111.  85. 

57  Fed.  R.  870.  «  Grant  v.'Spokane  Nat.  Bank,  47 

8  In  re  Manufacturers'  Nat  Bank,  Fed.  R.  673.    He  is  entitled  to  be 

5  Biss.  499.  substituted.  Sioux  Falls  Nat.  Bank 

6  Irons    v.    Manufacturers'   Nat  v.  First  Nat  Bank,  6  Dak.  113.  This 
Bank,  6  Biss.  301;  Wright  v.  Mer-  case  was  reversed  in  Thompson  v. 
chants'  Nat.  Bank,  1  Flip.  568.  Sioux  Falls  Nat  Bank,  150  U.  S.  231, 

7  Harvey  v.   Lord,  11  Biss.   144  but  affirmed  upon  this  point    Den- 
Compare  Wash.  Nat.  Bank  v.  Eckels,  ton  v.  Baker.  79  Fed.  R.  189. 

57  Fed.  R.  870.    The  appointment  « Green  v.  Walkill  Nat  Bank,  7 

may  be  ex  parte.    Ell  wood  v.  First  Hun,  63. 

Nat  Bank,  41  Kan.  475,  unless  a  8  Turner  v.  First  Nat  Bank,  36- 

statute  forbids  it  Iowa,  562. 

8  Merchants'    Bank    v.    Masonic  6  First  Nat  Bank  v.  Pahquioque 
Hall,  63  Ga.  549.  Bank,  14  Wall.  383.    In  some  juris- 

9  Price  v.  Abbott,  17  Fed.  R.  506.    diotions  he  sues  as  assignee  in  the 
1  See  §  322,  ante,  note  6.  name  of  the  assignor.    Chicago  Co. 
*  Denton  v.  Baker,  79  Fed.  R.  189    v.  Park  Nat  Bank,  44  III  App.  150. 


§  334.] 


DISSOLUTION   AND   INSOLVENCY. 


593 


sue  upon  them  in  his  own  name,7  or  he  may  use  the  name  of 
the  bank.8  He  succeeds  to  all  the  bank's  rights  of  action,9 
including  the  rights  of  the  bank  to  sue  its  officers  for  negli- 
gence in  the  management  of  its  affairs,10  as  well  as  for  viola- 
tions of  the  national  banking  law.11  But  a  cause  of  action 
which  belongs  to  a  creditor  or  person  who  has  been  defrauded 
by  the  officers  of  the  bank  he  has  no  concern  with  and  can- 
not release.12  It  was  formerly  erroneously  decided  that  he 
alone  could  sue  for  the  negligence  of  the  directors,13  or  for 
violations  of  the  banking  law,14  but  that  idea  has  been  thor- 
oughly exploded,  and  a  creditor  on  behalf  of  all  may  sue  in 
equity,  where  he  refuses  to  bring  the  action.15  The  lawful- 
ness of  his  appointment  cannot  be  questioned  by  a  debtor16 
or  by  the  stockholders.17  He  may  enforce  the  statutory  lia- 
bility of  the  stockholders  by  a  suit,  either  against  them 
singly18  at  law,  or  in  equity  against  all  of  them.19  The 
amount  of  the  assessment  upon  the  stockholders  is  deter- 
mined by  the  comptroller,20  but  a  court  having  acquired  ju- 


But  in  others  he  has  the  legal  title. 
Haxton  v.  Bishop,  3  Wend.  13;  De 
Wolf  v.  Sprague  Mfg.  Co.,  11  R  L 
380. 

'First  Nat.  Bank  v.  Pahquioque 
Bank,  14  Wall.  383. 

8  Case  last  cited. 

9  Case  v.  Berwin,  22  La.  Ann.  321; 
Movius  v.  Lee,  30  Fed.  R.  298. 

MMovius  v.  Lee,  30  Fed.  R.  298. 

11  Gerner  v.  Thompson,  74  Fed.  R 
125;  Hayden  v.  Thompson,  67  Fed. 
R273. 

12  Barnes  v.  Pogue,  29  Wkly.  Law 
Bui.  382.  This,  of  course,  is  correct 
because  this  right  of  action  never 
belonged  to  the  corporation.    The 
court's  reasoning  in  the  case  shows 
no  proper   understanding   of  the 
principle  involved. 

13  Howe  v.  Barney,  43  Fed.  R  6G8. 

14  National  Ex.  Bank  v.  Peters,  44 
Fed.  R  13;  Bailey  v.  Mosher,  63 

38 


Fed.  R  488, 27  U.  S.  App.  339;  Gerner 
v.  Thompson,  74  Fed.  R 125.  Hayden 
v.  Thompson,  67  Fed.  R  273,  re- 
quired an  order  from  the  comp- 
troller to  the  receiver,  but  Hayden 
v.  Thompson;  71  Fed.  R  60,  was  con- 
trary thereto.  See  §  87,  ante.  All 
these  cases  are  no  longer  authority. 
See  next  note. 

18  Ex  parte  Chetwood,  165  U.  S. 
443;  Brinckerhoff  v.  Bostwick,  88 
N.  Y.  52.  If  creditors  have  begun 
suit  the  appointment  of  a  receiver 
does  not  supersede  it.  McElhanny 
v.  First  Nat.  Bank,  Fed.  Cas.  8779. 

i«Cadle  v.  Baker,  20  WalL  650; 
Platt  v.  Beebe,  57  N.  Y.  339. 

17  See  §  70,  ante.  Washington  Nat 
Bank  v.  Eckels,  57  Fed.  R  870. 

18  See  §  70,  ante. 

19  See  §  70,  ante. 

20  See  §70,  ante. 


594  BANKS   AND   BANKING.  [§  322. 

risdiction  for  the  appointment  of  a  receiver  may  proceed 
and  settle  up  all  the  affairs  of  the  bank  in  one  action.21  He 
is  an  officer  of  the  United  States,  and  hence  may  sue  in  the 
courts  of  the  United  States  without  regard  to  citizenship.22 
He  may  bring  an  action  without  any  authority  from  the 
comptroller.23 

§  335.  Claims  and  assets. —  All  the  property  of  the  bank 
at  the  time  of  its  suspension  becomes  fixed  as  a  fund  for  dis- 
tribution among  the  general  creditors.1  The  receiver,  acting 
for  the  comptroller,  allows  the  various  claims  or  disallows 
them,  as  he  deems  right.  If  he  allow  a  claim,  the  claim 
stands  upon  the  footing  of  a  judgment.2  All  other  judg- 
ments against  the  bank  for  money  are  upon  the  same  level.8 
If  he  disallow  a  claim,'  suit  may  be  brought  against  the  cor- 
poration4 or  against  the  receiver.5  If  judgment  be  recov- 
ered, the  judgment  should  direct  that  the  claim,  if  the  judg- 
ment is  for  money,  be  certified  to  the  comptroller,  not  that 
it  be  paid  by  the  receiver.6  But  the  claim  is  allowed  only 
for  its  amount  at  the  date  of  the  failure  of  the  bank,  not  at 
the  date  of  the  judgment.7  A  claim  for  a  special  deposit  is 

21  See  §  TO,  ante.  Bank    v.    Pahquioque    Bank,    14 

22  Price  v.  Abbott,  17  Fed.  R  506;    Wall.  383. 

Linn  Co.  Nat.  Bank  v. 'Crawford,  69  s  Turner  v.  First  Nat  Bank,  26 

Fed.  R  532;  Thompson  v.  Pool,  70  Iowa,    562.    The   creditor   is    not 

TTed.  R.  725.    And  see  §  350,  post,  estopped,  by  taking  a  dividend  on 

.upon  this  matter,  as  well  as  upon  claim  allowed,  from  suing  on  the 

his  right  to  transfer  a  suit  to  the  claim  disallowed.    Chemical  Nat, 

federal  court.  Bank  v.  World's  Columbian  Exp., 

23  See  §  87,  ante,  and  see  note  14  170  111.  82. 

to  this  section.  6 Merrill  v. 'First  Nat.  Bank,  75 

iBalch  v.Wilson,  25  Minn.  299;  Fed.  R   148  (C.  C.  A.).    See  Flint 

National  Bank  v.  Colby,  21  Wall  Road  Cart  Co.  v.  Stephens,  32  Mo. 

609.  App.  341,  for  a  preferred  claim. 

2 National    Bank   v.   Mechanics'  ?  White  v.  Knox,   111  U.  S.  784. 

Nat.  Bank,  94  U.  S.  437.  This  case  fully  justifies  Lord  Ba- 

3  Irons   v.    Manufacturers'    Nat.  con's  dictum  that  the  courts  are 
Bank,  27  Fed.  R  591.  sometimes    like   the   bush  where- 

4  Nat.  Pahquioque  Bank  v.  First  unto  the  sheep  flies  for  refuge,  but 
Nat  Bank,  36  Conn.  325;  First  Nat  is  sure  to  lose  a  large  part  of  his 

fleece. 


§  336.]  DISSOLUTION   AND    INSOLVENCY.  595 

a  provable  claim.8  A  demand  for  rent  accrued  before  the 
suspension  is  entitled  to  share  in  the  distribution.9  The 
creditor  is  entitled  to  prove  his  full  claim  without  regard  to 
any  collections  made  upon  collaterals.10  The  costs  of  the 
plaintiffs  in  a  creditors'  bill,  where  the  action  has  been  bene- 
ficial to  the  bank,  may  be  ordered  paid  by  the  receiver,11  but 
not  the  costs  of  a  reversal  obtained  by  them.12  But  the  re- 
ceiver cannot  contract  to  pay  part  of  a  recovery  as  an  at- 
rtorney's  fee  without  authority  from  the  court.13  He  cannot 
exchange,  barter  or  trade  the  assets  of  the  bank;14  he  may 
compromise  doubtful  claims  of  the  character  allowed  by 
statute  by  the  authority  of  the  court,15  but  if  the  debts  are 
not  doubtful  the  order  is  invalid  and  the  compromise  inef- 
fectual.16 But  a  compromise  will  not  be  disturbed  after  a 
long  lapse  of  time.17  Nor  can  the  receiver  agree  to  a  rescis- 
sion of  the  bank's  sale  of  its  own  stock,  even  though  the 
sale  were  fraudulent.18 

§336.  Preferences  and  attachments. —  The  strenuous 
efforts  made  by  the  New  York  courts l  to  maintain  their 
jurisdiction  over  a  foreign  corporation  doing  business  with 
citizens  of  the  state  caused  it  to  hold  that  a  national  bank 
before  insolvency  could  be  reached  by  a  writ  of  attachment, 
provided  it  were  solvent  at  the  time  of  the  levy;2  but  if  it 

8  Turner  v.  First  Nat.  Bank,  26  was  authorized  to  sell  and  dispose 
Iowa,  562.  of  assets. 

9  Chemical  Nat,  Bank  v.  Hartford  w  In  re  Platt,  Fed.  Gas.  No.  11,211. 
Deposit  Co.,  161  U.  S.  1.  i«  Price  v.  Yates,  Fed.  Gas.  No. 

10  Chemical  Nat.   Bank  v.   Arm-    11,418. 

strong  59  Fed.  R.  512,  16  U.  S.  App.  17  Henderson  v.  Myers,  11  Phila. 

465;  Merrill  v.  National  Bank,  173  616. 

U.  S.  131.    And  see  §  331,  note  6.  ^Wallace  v.  Hood,  89  Fed.  R.  11. 

11  McElhenny  v.  First  Nat.  Bank,  1  See  Bank  of  Montreal  v.  Fidel- 
Fed.  Gas.  No.  8779.    But  see  next  ity  Nat.  Bank,  1  N.  Y.  Supp.  852, 112 
note.  N.  Y.  667,  overruling  its  former  de- 

12  Irons  v.  Manuf.  Nat.  Bank,  36  cisions  in  accordance  with  Pacific 
Fed.  R.  843;  reversed,  121  U.  S.  27.  Bank  v.  Mixter,  124  U.  S.  721. 

13  Barrett  v.  Henrietta  Nat.  Bank,  2  Robinson  v.  National  Bank,  81 
78  Tex.  222.  N.  Y.  385;   People's  Bank  v.  Me- 

14  Ellis  v.  Little,  27  Kan.  707.    He  chanics'  Nat  Bank,  62  How.  Pr.  422 


596 


BANKS    AND    BANKING. 


[§  336. 


were  insolvent  at  the  date  of  levy  the  attachment  was  not 
good.3  Some  countenance  was  obtained  for  this  rule  by  ex- 
pressions of  the  Supreme  Court  of  the  United  States,4  but 
now  it  has  been  settled  that  an  attachment,  prior  to  final 
judgment,  against  a  national  bank  is  wholly  void,  whether 
the  process  is  issued  by  a  state  or  a  federal  court.5  Not  only 
is  this  true  of  a  direct  levy,  but  it  is  true  also  of  an  indirect 
levy  by  garnishment  upon  the  property  of  the  bank  not 
capable  of  manual  caption,6  although,  of  course,  the  national 
bank  can  be  garnished  for  its  debt  to  a  third  party.7  No 
jurisdiction  is  obtained  by  such  a  levy  against  a  non-resident 
national  bank  as  to  the  property  taken  under  attachment.8 
Being  void,  the  receiver's  title  is  not  affected  by  it.9  He 
need  not  move  to  set  the  attachment  aside ; 10  nor  will  a  levy 
be  enjoined,  because  there  is  no  necessity  for  injunction 
against  a  void  thing.11  Hence  no  preference  can  ever  be 
gained  as  against  a  national  bank  by  an  attachment.  Other 
fraudulent  preferences  given  by  national  banks  it  is  the 


(the  burden  being  on  the  assertor 
of  insolvency  to  show  it  clearly). 
Contra,  Cadle  v.  Tracy,  11  Blatch. 
101;  McDonald  v.  First  Nat.  Bank, 
41  III  App.  368.  One  case  errone- 
ously held  that  the  bank  waived 
the  right  to  object  by  traversing. 
Norris  v.  Merchants'  Nat.  Bank,  30 
EL  App.  54  New  York  held  that 
the  receiver  could  not  move  to  va- 
cate until  he  was  made  a  party  by 
order.  Tracy  v.  First  Nat.  Bank, 
37  N.  Y.  523.  But  the  code  changed 
this  rule.  National  Bank  v.  Me- 
chanics' Nat.  Bank,  89  N.  Y.  440. 

3  Market   Nat.  Bank   v.    Pacific 
Nat.  Bank,  93  N.  Y.  648;  Ray  nor  v. 
Pacific  Nat.  Bank,  93  N.  Y.  371. 

4  First  Nat  Bank  v.  Colby,  21 
Wall  609. 

»  Butler  v.  Coleman,  124  U.  S.  721, 
construing  §§  915  and  5242,  Revised 
Statutes;  Pacific  Nat  Bank  v. 


Mixter,  124  U.  S.  721;  Bank  of 
Montreal  v.  Fidelity  Nat  Bank,  112 
N.  Y.  667;  Planters'  Bank  v.  Colby, 
91  Ga.  264.  A  tax  levy  was  held 
void  as  against  an  insolvent  na- 
tional bank.  Woodward  v.  Ells- 
worth, 4  Colo.  580. 

6  Rosenheim  Co.  v.  Southern  Nat 
Bank,  46  S.  W.  R.  1026  (Tenn.);  Saf- 
ford  v.  First  Nat  Bank,  61  Vt  373. 

7Conway  v.  Schall,  42  Wkly. 
Notes  Gas.  328. 

8  Garner  v.  National  Bank,  66  Fed. 
R.  369.    Central  Nat.  Bank  v.  Rich- 
land  Nat  Bank,  52  How.  Pr.  136, 
is  an  instance  where   the   lower 
court  was  right 

9  But  it  may  be  set  aside.  Harvey 
v.  Allen,  16  Blatchf.  29. 

10  This  is  self-evident 
"  First  Nat  Bank  v.  La  Due,  89 
Minn.  415. 


§§  337",  338.]      DISSOLUTION  AND  INSOLVENCY.  597 

duty  of  the  receiver  to  bring  suit  to  set  aside.12  If  he  does 
not  do  so,  either  the  stockholders  or  the  creditors,  by  proper 
averment,  may  bring  the  action.13 

§  337.  Payment  of  interest. —  In  the  case  of  national 
banks  the  claims  draw  interest  from  the  date  of  the  suspen- 
sion of  the  bank,1  unless  they  are  interest-bearing  claims, 
when  doubtless  the  contract  would  govern  the  rate  of  inter- 
est. The  rule  in  regard  to  state  banks  is  the  same.  Certifi- 
cates of  deposit  and  all  other  demands  have  been  already 
noticed,2  except  bank  bills,  which,  it  has  been  held,  do  not 
draw  interest  from  the  date  of  a  general  suspension,  but  only 
from  the  date  of  a  demand  for  payment.3 

§  338.  Agent  succeeding  receiver  of  national  bank. — 

The  third  section  of  the  act  of  congress  of  June  30,  1876, 
provides  that,  when  the  receiver  has  fully  paid  all  the  claims 
against  the  bank,  the  assets  may  be  turned  over  to  an  agent 
nominated  by  the  stockholders.  This  agent  succeeds  to  all 
the  assets  of  the  bank  and  is  entitled  to-be  substituted  in 
any  pending  suit.1  He,  too,  is  an  officer  of  the  United  States 
in  the  same  sense  that  the  receiver  is.2  He  is  indictable 
under  the  laws  of  the  United  States  for  misappropriation  or 
embezzlement  of  the  assets  of  the  bank.3  If  the  sharehold- 

12  See  §  337,  ante,  and  note  15  to    Fowler,  10  Rob.  (La.)  196.    See  Att- 
§  334,  ante.  wood  v.  Bank  of  Chillicothe,  10 

13  The  stockholders   would  be    Ohio,  526. 

within  the  94th  equity  rule.    The  1  McConville  v.  Gilmour,  36  Fed. 

creditors  should  practically  allege  R.  277. 

the  same  facts  as  the  rule  requires.  2  Ex  parte  Chetwood,  165  U.  S. 

See  Ex  parte  Chetwood,  165  U.  S.  443. 

443.  3  United  States  v.  Jewett,  84  Fed. 

1  National    Bank   v.    Mechanics'  R.  142.    It  follows  that  a  receiver 
Nat.   Bank,  94  U.  S.   437.    But  a  would  also  be  indictable.    It  seems 
creditor  cannot  sue  the  comptroller  difficult  to  reconcile  the  statement 
for  this  interest.    Chemical  Nat.  contained   in  this  case  with  the 
Bank  v.  Bailey,  12  Blatch.  480.  doctrine  of  the  last  cited  case.  The 

2  See  §  159,  ante.  court  clearly  mistakes  the  sense  in 

3  Crawford  v.  Bank  of  Wilming-  which  the  word  "agent"  is  used  in 
ton,  61  N.  CT.  136;  Ringo  v.  Biscoe,  United  States   v.    North  way,  120 
13  Ark.  563;  Bank  of  Louisiana  v.  U.  S.  327. 


598  BANKS   AND   BANKING.  [§    339. 

ers  have  paid  an  assessment  upon  their  stock  to  the  comp- 
troller, and  the  assets  after  settlement  of  claims  against  the 
bank  have  been  turned  over  to  the  agent  of  the  stock- 
holders, a  shareholder,  who  has  become  such  by  a  purchase 
for  full  value  from  a  stockholder  who  had  failed  to  pay  his 
assessment,  is  not  entitled  to  share  in  the  assets  until  those 
who  have  paid  their  assessments  are  reimbursed.4  "When 
all  the  claims  against  a  bank  are  paid  the  stockholders  suc- 
ceed to  the  assets,8  but  not  until  that  time  are  they  entitled 
to  any  share  in  the  property  of  the  bank.6 

§339.  Priorities  among  creditors  and  claimants. —  It 

may  be  said  to  be  a  rule  without  exception  that  where  a 
creditor  enforces  his  claim  against  the  assets  of  an  insolvent 
bank,  he  can  gain  ho  priority  from  filing  the  suit  to  enforce 
his  claim.1  It  is  true  that  in  some  statutory  systems  the 
creditor  first  suing  at  law  a  stockholder  for  the  stockhold- 
er's liability  gains  a  preference  as  to  that  particular  stock- 
holder, but  in  such  a  case  it  is  needless  to  observe  the 
stockholder's  liability  is  not  an  asset  of  the  bank.  In  all 
cases,  however,  where  the  creditor  sues  in  equity,  he  must 
sue  on  behalf  of  himself  and  all  other  creditors  similarly 
situated,  whether  he  sues  to  enforce  a  claim  that  belongs  to 
the  bank,  such  as  the  right  to  pursue  the  officers  of  the 
bank,  or  a  claim  of  the  bank  against  third  parties,  or  the 
stockholders'  liability.  In  either  case  all  the  general  cred- 
itors are  upon  the  same  level.2  But  the  so-called  creditors 

4  Richardson  v.  Wallace,  39  S.  C.  of  course,  they  have  claims  as  cred- 
216.  itors  against  the  bank,  when  they 

5  Bacon  v.  Robertson,  18  How.  480.  come  in  as   creditors.    Appeal  of 
Lum  v.   Robertson,  6  Wall    277,  Craig,  92  Pa.  896. 

holds  the  same  doctrine  as  to  a  ju-  l  Irons    v.    Manufacturers'  Nat. 

dicial    forfeiture.      The  assets  be-  Bank,  27  Fed.  R  591. 

long  to  the  stockholders  subject  to  2  Richmond  v.  Irons,  121  U.  S.  27; 

the  payment  of  the  debts  of  the  Exchange  Bank  v.  Knox,  19  Grat 

bank.  739;  Marr  v.  Bank  of  West  Tennes- 

6  Hollister  v.   Hollister  Bank,  2  see,  4  Cold.  471 ;  Robinson  v.  Gard- 
Keyes,  245;  State  v.  Commercial  ner,  18  Grat.  509.    And  see  §§  61, 
State  Bank,  28  Neb.  677;  Dabney  65,  68,  69,  ante,  and  as  to  national 
v.  State  Bank,  3  &  C.  124.    Unless,  banks  see  §  70,  ante. 


§  340.]  DISSOLUTION    AND    INSOLVENCY.  599 

may  have  different  rights  as  against  the  bank.  Thus  the 
claimant  may  be  a  mere  general  depositor,  or  he  may  be  a 
special  depositor.  He  may  have  been  defrauded  of  his  prop- 
erty by  the  bank,  which  has  thus  become  a  trustee  for  him 
as  to  what  it  has  obtained.  The  bank  may  be  bailee  of  his 
property  by  reason  of  a  collection  having  been  intrusted  to 
it.  The  case  may  be  one  where  trust  funds  are  in  the  bank 
or  public  funds.  The  creditor  may  have  an  assignment  from 
the  bank  of  a  particular  fund  or  a  portion  thereof.  Special 
preferences  and  priorities  may  be  given  by  statute.  Each 
one  of  these  cases  causes  interesting  questions  of  law  to 
arise,  which  are  somewhat  difficult  of  settlement,  owing  to 
the  difficulty  of  tracing  the  claimant's  property  into  and 
separating  it  from  the  funds  of  the  bank.  It  will  be  found 
that  different  courts  have  made  wholly  diverse  rulings  upon 
these  subjects.  One  species  of  priority  has  already  been 
noticed,  that  of  set-off,  whereby  the  claimant  in  effect  ob- 
tains a  priority  by  gaining  the  right  to  have  his  claim  set- 
tled in  full.3  In  the  succeeding  sections  we  will  examine 
these  various  subjects. 

§  340.  General  creditors. —  Unless  a  system  of  preference 
is  established  by  statute  among  general  creditors,  all  those 
persons  between  whom  and  the  bank  the  relation  of  debtor 
and  creditor  exists  are  general  creditors.  In  a  peculiar  case 
it  was  held  that  creditors  of  the  bank  who,  after  the  bank 
went  into  voluntary  liquidation,  had  taken  paper  belonging 
to  the  bank  in  payment  of  their  claims  were  not  entitled  to 
share  in  the  assets,  because  the  bank  had  indorsed  the  paper; 
the  reason  of  the  decision  was  that  the  bank  has  no  such 
power.1  But  conceding  that  the  relation  of  debtor  and  cred- 

3  See  §  330,  ante.  Matthews  was  so  great  a  lawyer 
1  Richmond  v.  Irons,  121  U.  S.  27.  that  it  is  wonderful  to  find  him 
But  if  the  bank  took  the  benefit  of  writing  an  incorrect  opinion.  Per- 
the  transaction  it  ratified  the  trans-  haps  this  view  of  the  case  may  be 
action  as  a  whole;  the  plea  of  ultra  taken.  There  was  an  implied  pro- 
vires  was  bad.  Therefore  this  opin-  hibition  by  statute  and  therefore 
ion  is  wrong.  It  misses  wholly  this  the  contract  of  indorsement  was 
view  of  the  matter.  But  Stanley  actually  illegal  See  §  33,  ante. 


600  BANKS   AND   BANKING.  [§  340. 

itor  exists,  there  is  no  preference  among  such  creditors  upon 
the  assets.  This  principle  has  been  applied  in  many  ways. 
"Where  the  directors  of  a  bank  paid  into  it  a  large  sum  of 
money  to  enable  it  to  continue  business,  and  an  account  was 
opened  with  the  fund  in  the  name  of  trustees,  they  were  held 
to  be  mere  general  creditors.2  Where  a  deposit  is  rightfully 
made  by  a  trustee,  the  trustee  is  merely  a  general  creditor,3 
or  where  funds  are  rightfully  deposited  by  an  agent,  the 
agent  is  nothing  more  than  a  general  creditor.4  Public  funds 
properly  deposited  in  the  bank  give  no  preference;  the  pub- 
lic is  merely  a  general  creditor  through  the  officer  depositing 
the  money.5  Certificates  of  deposit  create  no  lien  upon  any 
portion  of  the  assets,6  even  though  the  banker  promised  to 
keep  the  funds  deposited  separate  from  the  other  funds  of 
the  bank.7  The  same  rule  applies  to  certified  and  accepted 
checks.8  So  collections  deposited  for  credit  when  collected 
and  credited  create  only  the  general  relation  of  debtor  and 
creditor;9  and  in  those  jurisdictions  which  hold  that  a  de- 
posit for  collection  is  a  purchase  by  the  bank,  as  soon  as  the 
deposit  is  credited  the  bank  becomes  a  debtor  to  the  depos- 
itor.10 General  depositors  in  an  insolvent  bank,  known  to 

2  Booth  v.  Wills,  42  Fed.  R.  11.  7  Bayor  v.  American  Trust  &  Sav. 

3  Fletcher  v.  Sharpe,  108  Ind.  276;  Bank,  157  111.  62.    The  court  here 
McAfee  v.  Bland,  11  S.  W.  R.  439;  says  that  the  plaintiff's  evidence 
Hawkins  v.  Cleveland  R.  R.  Co.,  89  was  perjured  and  then  proceeds  to 
Fed.  R.  266  (C.  C.  A.).  decide  the  case  on  the  theory  that 

4  Henry  v.  Martin,  88  Wis.  367.        it  was  true.    Such  a  performance 
8  In  re  West.  Ins.  Co.,  38  111.  289;    cannot  be  said  to  be  proper  for  any 

Otis  v.  Gross,  96  111.  612  (as  to  court  court. 

funds).      But  see    District  Tp.  v.  8  People  v.  St.  Nicholas  Bank,  77 

Farmers'  Bank,  88  Iowa,  194,  and  Hun,  159.    Or  checks  agreed  to  be 

State    v.    Thum,  55    Pac.    R.    858  accepted.    Citizens'  Bank  v.  Bank 

(Idaho).    In  this  case  it  will  be  no-  of  Greenville,  71  Miss.  271. 

ticed  that  the  syllabus  to  the  case  9  Commercial  Bank  V.Armstrong, 

made  by  the  court  itself  misses  the  148  U.  S.  50.    And  see  §  188,  ante, 

whole  point  of  the  decision.  Judges  for  a  full  consideration  of  this  ques- 

would  do  well  to  leave  this  matter  tion,  and  also  §  133.  ante. 

to  a  competent  reporter.  10  Lanterman  v.  Travous,  73  111. 

6  Bayor  v.  Schaffner,  51  III  App.  App.  670,  174  III  459;  Doppelt  v. 

180.    This  case  is  affirmed  in  the  National  Bank  of  Republic,  74  111. 

next  case  following.  App.  429, 175  111.  432.  This  latter  de- 


§  340.]  DISSOLUTION   AND   INSOLVENCY.  C01 

its  officers  to  be  insolvent,  are  not  necessarily  general  cred- 
itors.11 But  in  some  jurisdictions  they  are  held  to  be  when 
the  deposit  becomes  mingled  with  the  bank's  general  funds,12 
but  this  doctrine  is  a  mistake.13  But  general  depositors  in  a 
bank  not  known  to  its  officers  to  be  insolvent  are  of  course 
mere  general  creditors.14  So  banks  with  mutual  credits  or 
creditors  upon  open  account  are  mere  general  depositors.13 
Where  the  correspondent  bank  credits  proceeds  of  collec- 
tions to  the  bank  which  transmitted  the  paper  for  collection 
to  it,  the  relation  of  debtor  and  creditor  between  the  two 
banks  results.16  The  same  result  follows  where  the  bank 
transmitting  paper  for  collection  sends  it  to  the  bank  on 
which  the  paper  is  drawn,  and  the  latter  bank  credits  the 
transmitting  bank  and  charges  the  paper  against  the  draw- 
ers.17 Even  where  the  depositor  in  the  bank  obtains  a  draft 
from  the  bank  by  his  check,  and  the  draft  is  not  paid,  he  is 
merely  a  general  creditor.18  Thus,  it  will  be  seen  that  what- 
ever the  transaction  may  be,  if  the  money  or  thing  of  value 
received  by  the  bank  goes  rightfully  into  the  general  fund 
and  assets  of  the  bank,  the  relation  resulting  is  one  of  debtor 

cision  puts  the  case  on  the  ground  known  to  its  officers  to  be  insolv- 

that  the  correspondent  bank  was  ent. 

a  holder  for  value.    The  decision  of  15Faulker  v.  Union  Banking  Co., 

the  court  upon  the  point  in  the  6  Wkly.  Notes  Gas.  109.  Unless  the 

text  is  therefore  a  bald  dictum,  priority  is  given  by  statute.    In  re 

But  the  other  Illinois  cases  decide  Patterson,  18  Hun,  221, 78  N.  Y.  608; 

such  a  rule.    Craigie  v.  Hadley,  99  Rosenblatt  v.  Manufacturers'  Bank, 

N.  Y.  131.   But  if  the  bank,  on  fail-  69  N.  Y.  358. 

ure  of  the  collection,  can  charge  16See  §  189,    ante.     Commercial 

back  to  the  depositor  the  check  or  Bank  v.  Armstrong,  148  U.  S.  50; 

draft  not  collected,  what  situation  Bowman   v.    First    Nat.    Bank,  9 

is  the  depositor  in  ?  These  cases  do  Wash.  614;   Sunderlin  v.  Mecosta 

not  seem  to  comprehend  that  phase  Sav.  Bank,  74  N.  W.  R  478.    This 

of  the  question.  last  case  is  an  authority  for  the 

11  See  §  344,  post.  proposition  that  when  a  collection 

12  See  §  344,  post.  is  made  the  relation  of  debtor  and 

13  See  the  next  section  and  §  344,  creditor  results  as  to  the  depositor 
post.  for  collection. 

14  Deposits  in  insolvent  banks  are  17  See  §  189,  ante.    • 

trust  funds  only  when  the  bank  is       18  People  v.  Merchants'  Bank,  78 

N.  Y.  269. 


602  BANKS   AND   BANKING.  [§  341. 

and  creditor  and  the  claimant  becomes  a  general  creditor.19 
This  is  the  true  test  and  the  only  test  to  determine  the  rights 
of  the  creditor  as  to  a  priority. 

§  341.  Trust  funds  as  a  priority. —  As  we  have  already 
seen,  a  deposit  by  a  trustee  rightfully  made  in  the  bank 
makes  the  trustee  merely  a  general  creditor  of  the  bank.1 
But  a  man  may  be  a  trustee  because  he  is  acting  in  viola- 
tion of  the  rights  of  some  one  else,  and  the  result  as  to  the 
bank  is  quite  different  from  the  former  case.  The  bank,  of 
course,  may  act  upon  what  it  knows.  If  it  has  no  notice  of 
the  trust  character  of  the  fund  it  may  treat  the  depositor  as 
the  owner.2  But  if  it,  knowing  or  having  notice  of  the  trust 
character  of  the  fund,  or  knowing  or  having  notice  of  the 
fact  that  the  fund  is  the  property  of  some  one  else  than  the 
depositor,  acts  in  violation  of  the  rights  of  the  real  owner 
or  beneficiary,  it  becomes  itself  a  trustee.3  Again,  the  real 
owner  of  the  fund  cannot  be  made  a  depositor  against  his- 
will.4  A  rightful  trustee  with  the  legal  title  is  authorized 
to  deposit  the  money  to  his  credit  as  trustee,  bat  not  to  his- 
private  credit;5  hence,  if  the  bank  knowingly  permits  one 
'standing  in  a  fiduciary  relation  to  appropriate  the  trust 
fund  for  any  other  than  a  lawful  purpose,6  or  if  it  permits 
the  trustee  to  take  the  fund  for  his  private  benefit,7  or  if  it 
knowingly  appropriates  the  fund  in  violation  of  the  trust,8  it 
becomes  itself  a  trustee  for  the  amount  in  favor  of  the  bene- 
ficiary. If  it  has  the  means  of  knowledge  or  notice  that 
the  depositor  is  acting  in  violation  of  the  rights  of  one  who 
owns  the  fund  and  is  himself  a  constructive  trustee,  by 
permitting  or  assenting  to  the  act  it  becomes  itself  a  trustee 

19  If  a  general  deposit  is  created  4  State  v.  Midland  Sav.  Bank,  71 

and  the  depositor  by  fraud  is  in-  N.  W.  R  1011;  Winslow  v.  Harri- 

duced  to  let  his  deposit  remain,  he  man  Iron  Co.,  42  S.  W.  R.  698. 

is  a  general  creditor.     Venner  v.  *  It  is  a  wrongful  mingling. 

Cox,  35  S.  W.  R  769.  •  See  §  136,  ante. 

1  See  note  3  to  last  section.  7  See  §  136,  ante. 

2  See  g§  135  a*nd  136,  ante.  8See  §  136,  ante,  and  Am.  Trust 
'See  §  136,  ante.  Co.  v.  Boone,  29  S.  E.  R  182. 


§  341.] 


DISSOLUTION   AND    INSOLVENCY. 


coa 


ex  maleficio?  The  result  of  the  foregoing  facts  is  that  if  the 
money  came  rightfully  into  the  bank  as  a  general  deposit, 
by  paying  it  out  in  violation  of  the  trust  the  bank  becomes 
liable  to  the  beneficiary  in  the  same  "way  it  stood  liable  to 
the  trustee.10  But  if  a  constructive  trustee  who  is  himself 
acting  in  violation  of  the  rights  of  the  real  owner  deposits 
the  money  in  the  bank,  and  the  bank  receives  it  with  knowl- 
edge that  the  real  owner  of  the  fund  does  not  assent  to  or 
is  not  cognizant  of  the  deposit,  the  bank  itself  becomes  a 
trustee  ex  maleficio,  and  the  assets  of  the  bank  become  im- 
pressed with  a  charge  to  the  amount  of  the  trust  funds.11 
The  reason  of  the  rule  is  perfectly  plain.  The  money  of  the 
real  owner  went  to  swell  the  assets  of  the  bank.  The  bank 
knowingly  mingled  funds  of  which  it  was  a  trustee  with 
funds  which  it  owned,  and  hence  the  beneficiary  has  the 
right  to  have  the  whole  fund  impressed  with  a  trust  in  his 
favor.12  The  reasons  for  this  rule  will  be  found  fully  stated 


9  See  §136,  ante. 

10  That  is  to  say,  the  beneficiary 
has  only  the  claim  of  a  general 
creditor.    Ihe  bank  received  the 
fund  rightly  and  the  funds  did  not 
pass  into  the  assets  of  the  bank  as 
a  trust  fund.    The  claim  of  the 
beneficiary  is  only  a  claim  to  re- 
cover damages  for  a  breach  of  the 
trust. 

11  The  bank  knowingly  receives 
the  fund  in  violation  of  the  trust. 
It  is  in  the  same  position  as  any 
person  would  be  who  so  received 
money.    Central  Nat.  Bank  v.  Life 
Ins.  Co.,  104  U.  S.  54;  Van  Alen  v. 
American  Nat.  Bank,  52  N.  Y.  1; 
Knatchbull  v.  Hallett,  L.  R.  13  Ch. 
D.  696,  state  the  principle.    A  very 
excellent  article  on  the  subject  will 
be  found  in  2  Harv.  Law  Rev.  28. 

12  Myers  v.  Board  of  Education, 
51  Kan.  87;  Wasson  v.   Hawkins, 
59  Fed.  Rep.  233;  Massey  v.  Fisher, 
62  Fed.  R.  958;  Kimmelv.  Dickson, 


5  S.  D.  221;  Boyer  Ind.  Dist.  v. 
King,  80  Iowa,  497;  People  v.  City 
Bank,  96  N.  Y.  32;  Leonard  v.  Lat- 
timer,  67  Mo.  App.  138;  Stoller  v, 
Coates,  88  Mo.  514;  Harrison  v. 
Smith,  83  Mo.  210;  San  Diego  Co. 
v.  CaL  Nat.  Bank,  52  Fed.  R.  59; 
State  v.  Thum,  55  Pac.  R.  858;  In 
re  Johnson,  103  Mich.  109;  More- 
land  v.  Brown,  86  Fed.  R.  259; 
Windstanley  v.  Second  Nat.  Bank, 
13  Ind.  App.  544;  Anderson  v.  Pa- 
cific Bank,  112  Cal.  598;  Wallace 
v.  Stone,  107  Mich.  190;  Anheuser- 
Busch  Ass'n  v.  Morris,  36  Neb.  31 ; 
and  see  especially  for  the  principle 
the  splendid  judgment  of  Stanley 
Matthews  in  Central  Nat  Bank  v. 
Life  Ins.  Co.,  104  U.  S.  54,  and  of 
Sir  George  Jessel  in  Knatchbull  v. 
Hallett,  L.  R.  13  Ch.  D.  696.  Wher- 
ever the  assets  of  the  bank  have 
been  augmented  by  the  trust  fund, 
there  must  be  a  priority.  Beard  v. 
'School  District,  88  Fed.  R.  375 j 


BANKS   AND   BANKING.  [§  341. 

in  the  cases  cited  in  the  notes  below.  On  the  other  hand,  if 
the  bank  received  the  money  without  notice  of  its  trust 
character,  even  though  the  depositor  was  acting  in  violation 
of  the  rights  of  the  owner,  the  true  owner  has  the  right  to 
pursue  the  fund  through  its  various  transmutations,  as  long 
as  he  can  trace  the  fund  into  any  specific  collection  of  prop- 
erty.13 If  the  property  is  money,  which  has  no  "earmarks," 
as  the  courts  say  in  the  homely  phrase  borrowed  from  the 
patois  of  the  agister  of  cattle,  the  owner  can  sue  at  law  for 
money  had  and  received,14  but  in  this  way  he  would  lose 
his  claim  upon  any  specific  property,  because  the  judgment 
at  law  could  not  preserve  the  lien  upon  the  property  into 
which  the  money  went.15  But  if  the  owner  brings  an  equi- 
table action,  he  impresses  the  trust  upon  the  property  into 
which  his  funds  found  their  way.  Since  now  the  bank 
owns  its  assets,  and  since  it  is  not  a  l)ona  fide  holder  except 
for  what  it  has  paid  out  or  appropriated  without  notice  of 
the  trust,16  it  necessarily  follows  that  the  bank  stands  in  the 
situation  of  any  other  holder  of  trust  property  who  has  ob- 
tained trust  property  with  no  right  to  hold  it  and  has 
mingled  it  with  property  of  his  own.  From  the  very  nature 
of  the  case  the  bank  assets  must  be  considered  as  one  fund 
in  a  constant  state  of  chang®,  where  all  the  property  of  the 
bank  is  mingled  together.  The  owner  of  the  trust  fund, 
therefore,  who  has  never  consented  to  the  bank's  acquisition 
of  his  property  can  claim  a  priority  as  a  preferred  charge 
or  a  lien  upon  the  bank's  assets  of  a  higher  character  than 
the  claim  of  any  general  creditor  who  has  no  lien,  and  on 
an  equality  with  every  other  creditor  with  an  equitable  lien 
of  the  same  description,  for  any  balance  of  the  fund  which 
remained  credited  in  the  bank  at  the  time  it  received  notice 
of  the  trust  character  of  the  fund.17  But  many  courts  deny 

Wiggins  v.  Stevens,  53  N.  Y.  Supp.  "See  cases  cited  in  note  11,  supra. 

90;  Paul  v.  Draper,  73  Mo.  App.  14  Keener,  Quasi-Cont,  183  et  seq. 

568;  City  Bank  v.  Blackraore,  75  l3He   simply  takes  a  claim   for 

Fed.  R  771.    The  last  case  states  a  damages, 

correct  principle  and  fails  to  prop-  16See  §  136,  ante, 

apply  it  to  the  facts.  17  See  the  principle  stated  in  the 


§  341.] 


DISSOLUTION   AND   INSOLVENCY. 


C05 


this  obvious  conclusion,  and  say  that  where  the  fund  has 
become  mingled  with  the  assets  of  the  bank  there  can  be  no 
preference.18  This  conclusion  violates  well  settled  principles 
and  is  not  sound.  It  ignores  the  very  obvious  suggestion, 
which  is  that  it  will  be  presumed  that  the  banker  in  paying 
out  moneys  paid  out  his  own  funds.19  The  difficulty  really 


cases  in  notes  11  and  12,  supra. 
But  some  cases,  not  understanding 
the  nature  of  bank  transactions, 
confine  the  priority  to  cash  on 
hand  in  the  bank.  Merch.  Nat. 
Bank  v.  School  District,  94  Fed.  R. 
705;  Bank  v.  Latimer,  67  Fed.  R 
27,  on  the  theory  that  the  bank 
drew  out  its  own  money;  State  v. 
Foster,  5  Wyo.  199. 

18  See  cases  cited  in  note  6,  §  342, 
post,  for  the  Illinois  citations,  in 
note  23  to  §  343,  post,  and  in  notes 
6,  12  and  13  to  §  344,  post,  Wis- 
consin, Illinois,  Tennessee  and  per- 
haps Massachusetts  are  the  main 
offenders.  The  Wisconsin  cases  are 
a  queer  illustration  of  the  power 
of  judicial  obstinacy.  In  McLeod 
v.  Evans,  66  Wis.  401;  Francis  v. 
Evans,  69  Wis.  115,  and  Bowers  v. 
Evans,  71  Wis.  133,  the  court  in 
opinions  Delivered  by  Chief  Justice 
Cole,  who  with  Chief  Justice  Dixon 
and  Chief  Justice  Ryan  has  given 
the  Supreme  Court  of  Wisconsin  a 
deservedly  high  standing,  affirmed 
the  correct  principle;  but  Justice 
Cassoday,  through  an  inability  to 
understand  that  a  transfer  of  credit 
in  a  bank  is  the  same  thing  as  the 
receipt  of  money,  dissented.  The 
Indiana  court  in  Windstanley  v. 
Second  Nat.  Bank,  13  Ind.  App. 
544,  shows  a  like  lack  of  compre- 
hension in  its  criticism  of  these 
Wisconsin  cases.  But  after  three 


decisions  by  a  court  it  would  have 
been  supposed  that  a  judge  would 
have  been  willing  to  concede  that 
he  was  probably  wrong  in  dissent- 
ing. But  in  Nonotuck  Silk  Co.  v. 
Flanders,  87  Wis.  237,  through  a 
new  court,  Justice  Cassoday  ob- 
tained his  opportunity  against  a 
non-resident  of  Wisconsin.  A  Chi- 
cago corporation  sent  to  a  Wiscon- 
sin bank  a  draft  on  one  Lemke. 
The  Wisconsin  bank  collected  the 
money  and  sent  its  check  therefor 
upon  a  Chicago  bank.  The  Chi- 
cago bank  refused  to  pay  the  check. 
Every  lawyer  would  concede  that 
the  unpaid  check  was  not  payment 
by  the  Wisconsin  bank.  The  funds, 
therefore,  remained  in  the  Wiscon- 
sin bank  as  bailee.  But  because 
the  Wisconsin  bank  had  other  deal- 
ings with  the  Chicago  bank  to  a 
larger  amount  than  the  draft,  Jus- 
tice Cassoday  in  some  mysterious 
way  discovered  that  the  Chicago 
firm's  money  1  ad  passed  in  those 
transactions,  and  that  therefore 
the  Wisconsin  bank  had  gotten  rid 
of  the  proceeds  of  the  collection. 
The  case  ne^ds  but  to  be  stated 
to  show  its  unsoundness.  The  ex- 
traordinary decision  in  Dowie  v. 
Humphrey,  91  Wis.  98,  shows  the 
necessary  result  of  Justice  Casso- 
day's  perverted  views  of  the  law. 
^State  v.  Foster,  5  Wyo.  199; 
Merch.  Nat.  Bank  v.  School  Dis- 


600  BANKS    AND   BANKING.  [§  341. 

arises  from  the  fact  that  the  courts  will  not  forget  that  the 
only  person  who  owns  the  assets  of  the  bank  is  the  banker 
and  the  common  phrase,  "  money  in  the  bank,"  is  really  a  rem- 
iniscence of  that  medieval  condition  when  the  only  relation 
that  existed  between  a  banker  and  his  depositor  was  the 
relation  of  bailee  and  bailor,  where  the  banker  kept  and 
returned  the  identical  money.  What  would  be  thought  of 
this  doctrine  applied  to  banks,  if  it  were  applied  to  an  ordi- 
nary business  man  who  had  received  trust  moneys  into  his 
hands  as  the  wrongful  or  gratuitous  depositary  of  them,  and 
had  merely  mingled  the  money  with  his  own,  and  then  ac- 
quired other  property  with  it?  "Would  any  court  hesitate 
to  impress  a  trust  upon  the  property,  simply  because  the 
man  was  in  debt?  Yet  this  is  what  these  holdings  as  to 
mingling  amount  to.  If  the  banker  mingles  the  fund  with 
Jiis  o\vn,  knowing  its  trust  character,  he  perpetrates  a  wrong. 
If  he  does  it  without  knowledge  his  wrong  is  not  malicious, 
but  it  is  none  the  less  an  injury  to  the  innocent  owner,  and 
a  violation  of  his  rights.  The  viciousness  of  this  rule  be- 
comes apparent  when  it  is  applied  to  those  banks  which  ac- 
cept and  execute  trusts.  Here  the-  bank  is  an  express  trustee, 
and  assumes  all  the  duties  of  a  trustee.  It  may  be  that  it  is 
an  executor,  or  an  administrator  or  a  trustee  by  deed  or  by 
will.  It  is  required,  no  doubt,  to  deposit  securities  for  the 
protection  of  its  creditors,  but  those  securities  are  not  equal 
to  the  amounts  which  the  corporation  may  receive  in  trust. 
Sometimes,  and  no  doubt  always  in  carefully-managed  com- 

trict,  94  Fed.  R  705.    But  the  rule  These    mingling   decisions   are   a 

ought  to  be  that  the  assets  of  the  weak  pandering  to  larger  numbers, 

bank  are    a  fund,  and  the   bank  by  allowing  the  many  general  cred- 

ought  not  to  be  permitted  to  claim  itors  of  a  bank  to  have  greater 

that  such  assets  are  not  impressed  rights   than  the    bank  itself  can 

with  a  trust.    The  opposing  cases  claim.    Certainly  it  would  be  ate 

seem  to  be  governed  by  the  wholly  surd  to  say  that  a  man  could  take 

illogical  idea  that  a  bank  as  trustee  another's  money  wrongfully  and 

can  have  greater  rights  than  any  mingle  it  with  his  own  and  say  he 

other   trustee,   simply  because    it  owned  it  all 
has  a  larger  number  of  creditors. 


§  341.]  DISSOLUTION   AND    INSOLVENCY.  607 

panies,  the  securities  of  the  trust  department  are  kept  sep- 
arate from  the  assets  of  the  banking  department.  But  the 
moneys  of  the  trust  department  from  the  necessity  of  the 
case  must  go  into  the  general  assets  of  the  bank,  and  be 
taken  from  those  assets  and  loaned.  The  moneys  of  the 
various  trusts,  of  necessity,  are  mingled  with  the  general 
bank  funds,  although  it  is  likely  each  trust  may  be  credited 
with  the  moneys  received  into  the  bank  from  it.  But  at 
any  rate  they  become  and  are  mingled  with  the  general 
funds  of  the  bank.  If  now  such  a  banking  and  trust  com- 
pany should  fail,  those  courts  which  hold  that  the  priority 
of  the  owner  of  the  trust  fund  is  lost  upon  mingling  would 
be  compelled  to  hold  that  the  trust  creditors  had  no  priority 
over  the  general  depositors  in  the  bank.  It  would  not  help 
the  matter  under  these  decisions  for  the  bank  officers,  antici- 
pating a  failure  to  take  the  amount  of  the  trust  deposits  out 
of  the  funds  of  the  bank  and  put  them  in  a  separate  place, 
properly  marked,  because  such  an  act  would  be  a  fraudulent 
preference  where  preferences  are  forbidden.  If  those  gen- 
eral bank  creditors  were  trust  depositors  also,  as  they  are  in 
some  savings  banks,  which  are  run  not  in  the  interest  of 
stockholders,  but  in  the  interest  solely  of  the  depositors, 
there  would  be  no  priority  for  one  trust  claimant  over  an- 
other, as  one  case  has  held.20  But  where  there  are  two  de- 
partments, one  a  commercial  banking  department  and  the 
other  a  trust  department,  the  claims  of  general  depositors 
meet  those  of  trust  claimants.  The  trustee  has  mingled  the 
funds  with  his  own  money.  Could  these  courts  be  consist- 
ent and  hold  that  the  general  creditors  of  a  trustee  were  on 
the  same  level  as  the  beneficiaries  for  whom  he  was  trustee? 
If  those  courts  would  not  so  hold  they  would  confess  the  un- 
soundness  of  their  doctrine.  The  conclusion  is,  then,  that 
where  the  beneficiary  or  real  owner  of  the  fund  is  not  in 
some  way  a  party  to  the  deposit  of  his  funds  in  the  bank,  he 
has  a  priority  for  the  balance  of  his  account,  being  whatever 
has  not  been  rightfully  paid  out  or  appropriated  by  the  bank 
without  notice  of  his  claim. 

20  Vail  v.  Newark  Sav.  Inst,  32  N.  J.  Eq.  627. 


608  BANKS   AND   BANKING.  [§  342. 

§  342.  Special  depositors'  priority.— As  we  have  already 
seen,  certain  transactions  with  a  bank  create  special  or  spe- 
cific deposits,1  the  essence  of  the  transaction  being  that  the 
relation  created  is  that  of  bailor  and  bailee.  The  character- 
istic of  the  relation  of  bailment  is  that  the  title  in  the  thing 
bailed  remains  in  the  bailor,  although  the  bailee  can  assert 
ownership  against  every  one  but  the  bailor.  The  relation 
has  been  sometimes  called  a  common-law  trust,  and,  as  we 
shall  hereafter  point  out,2  the  origin  of  the  relation  is  pre- 
cisely the  same  in  the  history  of 

"  That  codeless  myriad  of  precedent," 

which  is  called  the  common  law.  While  the  bailor  has  his 
remedy  at  law,  he  also  has  a  remedy  in  equity,  wherever 
his  property  in  violation  of  the  terms  of  the  bailment  has 
been  converted  by  the  bailee,  the  equitable  remedy  arising 
out  of  the  trust  character  of  the  relation.  The  essence  of 
this  relation,  judged  from  the  equitable  standpoint,  is  that 
the  property  came  rightfully  into  the  possession  of  the  bailee, 
but  without  any  authority  or  right  in  the  bailee  to  mingle  the 
thing  bailed  with  his  own  property,  and  thus  convert  his 
bailor  into  his  general  creditor.  If  the  bailee,  the  bank, 
does  mingle  the  money  bailed  by  a  special  or  specific  de- 
posit, the  bank  at  once  commits  a  breach  of  trust  and  be- 
comes responsible  as  trustee,  and  the  case  is  one  merely  of 
a  mingling  by  the  trustee  of  his  beneficiary's  funds  with  his 
own,  such  as  was  spoken  of  in  the  last  section,  and  the  bailor, 
the  special  depositor,  gains  a  priority  over  the  general  cred- 
itors for  the  amount  of  his  property  improperly  mingled 
with  the  fund.3  The  following  are  illustrative  cases :  Money 
paid  into  a  bank  for  a  specific  and  special  purpose  becomes 
a  special  deposit,4  and  if  mingled  with  the  funds  of  the  bank 

1  See  §§  162, 163,  ante,  and  §  136,  illegally  put  into  the  bank  a  prior- 
ante,  notes  14  and  15.  ity.    See  note  12,  §341,  ante. 

2  See  the  next  section.  <  See  §§  162,  163,  ante,  and  §  136, 

3  Every  case  that  gives  a  special  ante,  notes  14  and  15;  and  Moreland 
depositor  a  priority  is  an  authority  v.  Brown,  86  Fed.  R  257;  Montague 
for  giving  the  owner  of  a  trust  fund  v.  Pacific  Bank,  81  Fed.  R.  602;  la 


§  343.]  DISSOLUTION   AND    INSOLVENCY.  609 

the  whole  of  the  assets  become  impressed  with  a  trust  in 
favor  of  the  special  depositor;5  yet  this  proposition  has  been 
denied  in  some  gases,6  and  in  another  case  has  been  limited 
to  the  cash  on  hand.7  But  if  the  bank  makes  a  purchase 
for  a  customer,  and  the  customer  pays  money  into  the  bank 
for  the  purchase,  no  priority  results.8  Money  received  by  a 
bank  for  the  purpose  of  transmitting  it  is  a  special  deposit, 
and  the  special  depositor  has  a  priority.9  Money  deposited 
in  a  bank  to  secure  the  bank  for  becoming  surety  upon  a 
bond  gives  a  priority.10  It  is  needless  to  say  that  the  special 
depositor  may  waive  his  right  to  claim  that  he  had  a  special 
deposit,  but  he  does  not  do  so  by  taking  a  draft  for  a  part 
of  it,  when  he  was  induced  to  do  so  by  false  representations 
by  the  bank.11  If  the  special  deposit  is  actually  kept  separate, 
the  depositor  has,  of  course,  the  right  to  the  particular 
thing,12  but  he  has  no  priority  where  the  banker  has  prom- 
ised to  put  his  deposit  in  a  separated  condition  but  has  not 
done  so.13 

§  343.  Proceeds  of  collections  as  a  priority. — In  discuss- 
ing the  nature  of  the  undertaking  assumed  by  a  bank  upon 
the  deposit  of  paper  for  collection,  it  was  pointed  out  that, 
when  paper  requiring  collection  is  deposited,  the  transaction 
might  be  a  sale  to  and  a  purchase  by  the  bank  of  the  paper. 
In  such  a  case  there  is  no  doubt  that  if  the  transaction  was 
really  a  sale  or  was  so  treated  by  the  parties,  it  will  be  held 

re  Johnson,  103  Mich.  109;  Harrison  890.    There  was  no  intention  here 

v.  Smith,  83  Mo.   210;    Stoller  v.  to  make  a  special  deposit. 

Coates,  88  Mo.  514.  ^Moreland  v.  Brown,  86  Fed.  R 

8  In  re  Johnson,  103  Mich.  109.  257.    And  see  Massey  v.  Fisher,  63 

And  see  notes  11  and  12  to  preced-  Fed.  R  958. 

ing  section.  10  Anderson  v.  Pacific  Bank,  113' 

6  Lanterman  v.  Travous,  73  111.  Cal.  598. 

App.  670,  citing  other  Illinois  cases.       "  In  re  Johnson,  103  Mich.  109. 

7  Merchants'  Nat.  Bank  v.  School      12In  re  Commercial  Bank,  2  Ohio 
District,  94  Fed.  R.  705.    And  see    Dec.  304 

National  Bank  v.  Lattimer,  67  Fed.       13  See  §§  162,  163,  ante.    And  see 
R  27.  Venner  v.  Cox,  35  S.  W.  R  769; 

8  Downing  v.  Lillyett,  36  S.  W.  R    Bayor  v.  Am.  Trust  and  Sav.  Bank, 

157  111.  62. 
39 


610  BANKS   AND   BANKING.  [§  343. 

to  be  a  sale,1  and  as  to  the  proceeds  the  bank's  liability  as 
upon  a  general  or  a  special  deposit  must  be  ascertained  in 
accordance  with  the  rules  stated  in  the  preceding  section 
and  the  sections  to  which  it  refers.  But  where  the  deposit 
is  actually  a  deposit  of  the  paper  and  not  a  sale,  the  rights 
of  the  parties  are  determined  by  the  nature  of  the  transac- 
tion. The  deposit  may  be  simply  for  credit,  or  it  may  be 
simply  for  collection,  or  for  collection  and  credit.  If  for 
collection  solely,  the  proceeding  is  a  bailment,  and  upon 
receipt  of  the  proceeds  the  bank  may  credit  the  proceeds  to 
the  depositor,2  if  there  be  no  special  contract  requiring  an- 
other action.3  If  the  bank  is  bound  by  an  understanding 
either  to  hold  the  proceeds  as  the  property  of  the  depositor, 
if  it  does  credit  them  the  depositor  has  a  priority  in  the 
assets  to  the  extent  of  the  proceeds.4  If  the  bank  is  not 
bound  by  such  an  understanding  arising  either  from  the  ex- 
press agreement  of  the  parties  or  a  general  course  of  deal- 
ing between  them,  the  bank  may  credit  the  proceeds  to  the 
depositor  and  he  becomes  merely  a  general  creditor.5  Until 
the  proceeds  are  so  received  and  credited,  the  proceeds  as 
between  the  collecting  bank  and  the  depositor  are  still  the 
property  of  the  depositor,6  and  if  the  bank  receiving  the 
deposit  becomes  insolvent,  the  proceeds  not  having  been 
received  and  credited,  the  power  of  collection  in  that  bank 
ceases,  and  the  depositor  has  a  priority  for  the  funds  if  they 
come  into  the  custody  of  the  insolvent  bank  or  its  represent- 
ative,7 or  he  may  recover  them  from  the  correspondent 

1  Taft  v.  Quinsigamond  Bank,  52  Chase,  36  Neb.  328;  First  Nat.  Bank 
N.  E.  R  387.  v.  Sanford,  62  Mo.  A  pp.  394;  An- 

2  See  §§133  and  188,  ante;  Hen-  heuser-Busch  Ass'n  v.  Morris,  36 
derson  v.  O'Conor,  106  Cal.  385.  Neb.  31;  People  v.  Dansville  Bank, 

3  See  the  references  in  preceding  39  Hun,  187;  Hunt  v.  Townsend,  26 
note    and    Continental    Bank   v.  S.  W.  R  310. 

Weems,  69  Tex.  489;  Peak  v.  Elli-  <>  Anheuser-Busch  Ass'n  v   Clay- 

cott,  30  Kan.  156 ;  Ellicott  v.  Barnes,  ton,  56  Fed.  R  759.    And  see  §§  133, 

31  Kan.  170.  187,  188,  ante. 

4  See  the  references  in  notes  2  6  See  §§  133  and  188,  ante. 

and  3  preceding,  and  Wallace  v.  7  Evansville  Bank  v.  Germ.  Am. 
Stone,  107  Mich.  190;  Griffin  v.  Bank,  155  U.  S.  556;  Beal  v.Somer- 

ville,  50  Fed.  R  647. 


§  313.] 


DISSOLUTION   AND    INSOLVENCY. 


611 


bank,8  or  if  no  collection  is  made  from  the  party  liable  that 
party  still  remains  liable.9  If  it  be  a  correspondent  bank, 
which  becomes  liable  by  reason  of  having  the  proceeds  of 
the  collection  in  its  custody,  he  may  claim  a  priority  in  the 
funds  of  that  bank  if  it  has  received  money,10  or  he  may 
claim  the  particular  thing  which  it  has  received,11  provided 
that  bank  has  no  lien  upon  the  proceeds  by  reason  of  ad- 
vances upon  it,12  or  credit  given  upon  it,13  or  by  reason  of  a 
set-off  which  it  has  against  the  transmitting  bank  by  a  course 
of  dealing.14  But  in  those  jurisdictions  which  recognize  that 
the  correspondent  bank  is  the  agent  of  the  transmitting  or 
primary  bank,  he  may  hold  the  latter  liable  for  its  agent's 
default; 15  but  if  the  latter  bank  is  also  insolvent,  he  has  only 
the  claim  against  the  latter  bank  of  a  general  creditor,16 
where  that  bank  has  not  received  the  proceeds  either  by 
credit  to  it  or  set-off  against  it.17  But  in  those  states  which 
maintain  that  the  correspondent  or  secondary  bank  is  not 
the  agent  of  the  transmitting  bank,  but  the  agent  of  the 


8Evansville  Bank  v.  Germ.  Am. 
Bank,  155  U.  S.  556. 

9  This,  of  course,  must  be  the  re- 
sult. There  is  no  payment.  Crane 
v.  Fourth  Street  Bank,  173  Pa.  556, 
carries  this  idea  too  far,  for  there 
•was  a  payment. 

w  See  §§  187, 188, 189  and  190,  ant e, 
and  Commercial  Bank  v.  Arm- 
strong, 148  U.  S.  50;  Beal  v.  Somer- 
ville,  50  Fed.  R.  647. 

11  See  Levi  v.  National  Bank,  5 
Dili  104.    This  applies  even  to  a 
deposit  for  credit. 

12  See  §  189,  ante.     This  only  can 
apply  as  to  a  deposit  for  credit. 
Where  the  indorsement  is  to  the 
first  bank  for  collection  the  second 
bank  has  no  claim. 

13  The  form  of  the  indorsement  is 
notice  to  every  other  bank  that  the 
collection  does  not  belong  to  the 
first    bank.     Evansville    Bank    v. 


Germ.  Am.  Bank,  155  U.  S.  556. 
See  §  189,  ante.  This  only  can  apply 
as  to  a  deposit  for  credit.  See  the 
preceding  note. 

14  See  §  189,  ante,  and  Comm.  Bank 
v.  Armstrong,  148  U.  S.  50;  and  see 
the  preceding  note. 

15  See  §  181,  ante,  for  those  juris- 
dictions.   The  transmitting  bank 
could  claim  the  priority  unless  cut 
off  by  the  insolvent  bank's  set-off 
or  lien. 

16  This  follows  because  his  claim 
is  simply  one  for  damages. 

17  If  the  bank  has  received  the 
proceeds  by  credit  to  it  or  set-off 
against  it,  the  money  has  been  re- 
ceived by  it,  and  the  depositor  has 
a  priority  or  has  the  claim  of  a 
general  creditor  as  determined  by 
his  contract  with  it.    See  notes  4 
and  5  to  this  section. 


612  BANKS   AND   BANKING.  [§  343. 

owner  of  the  collection,18  the  rights  of  the  owner  over  the 
collection,  where  the  proceeds  are  in  the  hands  of  a  second- 
ary bank,  insolvent,  can  be  secured  for  a  priority,  if  the 
transmitting  bank  can  claim  a  priority,  which  it  can  do 
where  it  has  indorsed  the  paper  for  collection,19  or  the  owner 
himself  can  claim  a  priority  in  the  funds  of  the  secondary 
bank,  where  his  indorsement  to  the  primary  bank  was  merely 
for  collection.20  But  while  the  true  rule  is  that  the  owner 
of  the  collection  indorsed  merely  for  collection21  can  insist 
upon  his  priority  whenever  the  proceeds  have  come  to  and 
remain  in  the  hands  of  an  insolvent  bank,22  still  some  juris- 
dictions maintain  the  mistaken  doctrine  that  if  those  funds 
have  been  mingled  with  the  general  assets  of  the  bank  there 
can  be  no  priority.23  The  incorrectness  of  this  doctrine  has 
already  been  pointed  out.24  The  third  case  is  a  collection 
indorsed  to  a  bank  for  credit  of  the  depositor  or  for  collec- 
tion and  credit;  the  two  cases  do  not  differ.  The  relation 
established  by  such  a  transaction  is  a  bailment  to  collect  the 
money  and  deposit  it  to  the  credit  of  the  depositor.25  As 
soon  as  that  collection  is  made  and  the  proceeds  credited, 
the  depositor  is  a  general  creditor  of  the  bank  which  re- 
ceived the  paper  for  collection.26  But  until  that  time  he  is 

18  See  §  181,  ante,  for  those  states.  22  See  note  8,  supra. 

19  This  is  the  custom.    But  if  the  23  Phila.  Nat  Bank  v.  Dowd,  38 
indorsement  is  for  collection  and  Fed.  R  172;  State  v.  State  Bank,  5 
credit  by  the  first  bank  to  the  sec-  Baxt.  1 ;  111.  Trust  &  Sav.  Bank  v. 
ond  bank,  and  the  second  bank  First  Nat.  Bank,  15  Fed.  R  858; 
fails  with  the  proceeds  in  its  hands,  Burnham  v.  Barth,  89  Wis.  362;  St. 
the  first  bank  is  a  general  cred-  Louis  Brew.  Ass'n  v.  Austin,  100 
itor,  but  the  owner  of  the  collec-  Ala.  313.    Some  courts  limit  the 
tion  can  hold  the  first  bank.  priority  to  the  bank's  cash.    Nat. 

20  See  §  188,  ante,  and  cases   in  Bank  v.  Lattimer,  67  Fed.  R.  27. 
note  4,  supra.  24See  §  341,  note  12;  Bowers  v, 

21  This  applies   as  between    the  Evans,  71  Wis.  133  (now  wrongly 
owner  and  the  primary  bank,  where  overruled);  Windstanley  v.  Second 
that  is  insolvent    The  same  prin-  Nat.  Bank,  13  Ind.  App.  544. 
ciple  applies  as  between  the  pri-  25  gee  §  133,  ante. 

mary   bank    and   the    secondary      26  gee  §§  133, 187  and  188,  ante. 
bank,  where  the  latter  is  insolvent, 
with  the  proceeds  in  its  hands. 


§  343.] 


DISSOLUTION   AND    INSOLVENCY. 


613 


not  a  general  creditor.  If  the  proceeds  reach  that  bank 
after  its  insolvency,  its  power  to  collect  being  ended,  the 
owner  of  the  collection  has  a  priority  upon  the  funds  of  the 
bank.27  If  the  funds  are  in  the  hands  of  a  correspondent 
bank  he  may  claim  them  from  that  bank  as  a  priority  if  it 
is  insolvent,23  provided  that  bank  has  no  lien  upon  the  pro- 
ceeds or  right  of  offset  against  the  bank  transmitting  to  it.29 
In  this  latter  case  he  may  hold  the  bank  in  which  he  de- 
posited for  its  agent's  default  in  most  jurisdictions,30  but  in 
other  jurisdictions  he  cannot; 31  but  the  primary  bank  having 
received  the  deposit  by  set-off  or  credit,  he  has  the  right  to 
recover  from  it;  but  if  it  is  insolvent,  he  is  merely  a  general 
creditor.32  But  in  some  states  the  rule  is  held  that  a  deposit 
for  credit  passes  title  in  the  paper  to  the  bank,  where  the 
depositor  has  the  privilege  of  checking  against  it,33  and  hence 
the  depositor  in  such  case  becomes  a  mere  general  creditor 
of  the  first  bank  upon  the  deposit.34  He  could  not  reach  the 
proceeds  in  the  hands  of  a  correspondent  bank 35  so  as  to 


27  Beal  v.  Somerville,  50  Fed.  R. 
647,  5  U.  S.  App.  14 

28Evansville  Bank  v.  Germ.  Am. 
Bank,  155  U.  S.  556.  In  this  case 
the  form  of  the  indorsement  was 
not  for  credit,  but  for  collection, 
yet  the  court  recognizes  the  prin- 
ciple. The  case  cited  in  the  last 
note  states  the  principle  in  its  best 
form. 

29  See  notes  12, 13  and  14  to  this 
section. 

»°  See  §181,  ante. 

31  See  §  181,  ante. 

32  This  is  said  on  the  assumption 
that  the  deposit  was   simply  for 
credit   without   there  being   any 
course  of  dealing  or  understanding 
to  control  the  effect  of  the  indorse- 
ment.   See  §  188,  ante.    But  if  the 
credit  be  given  by  the  secondary  to 
the  primary  bank,  it  is  an  absolute 
nullity,  if  that  bank  had  notice  of 


the  preliminary  bank's  insolvency. 
If  it  had  not  notice  the  owner  can 
claim  the  proceeds  from  that  bank 
in  spite  of  the  credit.  Germ.  Am. 
Bank  v.  Third  Nat.  Bank,  5  Dill. 
104;  Evansville  Bank  v.  Germ.  Am. 
Bank,  155  U.  S.  556;  Beal  v.  Somer- 
ville, 50  Fed.  R.  647;  Jones  v.  Kil- 
breth,  49  Ohio  St.  401.  Or  he  can 
claim  the  remittance  received. 
Beal  v.  Somerville,  supra. 

83  See  §133,  ante. 

84  This  rule  places  the  depositor  in 
the  situation  that  if  the  second 
bank  fails  the  primary  bank  has 
the  priority.    If  the  primary  bank 
fails  it  has  a  claim  in  full  against 
the  secondary  bank,  but  the  depos- 
itor is  only  a  general  creditor  of  the 
primary  bank,  and  all  the   time 
the  collection,  if  not  made,  can  be 
charged  back  against  him. 

33  He  has  no  title. 


614:  BANKS   AND   BANKING.  [§  344. 

claim  any  priority  at  all.  In  such  jurisdictions,  if  the  cor- 
respondent bank  fails  with  the  proceeds  of  a  collection  in 
its  custody,  the  transmitting  bank  must  enforce  the  priority 
against  the  correspondent  bank.36  In  such  cases  also  the 
doctrine  is  held  by  some  courts  that  the  proceeds  of  the 
bank  upon  being  mingled  with  its  general  funds  lose  their 
right  of  priority,  and  in  consequence  the  person  or  bank 
claiming  the  priority  becomes  a  mere  general  creditor.37  But 
the  better  rule  is  otherwise  even  as  to  bailments,  because  a 
bailment  presents  a  case  of  a  fiduciary  relation  giving  rise 
in  equity  to  a  trust.38 

§  344.  Deposit  in  insolvent  bank  as  a  priority. —  The 

act  of  a  banker  in  keeping  open  his  bank  for  the  reception 
of  deposits  when  he  knows  his  bank  is  insolvent  is  a  gross 
fraud,  as  such  an  act  is  on  the  part  of  an  incorporated  bank 
whose  officers  know  that  it  is  insolvent.1  In  such  a  case, 
by  reason  of  the  fraud,  the  bank  obtains  no  title  in  equity 
and  becomes  a  constructive  trustee.2  The  case  then  becomes 
one  of  those  mentioned  in  the  former  section  upon  trust 
funds,  and  is  governed  by  the  same  rules.3  But  it  must  ap- 
pear that  there  was  actually  a  deposit  after  insolvency,  for 
if  a  general  depositor  is  induced  by  the  fraudulent  repre- 
sentation of  the  bank  officers  to  allow  his  general  deposit 
to  remain,  he  does  not  acquire  the  rights  of  a  depositor  on 

36  See  the  preceding  note.  Erie  R  Co.  v.  National  Bank,  65 

37  See  cases  in  note  23  to  this  sec-    Fed.  R  690;  American  Trust  Bank 
tion.  v.  Gueder  Mfg.  Co.,  150  III   336; 

38Evansville  Bank  v.  Germ.  Am.  Terhune  v.  Bank  of  Bergen  Co.,  34 

Bank,  155  U.  S.  556;  Knatchbull  v.  N.  J.  Eq.  367;  Francis  v.  Evans,  69 

Hallett,  L.  R  13  Ch.  D.  696.  Wis.  115;  Bowers  v.  Evans,  71  Wis. 

1  Importers'  &  Traders'  Bank  v.  133;  Comm.  Ex.  Nat.  Bank  v.  Solic- 

Peters,  123  N.  Y.  272;  Peck  v.  First  itors'  Trust  Co.,  188  Pa.  830;  and 

Nat  Bank,  43  Fed.  R  857;  St.  Louis  see  §§  187, 188,  ante. 

&  San  Francisco  By.  Co.  v.  Johns-  2  See  cases   cited  in   preceding 

ton,  133  U.  S.  566;  Furber  v.  Ste-  nota 

phens,  35  Fed.  R 17;  City  of  Somer-  3  See  §  341,  ante,  and  Atkinson  v. 

villev.Beal,49Fed.R790;  Wasson  Rochester  Printing  Co.,  114  N.  Y. 

v.  Hawkins,  59  Fed.  R  233;  Lake  168. 


§  344]  DISSOLUTION   AND    INSOLVENCY.  615 

insolvency.1  But  if  there  be  a  deposit  made  after  insolv- 
ency, it  makes  no  difference  whether  it  be  a  deposit  of  paper 
requiring  collection,5  or  a  deposit  of  money;  if  the  bank  is 
known  to  its  officers  to  be  insolvent,  a  trust  results.6  The 
depositor  has  tKe  right  to  reclaim  the  money  from  the  bank 
as  a  special  deposit,  or  if  it  has  become  mingled  with  the 
bank's  property  he  has  the  right  to  claim  a  priority  in  the 
assets.7  If  it  be  a  deposit  of  paper  for  collection,  he  may 
follow  the  proceeds  until  they  come  to  the  hands  of  a  lona 
fide  holder,  which  would  be  a  bank  having  the  right  to  re- 
tain them,  as  explained  before;8  but  if  the  proceeds  come 
back  to  the  insolvent  bank  by  credit  to  it,  whether  before 
its  suspension 9  or  afterwards,10  he  has  the  right  to  claim 
those  proceeds  as  a  priority  upon  the  assets  of  the  insolvent 
bank.11  But  here  again  we  are  confronted  with  the  ruling 
of  certain  courts  that  the  mingling  of  the  proceeds  with  the 
assets  of  the  bank  reduces  the  depositor  to  the  condition  of 
a  general  creditor,12  and  the  erroneous  ruling  of  other  courts 
that  a  mere  shifting  of  credit  does  not  augment  the  assets 
of  an  insolvent  bank.13  This  latter  position  seems  so  wholly 

4Venner  v.  Cox,  35  S.  W.  R.  769.  7St.  Louis  &  San  Francisco  Ry. 

s Importers'  &  Traders'  Bank  v.  Co.  v.  Johnston,  133  U.S. 566:  Fran- 
Peters,  123  N.  Y.  272.  cis  v.  Evans,  69  Wis.  115;  Bowers 

SKlepper  v.  Cox,  97  Tenn.  534;  v.  Evans,  71  Wis.  133;  Wasson  v. 

Friberg  v.  Cox,  97  Tenn.  550;  Wil-  Hawkins,  59  Fed.  R.  233;  and  see 

son  v.  Coburn,  35  Neb.  530;  Bruner  cases  cited  in  note  12  to  §  341,  ante, 

v.  First  Nat.  Bank,  97  Tenn.  540;  8See  §  189,  ante. 

Philadelphia  Nat.  Bank  v.  Dowd,  »  This  cannot  change  the  relation. 

38  Fed.  R  172.    All  these  cases  rec-  w  The  identical  thing  can  then 

ognize  the  creation  of  the  trust,  be  ascertained,  and  replevin  lies 

but  make  a  wrong  application  of  for  it.    Comm.  Ex.  Nat.  Bank  v. 

the  doctrine  of  mingling,  and  are  Solicitors'  Trust  Co.,  188  Pa.  330. 

good  reading  by  way  of  horrible  u  See  citations  in  note  7. 

examples.    The  presumption  is  that  12See  cases  cited  in  note  6,  and 

the  officers  knew  the  bank's  condi-  Blake  v.  State  Bank,  12  Wash.  619; 

tion.    Craigie  v.  Hadley,  99  N.  Y.  Nonotuck  Silk  Co.  v.  Flanders,  87 

131;    Rochester    Printing    Co.    v.  Wis.  237,  overruling  previous  cases 

Loomis,  45  Hun,  93,  120  N.  Y.  659.  correctly  decided.    See  note  18,  to 

But  Williams  v.  Cox,  37  S.  W.  R  §  341,  ante. 

282,  fails  to  notice  the  point.  13  Beard  v.  Independent  District, 


616  BANKS   AND   BANKING.  [§  315. 

indefensible  that  it  is  hardly  credible.  As  a  matter  of  fact 
almost  the  whole  of  banking  transactions  between  banks  is 
a  mere  shifting  of  credit.  It  is  just  the  purpose  that  banks 
exist  for.  And  a  shifting  of  credit  represents  a  transfer  of 
money,  just  as  well  as  if  the  money  were  actually  transmitted. 
The  right  to  claim  the  funds  a  trust  is  not  waived  by  the 
fact  that  the  claimant  took  a  dividend  upon  his  claim  as  a 
general  creditor,  where  he  was  ignorant  of  the  fact  that  ho 
was  entitled  to  a  trust.14 

§345.  Public  funds. —  As  we  have  seen,  public  funds 
rightfully  deposited  in  a  bank  are  not  entitled  to  a  priority,5 
but  if  the  deposit  was  made  contrary  to  law  a  trust  results 
against  the  bank,2  and  this  trust  creates  a  priority  upon  the 
funds  of  the  bank.8  If,  however,  the  bank  allows  public 
funds  to  be  appropriated  to  a  purpose  which  it  knows  is 
illegal  it  becomes  a  constructive  trustee,4  and  the  public  is 
entitled  to  a  priority  for  the  amount  of  the  money  misap- 

S8  Fed.  R.  375;  City  Bank  v.  Black-  52  Fed.  R.  59.    This  decision  by  an 

more,  75  Fed.  R.  771.    If  a  bank  accomplished  lawyer  is  one  of  the 

cancels  its  debt  to  one  person  by  best  upon  this  subject.     State  v. 

giving  another  credit,  how  does  the  Thum,  55  Pac.  R.  858.    Compare 

transaction  differ  from  one  where  State  v.  Midland  Sav.  Bank,  71  N. 

a  man  takes  money  out  of  the  bank  W.  R.  1011. 

and  gives  it  to  another  to  pay  his  3  See  cases  cited  in  last  note.  But 
debt  and  that  other  thereupon  de-  Merchants'  Nat.  Bank  v.  School 
posits  it  in  the  bank?  Even  the  Disk,  94  Fed.  R.  705,  confines  the 
case  of  Nonotuck  Silk  Co.  v.  Fland-  priority  to  the  bank's  cash.  And 
ers,  87  Wis.  237,  admits  this  to  be  see  Stevens  v.  Williams,  91  Wis.  58. 
the  case.  Other  courts  confine  the  *  This  is  to  be  understood,  accord- 
priority  to  the  cash  on  hand  where  ing  to  some  cases,  if  the  bank  mis- 
there  has  been  a  mingling.  Com-  appropriates  to  itself  the  money, 
pare  Merchants'  Nat.  Bank  v.  School  thereby  increasing  its  assets.  But 
District,  94  Fed.  R.  705;  State  v.  if  some  one  else  than  the  bank  re- 
Foster,  5  Wyo.  199;  National  Bank  ceives  the  money  the  public  has 
v.  Lattimer,  67  Fed.  R.  27.  only  the  claim  of  a  general  cred- 
14  In  re  Johnson,  103  Mich.  199;  itor.  See  Beard  v.  Independent 
Wallace  v.  Stone,  107  Mich.  190.  Dist,  88  Fed.  R.  375.  This  rule  at- 

1  See  §  340,  ante,  note  5.  tempts  to  make  a  distinction  where 

2  San  Diego  Co.  v.  CaL  Nat  Bank,  none  exists. 


§§  3iG,  347.]        DISSOLUTION   AND   INSOLVENCY.  617 

propriated.5    Taxes  due  from  the  bank  have  been  held  to 
be  entitled  to  priority.6 

§  346.  Liens  upon  particular  funds.— As  we  have  here- 
tofore noticed,  liens  existing  at  the  time  of  insolvency  upon 
particular  assets  of  the  bank  are  not  affected  by  the  insolv- 
ency.1 So  where  the  bank  has  not  fraudulently  drawn  a 
check  or  draft  upon  a  particular  fund  which  the  parties 
agreed  or  understood  should  be  payable  out  of  a  particular 
fund,  the  check  operates  as  an  assignment  of  a  portion  of 
the  fund  corresponding  to  the  check  or  draft,2  and  the  holder 
of  it  has  a  priority  as  to  that  particular  fund.3  Any  other 
lienholder  is  entitled  to  insist  upon  his  lien  against  the  bank 
or  its  creditors  or  representative.4 

§  347.  Statutory  preferences. —  Under  one  system,  at 
least,  the  creditors  of  a  bank  are  divided  into  classes,  as  note- 
holders, depositors,  and  creditors,  and  a  preference  upon  the 
assets  is  given  in  the  order  stated  to  the  respective  classes. 
Under  this  system  it  is  held  that  balances  due  banks  are  the 
claims  of  creditors,  not  depositors,1  and  the  word  "  depos- 
itors "  covers  only  general  depositors,  but  not  holders  of  cer- 
tificates of  deposit;  the  latter  are  creditors.2  Under  another 
system,  savings  banks  as  depositors  are  given  a  preference 

5  See  note  2,  supra.  Nat.  Bank  v.  Dubuque  Ry.  Co.,  52 

6  Taxes  are  necessarily  preferred.    Iowa,  387.    But  where  a  depositor 
1  See  §  327,  ante,  notes  8  and  9.    obtains  drafts  by  his  checks,  which 

These  liens  may  be  legal  or  equi-  drafts  are  not  paid,  he  gains  no  lien 

table  in  their  nature.    Liens  at  law  upon  the  fund,  nor  does  he  become 

are  spoken  of  in  the  cases  referred  a  special  depositor  entitled  to  a  pri- 

to  in  section  327.    In  the  next  note  ority.    Jewett  v.  Yardley,  81  Fed. 

will  be  found  cases  where  the  liens  R  920. 

were  equitable.    A  right  of  set-off  3  See  cases  cited  in  precedingnote. 

is  equivalent  in  some  instances  to  <  See  §  331,  ante,  note  6. 

an  equitable  lien.  1  In  re  State  Bank,  13  Pa.  Co.  Ct 

2Coates  v.  First  Nat.  Bank,  91  R.    433;    Appeal    of   Parkersburg 

N.  Y.  26;  Fourth  St.  Bank  v.  Yard-  Bank,  6  Wkly.  Notes  Cas.  694. 

ley,  165  U.  S.  634;  First  Nat  Bank  2  In  re  State  Bank,  13  Pa.  Co.  Ct 

v.  Clark,  134  N.Y.  368.  But  see  First  R.  43& 


618 


BANKS   AND   BANKING. 


[§  347. 


upon  the  assets  for  any  balance  due  to  them,8  but  this  pref- 
erence given  by  the  state  statute  is  not  binding  upon  a  na- 
tional bank.4 


3Rosenback  v.  Manuf.  Bank,  69 
N.  Y.  358;  In  re  Patterson,  18  Hun, 
221,  78  N.  Y.  608.  The  savings  bank 
was  held  to  be  a  depositor,  though 
interest  was  paid  to  it. 

4  Sixpenny  Sav.  Bank  v.  Stuyve- 


sant  Bank,  Fed.  Gas.  No.  12,919; 
Davis  v.  Elmira  Sav.  Bank,  161  U.  S. 
275,  reversing  142  N.  Y.  590.  It  is 
singular  how  frequently  the  Su- 
preme Court  reverses  national  bank 
cases  from  New  York, 


CHAPTER  XIIT. 

ACTIONS  AND  JURISDICTION. 

§  348.  Summary  remedy. —  In  the  days  when  banks  were 
considered  as  the  favored  creatures  of  the  law,  a  summary 
remedy  was  given  to  them  in  some  states  and  jurisdictions. 
Especially  in  the  early  Alabama  reports  will  be  found  a 
great  deal  of  law  upon  this  subject.  Cranch's  Circuit  Court 
Reports  are  also  thickly  sown  with  cases  upon  this  subject. 
The  matter  possesses  only  an  antiquarian  interest  at  the 
present  day.  These  statutes  permitted  a  judgment  upon  a 
bank's  claims  to  be  taken  without  pleadings,1  but  took 
away  no  defense  that  the  maker  of  a  note  possessed.2  They 
were  held  to  apply  only  to  paper  acquired  after  the  act 
was  passed,8  and  only  to  paper  payable  at  the  bank ; 4  but 
in  sorre  instances  the  remedy  extended  to  all  paper  due  the 
bank.5  The  statute  was  required  to  be  strictly  followed,6  but 
one  case  held  it  to  be  remedial,7  and  the  right  to  exercise  the 
remedy  could  not  be  had  against  the  personal  representa- 
tive of  a  deceased  debtor.8  Under  special  charters  the  bank 
could  insist  upon  a  right  to  an  immediate  trial,9  and  could 
have  special  privileges  as  to  waiver  of  proof  of  notice,  de- 
mand and  protest,10  which  privilege  applied  to  notes  not 
made  payable  at  the  bank.11 

1  Lyon  v.  State  Bank,  1  Stew.  442;  7  Branch  of  State  Bank  v.  Harri- 
Crawf ord  v.  Planters'  Bk.,  4  Ala.  313.  son,  2  Port.  640. 

2  Bank  of  Columbia  v.  Sweeney,  8  Murphy  v.  Branch  Bank,  5  Ala. 
2  Pet.  671.  421;  Andrews  v.  Branch  Bank,  10 

3  Levert  v.  Planters'  Bank,  8  Port  Ala.  375. 

104.  9  Bank  of  Alexandria  v.  Young,  1 

4  See  last  case  cited.  Cranch,  C.  C.  458. 

5  Hancock  v.  Branch  Bank,  5  Ala.  10  Merchants'  Bank  v.  Central 
440.  Bank,  1  Kelley,  418;  Mahone  v.  Cen- 

6  Logwood  v.  Huntsville  Bank,  1  tral  Bank,  17  Ga.  111. 

Minor,  23;  Levert  v.  Planters'  Bank,       ll  Donald  v.  Central  Bank,  8  Kel- 
8  Port  104.  ley,  185. 


€20  BANKS   AND   BANKING.  [§  349. 

§  349.  Matters  of  procedure. — Certain  miscellaneous  mat- 
ters of  procedure  are  grouped  in  this  section.  In  those  states 
which  gave  the  president  the  right  to  bring  suit  for  the  bank, 
it  was  held  that  he,  as  the  bank,  could  sue  or  be  sued,1  under 
the  allegation  that  he  was  the  president  of  the  bank,2  or  the 
bank  itself  could  sue.3  A  failure  to  file  reports  as  provided 
by  statute  may  prevent  a  bank  from  suing  under  a  statute,4 
but  the  statute  will  not  be  applied  in  a  federal  court.5  Serv- 
ice upon  a  bank  must  be  had  in  accordance  with  the  statute 
applicable  in  the  jurisdiction.  A  garnishment  may  be  prop- 
erly served  on  the  cashier,6  but  the  answer  thereto  should 
be  made  by  the  president,7  yet  the  cashier  generally  would 
have  the  same  power.  A  garnishment  may  be  had  without 
first  making  a  demand  upon  the  bank.8  In  a  suit  against 
an  unincorporated  association  whose  members  are  nflmer- 
ous,  it  is  not  necessary  to  serve  all  the  members  before  judg- 
ment can  be  taken.9  A  bank  could  formerly,  where  it  had 
not  the  legal  title  to  paper,  sue  in  the  holder's  name  to  its 
use.10  But  this  matter  is  to-day  of  some  importance  in  suing 
upon  paper  made  to  the  cashier.  The  cashier's  successor 
may  sue  upon  it  without  an  indorsement  by  the  cashier,11 
and  the  bank  itself  may  sue,  certainly  where  the  allegation 
is  made  that  the  paper  was  given  to  the  bank  in  the  name 
of  the  cashier;12  or  the  cashier  may  sue  in  his  own  name  to 
the  use  of  the  bank,13  or  he  may  indorse  to  himself  and  sue 

1  Hallett  v.Harrower,33  Barb. 537;  8  Birmingham  Nat. Bank  v.  Mayer, 

Delafleld  v.  Kinney,  24  Wend  345;  104  Ala.  634. 

Thomas   v.  Dakin,    22  Wend.    9;  9Mandeville  v.  Riggs,  2  Pet.  482. 

Stanton  v.  Wilson,  2  Hill,  15,3.  1°  Moore  v.  Penn,  5  Ala.  135. 

2 Hallett  v.Harrower,  33  Barb. 537.  «  Dutch  v.  Boyd,  81  Ind.  146;  Bar- 

3  Leonardsville  Bank  v.  Willard.  ney  v.  Newcomb,  9  Gush.  46.    The 
25  N.  Y.  574  bank  should  sue  where  the   real 

4  Bank  of  British  North   Am.  v.  party  in  interest  is  required  to  sue. 
Improvement  Co.,  97  Cal.  28.  Camden  Bank  v.  Rogers,  4  How. 

»  Barling  v.  Bank  of  British  North    Pr.  63. 
Am.,  50  Fed.  R.  260.  l-See  cases  cited  in  note  15. 

6 Rosenberg  v.  First  Nat.  Bank,       "O'Brien  v.  Smith,  1  Black,  99; 
27  S.  W.  R  897.  Merchants'  Bank  v.  McClelland,  9 

7  Sturgis  v.  Rogers,  26  Ind.  1«  Colo.   608;   Johnson  v.  Catlin,  27 

Vt  87. 


§  349.]  ACTIONS   AND   JUKISDICTION.  621 

upon  it.14  An  indorsement  to  the  cashier  as  cashier  is  an 
indorsement  to  the  bank,  and  may  be  so  alleged ; 15  or  if  al- 
leged to  be  indorsed  simply  to  the  cashier,  the  allegation  is 
sufficient.  The  general  rule  as  to  pleading  the  existence  of 
a  corporation  is  applicable  to  banks.  It  is  not  necessary 
to  allege  the  corporate  character  specifically,16  and  if  the 
plaintiff  sues  as  a  corporation  the  corporate  character  must 
be  denied ; "  and  under  common-law  pleading  the  general 
issue  might  not  put  in  issue  the  corporate  character  of  the 
plaintiff,  where  the  plaintiff  sued  as  a  corporation.18  Mat- 
ters of  evidence  have  been  incidentally  noticed  in  many 
places  in  the  preceding  sections.  It  remains  to  be  said  here 
that  an  indorsement  upon  a  note  of  the  sum  for  which  it 
was  discounted,  and  the  date  of  the  discount,  is  an  admis- 
sion binding  upon  the  bank.19  A  defense  by  a  stockholder 
to  a  note  to  the  bank  is  immaterial  where  it  is  based  upon 
illegal  proceedings  whereby  he  lost  a  dividend  upon  his 
stock.20  In  an  old  case  it  was  held  that  an  action  on  the 
case  against  a  bank  did  not  lie  for  failure  to  pay  over 
money  which  it  had  collected  and  credited.21  A  judgment 
where  all  the  parties  liable  are  sued  under  a  statute  may  be 
against  any  or  all  of  the  defendants.22  Proceedings  supple- 
mentary to  execution  may  be  had  against  the  officers  of  the 
bank,  as  holding  property  of  the  bank.23  Statutes  of  limita- 
tion govern  banks,  unless  they  are  exempted  by  statute  or 
charter.24  But  it  was  held  in  Illinois  that  the  state  bank 

14  Young  v.  Hudson,  99  Mo.  102.  2ixinkham  v.  Hey  worth,  31  111. 

15  Bank  of  U.S.  v.  Davis,  4  Cranch,  519.    The  bank  here  had  the  right 
C.  C.  533;  Pratt  v.  Topeka  Bank,  12  to  credit  the  owner  of  the  collec- 
Kan.  570.  tion.    The  language  of  the   case 

16  Ryan  v.  Farmers' Bank,  5  Kan.  goes  far  beyond  anything  neces- 
658;  Lewis  v.  Bank  of  Ky.,  12  Ohio,  sary  to  be  decided.  The  case  shows 
132.  a  deposit  for  collection  and  credit, 

17  Ryan  v.  Farmers'  Bank,  5  Kan.  and  is  therefore  correctly  decided. 
658,  semble.    See  the  next  note.  22  Bussey  v.  Branch  Bank,  15  Ala. 

18  See  the  conflicting  authorities,  216. 

5  Encyc.  Plead.  &  Pr.  77  et  seq.  23  Ballston  Spa  Bank  v.  Marine 

19  Colgin  v.  State  Bank,  11  Ala.  222.  Bank,  18  Wia  490. 

20  Whittington  v.  Farmers'  Bank,  2*Mahone  v.  Central  Bank,  17  Ga. 
5  Har.  &  J.  489.  HI.    See  the  queer  discussions  of 


622  BANKS   AND   BANKING.  [§  350. 

was  the  state,  and  hence  a  statute  of  limitation  did  not  run 
against  it.25  For  the  same  reason  it  was  held  that  ministe- 
rial agents  of  the  bank  sued  with  it  were  not  liable  for  costs.28 
But  in  Arkansas  the  state  bank  was  required  to  give  a  bond 
upon  an  injunctional  order.27 

§  350.  Jurisdiction  of  courts  over  national  banks.— 

The  law  of  June  30,  1864  (13  Stat.  99),  and  of  June  3,  1866, 
carried  into  section  5198  and  section  629  of  the  Revised  Stat- 
utes, gave  jurisdiction  in  cases  relating  to  national  banks  to 
the  state  courts,  and  also  to  the  circuit  courts  of  the  United 
States.  The  act  of  June  30,  1876,  gave  federal  courts  juris- 
diction of  equity  suits  where  brought  to  enforce  the  statu- 
tory liability.1  The  act  of  July  12,  1882  (22  Stat.  163),  re- 
stricted the  jurisdiction  of  federal  courts  over  national  banks 
to  such  cases  as  those  courts  would  have  jurisdiction  to  en- 
tertain over  individuals.2  Cases  involving  usury  by  national 
banks  were  governed  by  sections  5197  and  5198,  which  gave 
concurrent  jurisdiction  to  federal  courts  and  to  state  courts; 3 
but  by  22  Stat.  163,  and.  by  25  Stat.  433,  courts  of  the  United 
States  have  jurisdiction  in  such  suits  only  on  the  ground  of 
diverse  citizenship  or  the  presence  of  a  federal  question;  but 
an  exception  is  made  in  25  Stat.  436,  as  to  cases  for  winding 
up  the  aifairs  of  national  banks.  Therefore  in  suits  for  re- 
ceivers, etc.,  the  United  States  courts  have  the  same  juris- 

the  state's  right  to  delegate  its  sov-  l  Irons    v.    Manufacturers'    Nat. 

ereignty  in  Bank  of  Alabama  v.  Bank,  17  Fed.  R  308. 

Gibson's   Adm'rs,  6  Ala.  814,  and  2  Union  Nat.  Bank  v.  Miller,  15 

also  the  case  first  cited  in  this  note,  Fed.  R.  703;  National  Bank  v.  Fore, 

which  should  be  compared  with  25  Fed.  R.  209;  Price  v.  Abbott,  17 

the  cases   cited  in  the  next  two  Fed.  R  506.    And  see  Wilson  Co.  v. 

notes.    It  is  interesting  to  conjee-  Third  Nat.   Bank,  103  U.  S.  770; 

ture  what  the  Alabama  court,  in  Commercial  Nat.  Bank  v.  Simmons, 

its  then  condition  of  mind,  would  1  Flip.  449,  for  the  rule. 

have  held  as  to  the  delegated  power  3  First  Nat.  Bank  v.  Morgan,  132 

to  condemn  private  property.  U.  S.  141.  The  defense  of  usury  was 

25  State  Bank  v.  Brown,  2  111.  106.  governed  by  the  same  rule.    Na- 

See  the  last  note.  tional  Bank  v.  Eyre,  52  Iowa,  114. 

28  Duncan  v.  State  Bank,  2  111.  262.  See  §  200,  ante,  for  other  authorities. 

27  Ex  parte  State,  15  Ark.  26a 


§  350.]  ACTIONS   AND   JURISDICTION.  623 

diction  presumably  which  they  had  prior  to  the  passage  of 
22  Stat.  163;  but  that  is  a  close  question,  because  25  Stat. 
436,  left  this  particular  jurisdiction  over  winding-up  suits 
:as  it  existed  prior  to  its  passage,  and  that  jurisdiction  was 
controlled  by  the  statute  of  1882  (22  Stat.  163),  which  had 
probably  taken  it  away.  To  obtain  a  review  of  a  usury  case 
by  the  Supreme  Court  of  the  United  States  in  error  to  the  Su- 
preme Court  of  the  state,  a  claim  of  a  right  under  a  federal 
statute  must  be  specially  set  up  and  claimed  in  the  state 
court.4  The  statute  of  July  12,  1882,  has  practically  been 
incorporated  into  the  act  of  1887  (24  Stat.  373),  amended 
and  corrected  in  1888  (25  Stat.  433),-whereby  the  national 
banks  are  made  citizens  of  the  state  where  they  are  located, 
and  the  jurisdiction  of  the  United  States  courts  over  them 
is  dependent  upon  the  diverse  citizenship  of  the  parties  or 
the  presence  of  a  federal  question.5  It  is  difficult  to  see  what 
effect  the  exception  as  to  winding-up  suits  has,  for  that  juris- 
diction was  taken  from  the  United  States  courts  by  22  Stat. 
163.  Sfince  a  state  court  cannot  issue  an  injunction  against 
a  national  bank  (see  §  35%,  post),  these  suits  are  left  in  a 
very  unsatisfactory  condition.  A  national  bank  cannot,  any 
longer,  remove  a  case  simply  because  it  is  a  national  corpo- 
ration.6 "Where  jurisdiction  is  conferred  by  reason  of  diverse 
citizenship,  the  matter  involved  must  reach  the  jurisdictional 
.amount,7  which  is  $2,000  by  25  Stat.  434.  Kon -residents 
may  of  course  remove  a  suit  to  the  federal  court.  But  where 
a  federal  question  is  involved,  the  circuit  courts  of  the  United 
States  have  concurrent  jurisdiction,8  and  the  suit  may  be  re- 

4Schuyler  Nat.  Bank  v.  Bollong,    Union  Nat.  Bank,  9  Biss.  178,— a 
150  TJ.  S.  85.  case  wrongly  decided  as  the  law 

5  Whittemore  v.  Amoskeag  Nat.    then  was. 

Bank,  134  U.  S.  527;  Petri  v.  Comm.  7  See  cases  cited  in  last  two  notes. 

Nat.  Bank,  142  U.  S.  644;  Danahy  8  Union  Nat.  Bank  v.  Miller,  15 

v.  National  Bank,  64  Fed.  R  148,  Fed.  R  703;  Auburn  Sav.  Bank  v. 

24  U.  S.  App.  351.  The  provision  as  Hayes,  61  Fed.  R  911;  Walker  v. 

to  jurisdictional  amount  of  $2,000  Windsor  Nat.  Bank,  56  Fed.  R  76, 

governs.  5  U.  S.  App.  423.    The  suit  may  go 

6  Leather    Mfg.    Nat.    Bank    v.  on  in  the  state  court  and  be  taken 
•Cooper,  120  U.  S.  778;  Wilder  v.  to  the  United  States  Supreme  Court 


BANKS   AND   BANKING.  [§  350. 

moved  upon  that  ground  from  the  state  court,  provided  the 
matter  in  dispute  is  $2,000  or  over.  The  receiver  of  a  na- 
tional bank  being  an  officer  of  the  United  States  may  sue  in 
the  circuit  court  of  the  United  States  or  in  the  district  court,9 
regardless  of  citizenship  or  of  the  amount  involved.  He  may 
remove  a  suit  against  him  from  the  state  court  upon  this 
ground.10  The  same  rule  applies  to  the  agent  of  the  stock- 
holders after  the  termination  of  the  receivership.11  Either 
of  these  officers  may  sue  or  be  sued  in  the  state  courts.12  But 
the  receiver  must  be  really  involved  as  to  his  rights  directly 
and  not  remotely,13  and  adversely  to  the  party  litigating.  If 
he  be  merely  a  formal,  party,  or  joined  because  he  holds  the 
fund  in  litigation,14  the  federal  court  does  not  thereby  gain 
jurisdiction.  The  receiver  is  not  estopped  from  asking  a  re- 
moval by  causing  himself  to  be  substituted  in  an  action  in 
the  state  court.15  But  where  a  national  bank,  as  a  going 
concern  and  not  in  the  hands  of  a  receiver,  is  a  party,  the 
rule  applied  to  determine  the  jurisdiction  of  a  United  States 
court  is  precisely  the  rule  that  would  be  applied  to  any  citi- 
zen of  the  state  where  it  is  located,16  unless  in  winding-up 

where  a  federal  question  is  spe-  607;  Thompson  v.  Sehaetzel,  2  S.  D. 

cially  raised.    Miller  v.  National  395;  Witters  v.  Sowles,  61  Vt.  366. 
Bank,  106  U.  S.  542.  13  Le  Sassier  v.  Kennedy,  123  U.  S. 

SYardley  v.  Dickson,  47  Fed.  R  521;  Van  Antwerp  v.  Hulburd,  8 

835 ;  Price  v.  Abbott,  17  Fed.  R  508 ;  Blatch.  282. 

Armstrong  v.  Ettlesohn,  36  Fed.  R       u  St.  Luke's  Church  v.  Sowles,  51 

209;   National  Bank  v.  Crawford,  Fed.  R  609. 

69  Fed.  R  532;  Thompson  v.  Pool,       ^Cadle  v.  Tracy,  11  Blatchf.  101. 

70  Fed.  R  725;  Stephens  v.  Bernays,       16  See  cases  cited  in  notes  2  and  5 
119  Mo.  143;  S.  a,  44  Fed.  R  642.  A  to  this  section,  and  Petri  v.  Comm. 
petition  to  compromise  may  also  be  Nat.  Bank,  142  U.  S.  644;  Danahy 
brought  in  the  federal  court.  In  re  v.  National  Bank,  64  Fed.  R  148,  24 
Platt,  1  Ben.  534  U.  &  App.  351.    It  may  be  worthy 

w  School  Dist  v.  First  Nat  Bank,  of  note  that  the  first  United  States 

61  Fed.  R  417;  Bartley  v.  Hayden,  Bank  could  not  sue  in  the  federal 

74  Fed.   R   913.     Contra,  Bird  v.  courts  (Bank  of  U.  S.  v.  Devaux,  5 

Cockrem,  2  Woods,  32.  Cranch,  85),  but  could  on  the  ground 

11  McConville  v.  Gilmour,  86  Fed.  of  diverse  citizenship  of  its  officers. 
R  277.  The  second  United  States  Bank  was 

12  Brinckerhoff   v.    Bostwick,    88  given  the  right   Osborn  v.  Bank  of 
N.  Y.  52;  Peters  v.  Foster,  56  Hun,  U.  S.,  9  Wheat.  73& 


§  351.]  ACTIONS   AND   JURISDICTION.  625 

suits  a  jurisdiction  remains  in  federal  courts.  A  national 
bank  bringing  suit  in  another  state  than  the  one  where  it  is 
located  may  sue  in  the  United  States  court  on  the  ground 
of  diverse  citizenship,  if  it  bring  itself  within  the  jurisdic- 
tional  requirements.17  The  method  of  alleging  the  residence 
of  the  bank  is  to  allege  its  due  organization  and  the  place 
and  state  where  located,  but  it  has  been  held  to  be  sufficient 
to  describe  it  as  of  a  certain  city.18  But  where  a  note  was 
executed  to  a  national  bank,  a  denial  on  information  and 
belief  of  its  corporate  existence  in  a  suit  on  the  note  is  friv-, 
olous.19 

§  351.  What  court  of  state  or  United  States  has  juris- 
diction.—  The  rule  as  to  jurisdiction  of  the  various  federal 
courts  in  the  act  of  1888  is  that  the  suit,  where  diverse  cit- 
izenship exists,  must  be  brought  either  in  the  district  of  the 
residence  of  the  plaintiff  or  the  defendant.1  Hence  a  na- 
tional bank  could  be  sued  in  a  United  States  court  in  another 
district  than  the  one  where  it  is  located  if  a  good  service 
could  be  obtained.  But  section  629  of  the  Kevised  Statutes 
limits  the  district  where  a  national  bank  may  bring  suit  or 
be  sued  to  the  district  where  it  is  located.2  That  statute 
must  be  considered  as  modified  by  the  later  statute.  But  in 
equity  suits  to  remove  a  cloud  from  title  —  and  the  principle 
would  apply  to  all  suits  of  a  local  nature  —  the  United  States 
court  where  the  property  is  situated  would  have  jurisdic- 

"  Manuf.  Nat.  Bank  v.  Baack,  8  McCormick  v.  Walthers,  134  U.  S. 

Blatchf.  137;  Petri  v.  Comni.  Nat.  41,  citing  many  other  decisions,  and 

Bank,  142  U.  S.  644.    But  see  First  Bostwick  v.  American  Finance  Co., 

Nat.  Bank  v.  Smith,  6  Fed.  R.  215;  43  Fed.  R.  897.   Therefore  a  national 

Farmers'  Nat.  Bank  v.  Mcllhaney,  bank  could  sue  a  non-resident  in 

42  Fed.  R.  801,  wrong.  the  district  either  where  the  bank 

18  Farmers'  Nat.  Bank  v.  Rogers,  1  resides  or  where  the  non-resident  re- 

N.  Y.  Supp.  757.    Compare  Third  sided.    And  the  bank  could  be  sued 

Nat.  Bank  v.  Teal,  5  Fed.  R  503.  in  its  own  district  as  well  as  where 

19Huffaker  v.  National  Bank,  75  the  plaintiff  resided. 

Ky.  287.  2  If  this  statute  is  applied  to  suits 

1  See  25  Stat.  433.    The  decisions  against  national  banks  it  would 

upon  this  point  are  the  following:  conflict  with  the  later  statute. 
40 


626  BANKS   AND   BANKING.  [§  351. 

tion,  provided  the  parties  were  either  of  them  non-residents, 
regardless  of  the  fact  as  to  whether  either  of  them  resided 
in  the  district  where  the  property  was  situated.3  This  cov- 
ers cases  where  both  are  non-residents  of  the  district  but 
residents  of  different  states,  but  it  does  not  seem  to  cover 
the  case  where  both  are  non-residents,  but  residents  of  the 
same  state.  Such  was  the  holding  of  the  courts  as  to 
suits  against  national  banks,  and  it  was  decided  that  ju- 
risdiction in  another  district  was  not  gained  by  a  serv- 
ice upon  an  officer  of  the  bank  in  the  foreign  district.4 
^here  a  national  bank  sues  in  a  federal  court  it  may  sue 
the  defendant  in  a  transitory  action  in  the  district  where  he 
resides.5  But  if  the  action  is  local  in  its  nature  it  could 
only  be  brought  in  the  district  where  the  property  was  lo- 
cated, and  if  that  was  not  the  district  wherein  either  the 
plaintiff  or  the  defendant  resided,  it  would  seem  to  follow 
that  the  bank  would  be  required  to  sue  in  the  proper  court 
of  the  state  where  the  property  was;  but  the  courts  have,  as 
we  have  seen,  held  otherwise.6  If  part  of  the  defendants  re- 
side in  one  district  in  the  state  and  part  in  another,  the  ac- 
tion, if  not  local,  may  be  brought  in  either  district.7  The 
act  of  congress  of  February  18,  1875  (18  Stat.  320),  confer- 
ring jurisdiction  on  the  state  courts,  gives  it  to  the  state, 
county  or  municipal  court  of  the  city  or  county  where  the 
bank  is  located.8  The  same  statute  applies  to  suits  for  usury 
sued  for  as  a  penalty.9  A  very  remarkable  judicial  deliver-- 
ance  has  denied  the  power  of  congress  to  impose  upon  the 

3  See  cases  in  note  6,  supra.  McCrary,  316.    If  part  resided  in 

4  Maine  v.  Second  Nat.  Bank,  6  the  state  where  the  bank  was  lo- 
Biss.  26.    A  state  statute  as  to  serv-  cated  and  part  in  another  state, 
ice  upon  a  foreign  corporation  gov-  what  then  would  be  the  case  ? 
erns  the  federal  courts.    Ex  parte  8  See  Rev.  Stat.,  §5198.    Thisstat- 
Schollenberger,  96  U.  S.  369.  ute  was  held  to  apply  to  suits  by,  as 

6Manuf.  Nat.  Bank  v.  Baack,  8  well  as- against,  a  national  bank. 

Blatch.  137.  This  is  now  especially  necessary,  or 

6  Dick  v.  Foraker,  155  U.  S.  404;  a  national  bank  could  not  sue  a 
United  States  v.  S.  P.  Co.,  63  Fed.  citizen  of  its  own  state  at  all 
R481.  »  Rev.  Stat,  §  519& 

7  Third  Nat  Bank  v.  Harrison,  3 


§  351.]  ACTIONS   AND   JUKISDICTION.  627 

courts  of  a  state,  called  in  the  opinion  a  foreign  jurisdiction, 
the  duty  of  enforcing  this  penal  statute  against  usury.10  But 
assuming  that  a  state  court  will  not  refuse  to  take  jurisdic- 
tion on  any  such  wild  and  untenable  ground,  a  suit  for  a 
usurious  penalty  must  be  brought  in  a  state  court  at  least 
having  the  requisite  jurisdiction  under  the  state  laws.  "Where 
usury  is  insisted  upon  as  a  defense  it  may  be  set  up  in  any 
court  where  the  usurious  contract  is  sued  upon.11  But  as  to 
other  suits  against  national  banks  it  is  a  vexed  question 
whether  the  bank  can  be  sued  in  any  state  court  other  than 
that  of  the  district  or  county  where  it  is  located.  One  series 
of  cases  holds  that  as  to  actions  transitory  in  their  nature  a 
national  bank  may  be  sued  in  any  state  court  where  service 
can  be  gained  upon  it,  though  it  be  the  court  of  another 
state  than  the  one  where  it  is  located.12  But  since  the  means 
of  gaining  jurisdiction  by  attachment  upon  non-residents  has 
been  wrested  from  the  New  York  courts,13  such  jurisdiction 
could  be  gained  only  by  service  upon  an  officer  within  the 
state,  and  such  service,  on  principle,  would  be  bad.14  But  it 
would  still  remain  the  rule  that  within  the  state  the  national 
bank  could  be  sued  in  transitory  actions,  under  these  decis- 
ions, in  a  county  of  the  state  other  than  where  the  bank  is 
located.15  Other  cases  have  strenuously  contended  that  a 
national  bank  can  be  sued  only  in  that  state  court  which 
has  jurisdiction  in  the  district  or  county  where  the  bank  is 

10  Miss.  River  Tel.  Co.  v.  First  Nat.  13  See  the  laconic  submission  in 

Bank,  74  111.  217.  The  judge  who  de-  Bank  of  Montreal  v.  Fidelity  Nat 

livered  this  opinion  had  the  longest  Bank,  112  N.  Y.  667;  and  see  §  336, 

service  on  the  bench  of  any  judge  ante. 

who  ever  sat  in  the  Illinois  Supreme  14  The  officer  would  not  be  acting 

Court.    How  he  came  to  make  such  officially.    See  Maine  v.  Second  Nat. 

an  incomprehensible  decision,  and  Bank,  6  Biss.  26. 

why  the  other  judges  concurred,  is  15  Fresno  Nat.   Bank  v.  Superior 

a  mystery.  Court,  83  Cal.  491 ;  Talmage  v.  Third 

"  See  §  200,  ante.  Nat.  Bank,  27  Hun,  61,  97  N.  Y.  531. 

12Cooke  v.  State  Nat  Bank,  52  But  this  idea  is  abruptly  dismissed 

N.  Y.  96,  which  contains  some  amus-  by  the  Supreme  Court  of  the  United 

ing  ratiocination  in  regard  to  the  States  (First  Nat.  Bank  v.  Morgan, 

power  of  congress;  Robinson  v.  Na-  132  U.  S.  141)  with  the  short  state- 

tional  Bank,  81  N.  Y.  385;  Holmes  ment  that  so  the  law  is,  without 

v.Wilmington  Nat.  Bank,  18  S.  C.  31.  any  examination  of  the  decisions. 


628  BANKS   AND   BANKING.  |~§  352. 

located.18  The  Supreme  Court  of  the  United  States,  whose 
decision  controls,  holds  that  if  the  action  is  local  the  national 
bank  should  be  sued  in  the  court  that  has  jurisdiction,  wher- 
ever that  may  be,  but  in  all  other  cases  the  bank  must  be 
sued  in  the  county  or  district  where  it  is  located.17  The  opin- 
ion in  note  15  to  this  section  does  not  examine  the  cases  upon 
the  subject,  but  shortly  says  that  the  statute  so  provides. 
Yet  if  the  objection  to  the  jurisdiction  is  not  raised  in  the 
lower  court  it  is  waived.18 

§  352.  Injunctions  and  attachments  against  national 
banks. —  No  state  court,  under  section  5242  of  the  Ee vised 
Statutes,  can  issue  an  injunction  against  a  national  bank 
prior  to  final  judgment.1  This  would  seem  to  cover  any 
injunction  against  officers  of  the  bank  which  would  suspend 
the  operations  of  the  bank.  But  whether  it  would  cover  an 
injunction  against  a  particular  officer,  not  a  managing  offi- 
cer, of  the  bank,  who  was  enjoined  from  acting  in  the  bank, 
is  a  matter  of  some  doubt.  Certainly  the  words  of  the 
statute  do  not  cover  such  a  case.  But  an  injunction  di- 
rected against  the  board  of  directors  would  be  prohibited, 
as  well  as  an  injunction  against  the  cashier  or  any  general 
officer  of  the  bank  interfering  with  the  operations  of  the 
bank.  But  a  federal  court  may  enjoin  a  national  bank,  and 
it  may  continue,  after  the  cause  is  removed,  an  injunction 
improperly  granted  by  a  state  court.2  As  we  have  already 
seen,  an  attachment  against  a  national  bank  issued  by  any 
court  is  void.* 

"Cadle  v.  Tracy,  11  Blatch.  101;  2Hower  v.  Weiss  Malting  Co.,  55 

Crocker  v.  Marine  Nat.  Bank,  101  Fed.  R.  356,  14  U.  S.  App.  210. 

Mass.  240;  Miss.  Riv.  TeL  Co.  v.  First  3  See  §  336,  ante.    If  the  federal 

Nat.  Bank,  74  111.  217.  courts    have    not  jurisdiction    of 

17  Casey  v.  Adams,  102  U.  S.  66.  suits  for  winding  up  national  banks 

18  First  Nat.  Bank  v.  Morgan,  132  under  section  4,  25  Stat.  433,  and 
U.  S.  141;  Lee  v.  Citizens'  Bank,  5  if  a  state  court  cannot  grant  an  in- 
Ohio  Dec.  2L  junction,  it  is  difficult  to  see  how 

1  See  §  336,  ante,  and  Pacific  Nat.  a  suit  of  that  character  can  be  suo 
Bank  v.  Mixter,  124  U.  S.  721;  cessfully  conducted,  unless  some 
Hower  v.  Weiss  Malting  Co.,  55  stockholder  who  is  a  non-resident 
Fed.  R.  356, 14  U.  S.  App.  210.  can  be  found  to  bring  the  action. 

See  §  350,  ante,  as  to  this  matter. 


CHAPTER  XIV. 

SAVINGS  BANKS. 

§  353.  The  nature  of  savings  banks. —  The  original  con- 
ception of  a  savings  bank  was  a  place  where  the  savings  of 
working  people  could  be  deposited  and  united  so  as  to  form 
loanable  capital.  The  funds  were  managed  without  pay  by 
officers  who  were  philanthropic  individuals,  and  the  profits 
upon  the  capital  earned  went  to  the  depositors.  This  was 
the  original  type  of  savings  bank  and  it  yet  survives,  except 
that  the  officers  are  generally  paid  a  salary.1  But  there  was 
certain  to  arise  a  kind  of  savings  bank,  where  the  profits, 
over  and  above  a  certain  interest  on  the  deposits,  would  go  to 
the  managers  of  the  institution ;  and  therefore  there  are  sav- 
ings banks  which  are  regularly  stocked  corporations,  where 
the  deposit  creates  a  debt  and  the  stockholders  are  liable 
for  the  usual  double  liability  upon  their  stock.2  There  are 
still  other  savings  banks  which  have  two  kinds  of  depos- 
itors, those  who  become  stockholders  and  those  who  are  not.3 
The  peculiar  nature  of  these  banks  has  caused  them  to  be 
separately  noticed. 

§  354.  Illustrative  cases  on  the  nature  of  savings  banks. 

Whether  a  bank  is  a  savings  bank  or  not  depends  upon  its 
functions  and  not  its  name.1  A  savings  bank  which  is  au- 
thorized to  do  a  commercial  banking  business  is  an  ordinary 
commercial  bank;2  and  a  statute  creating  savings  banks 
which  were  authorized  to  receive  deposits  and  declare  divi- 

1  Huntington  v.  Savings  Bank,  96  Bank,  32  N.  J.  Eq.  163.    But  a  bet- 
U.  S.  388.    See  the  remarks  made  ter  case  is  Murphy  v.  Pacific  Bank, 
in  the  opinion.  119  CaL  834. 

2  See  Queenan  v.  Palmer,  117  III  l  State  v.  Lincoln  Sav.  Bank,  82 
169,  and  Ward  v.  Johnson,  5  Bradw.  Tenn.  42. 

30,  for  this  kind  of  a  savings  bank.        2  Mitchell  v.  Beckman,  64  CaL  117. 

3  Stockton    v.    Mechanics'   Sav. 


630  BANKS    AND   BANKING.  [§  355. 

dends  was  held  to  be  within  a  constitutional  requirement 
which  provided  that  any  banking  law  establishing  banks, 
whether  of  deposit,  discount  or  circulation,  should  be  ap- 
proved by  a  vote  of  the  people  of  the  state.  The  consti- 
tutional provision  was  not  confined  to  stockholders  who 
owned  the  bank.3  A  savings  bank  formed  for  the  pecuniary 
benefit  of  its  members  is  not  a  benevolent  or  charitable  so- 
ciety.4 But  if  formed  merely  for  the  investment  of  money, 
and  the  payment  of  the  income  therefrom,  it  is  a  trustee,  and 
a  court  of  chancery  may  regulate  the  distribution  of  its 
assets,8  but  it  cannot  change,  any  more  than  the  legislature 
can  change,  the  terms  of  the  incorporating  act.6  But  even 
in  ordinary  savings  banks  the  claim  of  the  depositor  is  a 
chose  in  action — it  is  not  a  bailment.7  It  is  immaterial,  where 
the  bank  has  engaged  to  pay  a  certain  interest,  that  it  has 
invested  in  stocks  which  have  depreciated.8  But  the  man- 
agers have  no  right  to  profits  as  such  where  the  profits  are 
divisible  among  the  depositors.9  In  savings  banks  the  de- 
positors are  not  stockholders10  unless  the  form  of  the  organ- 
ization makes  them  so ;  the  relation  of  debtor  and  creditor 
arises  in  most  savings  banks  upon  a  deposit u  unless  it  be  a 
special  deposit.12 

§  355.  Officers  of  sayings  banks. — The  statutes  are  some- 
times drawn  so  as  to  prevent  an  officer  of  a  bank  of  circula- 
tion or  deposit  from  becoming  a  director  of  a  savings  bank  — 

s  Reed  v.  People,  125  I1L  592.  «  Makin  v.  Inst  for  Sav.,  19  Me. 

«  Shenn  v.  Mendenhall,  23  Minn.  128;  Makin  v.  Sav.  Inst.,  23  Me.  350. 

92.  9  Huntington  v.  Savings  Bank,  96 

5  In  re  Newark  Sav.  Inst,  28  N.  J.  U.  S.  388. 

Eq.  552;  Savings  Inst  v.  Makin,  23  10  Savings  Bank  v.  New  London, 

Ma  360.  20  Conn.  111. 

«  Dodd  v.  Una,  40  N.  J.  Eq.  672.  »  Ward  v.  Johnson,  5  Bradw.  30; 

7  Lund   v.   Seamen's    Bank,   37  and  compare  the  cases  in  note  7, 

Barb.  129;   People    v.  Mechanics'  supra. 

Sav.  Inst,  92  N.  Y.  7;  Ide  v.  Pierce,  "Zinn  v.  Mendel,  9  W.  Va.  580, 
134  Mass.  260;  Pope  v.  Burlington  semble.  The  bank  is  in  such  case 
Sar.  Bank,  56  Vt  284;  Ward  v.  bailee  and  is  liable  at  law  for  a  con- 
Johnson,  5  Bradw.  30.  version.  Davenport  v.  Underwood, 

13  Am.  Law  Reg.  (N.  S.)  211  (Ky.). 


§  355.]  SAVINGS   BANKS.  631 

an  exceedingly  wise  provision ;  but  a  court  is  likely  in  such 
case  to  produce  one  of  those  convenient  presumptions  of 
which  courts  keep  a  liberal  supply,  to  the  effect  that,  if  the 
director  allows  himself  to  be  voted  for,  it  will  be  presumed 
that  he  has  resigned  his  other  office.1  The  officers  of  the 
bank  are  selected  generally  by  the  board  of  trustees  by  ma- 
jority vote;2  but  where  the  trustees  are  elected  annually, 
and  the  officers  are  to  be  appointed  during  their  pleasure, 
the  office  of  treasurer  is  not  an  annual  one.3  If  the  compen- 
sation of  the  officers  is  dependent  upon  net  profits,  a  rise  in 
the  government  securities  owned  by  the  bank  has  been  held 
to  be  not  a  part  of  the  profits.4  The  officers  being  trustees 
are  liable  to  the  bank  as  are  officers  of  other  banks.5  If  they 
make  a  loan  to  a  greater  amount  than  is  permitted  by  the 
statute  they  are  liable  for  the  loss,  although  the  statute  fixes 
no  penalty.6  Where  a  treasurer  of  a  savings  bank  assigned 
to  his  bank  a  note  and  mortgage  of  lands  not  worth  double 
the  amount  of  the  note  as  the  law  required,  and  without  sub- 
mitting the  loan  to  the  finance  committee  as  required  by  the 
by-laws,  he  is  liable  irrespective  of  a  failure  on  the  part  of 
the  directors  to  repudiate  the  loan  for  so  long  a  period  as  six 
years,  and  irrespective,  too,  of  the  knowledge  of  the  direct- 
ors.7 The  treasurer  is  liable  for  permitting  the  funds  of  the 
bank  to  be  used  in  making  an  unlawful  and  imprudent  loan 
not  submitted  to  the  finance  committee.8  The  president  is 
liable  for  loss  upon  an  improvident  loan  made  to  him  not 
authorized  by  or  submitted  to  the  finance  committee.9  The 
treasurer  is  also  liable  where  he  signed  the  check  for  the 
loan.10  The  purchase  of  realty  which  was  not  authorized  by 
the  charter  and  not  submitted  to  the  finance  committee  ren- 

1  People  v.  Conklin,  7  Hun,  m  7  Williams  v.  Riley,  34  N.  J.  Eq. 

2  See  the  last  case  cited.  398. 

3  Commonwealth  v.  Reading  Sav.  8  Williams  v.  McKay,  46  N.  J.  Eq. 
Bank,  129  Mass.  73,  a  suit  on  a  bond.  25.    See  §  79,  ante,  where  the  con- 

4  Jenneiy  v.  Olmstead,  36  Hun,  elusions  from  this  case  are  stated 
536.  in  the  text. 

6  See  §  79,  ante,  et  seq.  9  See  last  case  cited. 

6  Thompson  v.  Greeley,  107  Ma      10  See  last  case  cited, 
577. 


632  BANKS   AND   BANKING.  [§  355. 


ders  liable  for  the  loss  those  officers  ^ho  took  part  in  the 
transaction.11  The  treasurer  who  signed  the  checks  therefor 
in  blank  is  also  liable.12  All  those  officers  who  participate 
in  making  unlawful  loans  are  liable  for  the  loss  thereon  to 
the  bank.13  For  a  release  of  securities  on  a  loan  by  the  presi- 
dent where  the  loan  is  to  a  manager,  the  president  and 
manager  are  both  liable.14  The  secretary  of  the  bank,  who 
knew  that  a  loan  was  unlawful,  but  acquiesced  in  it,  must 
respond  to  the  bank;15  but  a  director  who  took  no  part  in 
the  loan,  but  found  out  the  fact  after  it  was  made,  and  made 
no  objection,  cannot  be  held.16  The  trustees  who  act  in  good 
faith  and  with  ordinary  care  and  prudence  in  making  a  loan 
on  a  mortgage  are  exempt  from  blame.17  If  they  are  directly 
concerned  in  making  unlawful  loans  they  are,  of  course,  re- 
sponsible for  the  loss.18  Where  an  executive  committee  of 
the  trustees  is  acting,  they  are  liable  for  not  exercising  the 
proper  control  of  the  bank's  affairs.19  But  the  managers 
are  also  responsible  if  they  fail  to  bestow  upon  the  affairs 
of  the  bank  that  reasonable  care  which  the  law  requires  of 
them,  in  consequence  of  which  their  associates  are  enabled 
to  cause  loss.20  The  habitual  disregard  by  the  president  of 
the  bank  of  the  charter  and  the  by-laws  shows  negligence 
in  the  managers.21  They  are  presumed  to  have  failed  to  ex- 
ercise ordinary  care.22  Where  money  has  been  secretly  with- 
drawn from  the  bank  and  covered  by  a  system  of  false 
entries  for  a  series  of  years,  and  the  fact  has  not  been  dis- 

11  See  last  case  cited.  17  Williams  v.  McDonald,  37  N.  J. 

12  See  last  case  cited.  Eq.  409. 

13  Paine  v.  Barnum,  59  How.  Pr.       18See  cases  cited  in  note  13. 

303:  Williams  v.  McDonald,  43  N.  J.  »  Williams  v.  McKay,  46  N.  J. 

Eq.  392;  Knapp  v.  Roche,  44  N.  Y.  Eq.  35. 

Super.   Ct.  247;  Hun  v.   Gary,  82  20  Wilkinson  v.  Dodd,  40  N.  J.  Eq. 

N.  Y.  65.  123,  42  id.  234,  42  id.  647;  Williams 

"Williams  v.  McKay,  46  N.  J.  v.  McDonald,  42  N.  J.  Eq.  392. 

Eq.  25.  21  Williams  v.  McKay,  40  N.  J.  Eq. 

15  See  last  case  cited.  189. 

16  Knapp  v.  Roche,  44  N.  Y.  Super.  -'2  See   case  last  cited,  reversing 
Ct  247.  Williams  v.  Halliard,  38  N.  J.  Eq. 


§  355.]  SAVINGS    BANKS.  633 

covered  by  the  executive  committee  or  the  board  of  trustees, 
who  would  have  discovered  it  had  they  exercised  reasonable 
diligence,  they  are  bound  to  respond  to  the  bank  for  the 
loss.23  They  cannot  escape  by  averring  that  they  did  not 
know  of  the  fact  and  had  not  time  to  give  to  the  affairs  of 
the  bank.24  But  for  single  transactions  they  are  not  respon- 
sible if  they  were  not  otherwise  negligent;25  nor  would  they 
be  liable  for  the  first  of  a  series  of  transactions  by  the  presi- 
dent in  disregard  of  the  charter,  if  they  could  not  reason- 
ably have  anticipated  it.26  For  declaring  unlawful  dividends 
they  can  be  held;27  but  if  in  regard  to  a  particular  transac- 
tion a  trustee  did  not  act  he  is  not  responsible  for  it,  if  he  is 
not  made  liable  on  some  other  ground  of  failure  to  exercise 
care.28  But  a  trustee  is  released  for  a  loss  where  the  loss  is 
paid  by  a  subsequent  trustee.29  And  if  a  trustee  gives  the 
bank  security  to  provide  against  loss  upon  a  particular  loan 
already  made,  he  does  not  thereby  become  surety  for  money 
loaned  to  the  bank.30  The  suit  against  the  officers  may  be 
brought  by  the  bank  or  its  receiver.31  It  maybe  at  law 
where  no  accounting  is  necessary.32  But  under  one  statute 
the  state  auditor  alone  can  sue.33  If,  however,  the  bank  and 
its  receiver,  or  any  other  officer  whose  duty  it  is,  refuses 
to  bring  the  action,  the  creditors  may  sue,  making  the  bank 
or  the  receiver  and  other  officers  parties.34  The  recovery 
belongs  to  the  assets  of  the  bank.35  But  the  parties  who 
profited  by  the  improvident  loans  of  the  bank  are  not  nec- 

23  Williams  v.  McKay,  46  N.  J.  Eq.  «  See  §§  79,  81,  ante,  and  Wilkin- 
25;  Paine  v.  Irwin,  59  How.  Pr.  816.  son  v.  Dodd,  41  N.  J.  Eq.  566. 

24  Williams  v.  McKay,  46  N.  J.  32 Thompson  v.  Greeley,  107  Mo. 
Eq.  25.  577. 

25  See  case  last  cited.  83  Ryan  v.  Pvay,  105  Ind.  101. 

26  See  case  last  cited.  84  Chester  v.  Halliard,  34  N.  J.  Eq. 

27  Van  Dyck  v.  McQuade,  57  How.  341 ;  Maisch  v.Savings Fund,5  Phila. 
Pr.  63.  30,  an  excellent  opinion  by  Shars- 

28  Compare  Hun  v.  Gary,  59  How.  wood,  and  Leffman  v.  Flannigan,  5 
Pr.  426,  with  S.  C.,  83  N.  Y.  65.  Phila,  155,  an  opinion  by  Hare.  And 

29  Hun  v.  Van  Dyck,  26  Hun,  567,  see  §  83,  ante. 

92  N.  Y.  660.  86  Chester  v.  Halliard,  84  N.  J.  Eq. 

30  Best  v.  Thiel,  79  N.  Y.  15.  841. 


63-t  BANKS   AND   BANKING.  [§  356. 

essary  parties.36  The  question  of  negligence,  where  the  acts 
are  improvident  but  not  forbidden  by  law,  is  a  question  of 
fact.37  But  even  where  the  loans  are  illegal  it  seems  that 
the  officers  would  not  be  liable  if  they  had  misconstrued  the 
charter,  unless  the  act  were  foreign  to  the  business  of  the 
bank.38  Where  a  corporation  is  a  fraud  because  organized 
by  corporators  who  are  not  the  persons  designated  by  the 
legislature,  those  officers  who  act  are  responsible  personally 
to  the  depositors;39  and  such  is  the  case  where  no  corpora- 
tion whatever  is  formed.40  But  trustees  who  did  not  accept 
office  and  act  are  not  liable.41 

§  356.  Stockholders. —  "Where  the  stockholders  of  a  sav- 
ings bank  are  bound  upon  their  stock  subscription  in  double 
the  amount  of  the  stock,  the  liability  does  not  differ  from 
that  imposed  upon  ordinary  bank  stockholders ;  it  is  not  a 
penalty  or  a  forfeiture.1  It  has  been  held  that  the  liability 
could  not  be  enforced  while  the  original  stock  subscription 
was  unpaid.2  The  original  stock  subscription  can  be  col- 
lected as  in  the  case  of  any  other  corporation.  It  is  an  asset 
of  the  corporation  which  passes  to  the  assignee  of  the  bank ;  * 
but  while  an  assignee  appointed  by  a  court  under  a  statute 
is  in  possession  of  the  assets,  it  is  held  in  one  court  that  a 
creditor  cannot  maintain  a  creditor's  bill.4  Where  a  savings 
bank  is  insolvent  a  court  of  equity  may  order  all  stockhold- 
ers joined  in  an  action  which  is  brought  for  the  determina- 

36  Wilkinson  v.  Dodd,  41  N.  J.  Eq.     As  to  proof  of  no  incorporation,  see 
566;  Paine  v.  Barnum,  59  How.  Pr     In  re  Gibbs,  157  Pa.  59. 

303.  41  Maisch  v.  Savings  Fund,  5  Phila. 

37  French  v.  Redman,  13  Hun,  502.    30. 

If  the  act  is  forbidden  by  law  the  l  Queenan  v.  Palmer,  117  III  619. 

question  of  the  officer's  negligence  2  Herron  v.  Vance,  17  Ind.  595. 

is  immaterial.    He  is  liable  for  the  And  a  joint  action  was  held  not  to 

loss.    Williams  v.  McKay,  46  N.  J.  lie  at  law  against  all  the  stock- 

Eq.  25.  holders. 

ss  Williams  v.  McKay,  46  N.  J.  3  See  §61,  ante. 

Eq.  25.  4  Brown  v.  Folsom,  62  N.  H.  527. 

39  Leff man  v.  Flannigan,  5  Phila.  See  also  Schoyer  v.  Creswell,  3  Mac- 
155.  Arthur,  5. 

40  Ridenour  v.  Mays,  40  Ohio  St.  9. 


§  357.]  SAVINGS   BANKS.  635 

tion  of  the  stockholders'  liability  and  a  general  settlement 
of  the  bank's  affairs.5  But  a  petition  by  stockholders  charg- 
ing that  the  bank  is  insolvent  and  that  assessments  will  be 
made  upon  the  stock  by  officers  for  their  own  gain,  but 
charging  no  fraud  or  breach  of  trust,  is  bad  for  want  of 
equity.6 

§  357.  Powers  of  the  savings  bank. —  The  usual  purpose 
for  which  a  savings  bank  is  incorporated  or  formed  is  to  loan 
money.  It  may  loan  upon  real  estate :  and  take  security  by 
way  of  mortgage  upon  land  in  another  state.  If  it  have 
power  to  discount  notes,  it  may  purchase  them.2  But  fre- 
quently these  banks  are  denied  the  power  to  discount.3  It 
may  purchase  and  hold  city  warrants,  if  such  paper  is  within 
the  kinds  of  securities  in  which  the  savings  bank  is  per- 
mitted to  invest.4  But  if  it  loan  money  on  securities,  it  is- 
doubtless  investing  its  deposits  in  them.5  It  may  not  pur- 
chase real  estate  unless  it  is  given  the  power.6  Its  subscrip- 
tion to  stock  in  another  corporation,  where  it  has  no  funds 
to  invest,  is  ultra  vires}  If  it  owns  stock  it  may  contract 
with  a  broker  to  sell  it.8  But  it  has  no  power  to  indulge  in 
purchases  of  cotton  futures.9  By  a  power  to  give  security 
for  public  moneys  invested  with  it,  it  is  not  given  power  to 

5Herron  v.  Vance,  17  Ind.  595;  5  Duncan  v.  Maryland  Sav.  Inst,, 

Raye  v.  Savings  Inst.,  14  Rich.  Eq.  10  Gill  &  J.  299.    As  to  loans,  see 

54  Paine  v.  Barnuin,  59  How.  Pr.  303 ; 

6  Gorman  v.  Guardian  Sav.  Inst,  Rome  Sav.  Bank  v.  Kramer,  32  Hun, 

4  Mo.  App.  180.  270;  Erie  Co.  Sav.  Bank  v.  Coit,  104 

i  Lebanon  Sav.  Bank  v.  Hollen-  N.  Y.  532. 

beck,  29  Minn.  322.    See  also  Tishi-  6See  §  122,  ante. 

mingo  Sav.  Inst.  v.  Buchanan,  60  7  Franklin  Co.  v.  Lewiston  Inst, 

Miss.  496;  Williams  v.  McKay,  46  68  Me.  43. 

N.  J.  Eq.  25.  sgistare  v.  Best.  88  N.  Y.  527. 

2Pape  v.  Capitol  Bank,  20  Kan.  9  Jennison  v.  Citizens'  Sav.  Bank, 

440.    See  also  Auburn  Sav.  Bank  v.  122  N.  Y.  135.    The  contract  is  im- 

Brinkerhoff,  44  Hun,  142.  moral.    The  court  should  have  put 

3  United  Germ.  Bank  v.  Katz,  57  its  decision  on  the   ground  that 
Md.  128.  the   contract  was  wholly  illegal. 

4  Aull  Sav.  Bank  v.  City  of  Lex-  See  §  33,  ante. 
ington,  74  Mo.  104 


€36  BANKS   AND   BANKING.  [§  358. 

become  surety  on  the  bond  of  a  school  treasurer.10  It  has 
the  implied  power  to  borrow  money  and  make  negotiable 
paper  for  the  loan.11  The  contract,  while  it  is  insolvent,  to 
resume  business  by  receiving  new  deposits  to  be  used  only 
in  paying  checks  upon  new  accounts  is  beyond  its  power.12 
But  it  may  agree  with  a  depositor  to  pay  interest  upon  in- 
terest left  in  the  bank  as  nevv"  principal.13 

§  358.  Ultra  vires  acts. —  If  a  savings  bank  makes  a  loan 
contrary  to  a  statute,1  or  if  it  discounts  a  note  without  au- 
thority of  law,2  or  if  it  receives  a  bond  to  enable  it  to  con- 
tinue its  business,3  the  various  instruments  can  be  enforced 
by  the  bank.  The  presumption  will  be  indulged  that  an  act 
is  not  unlawful  until  it  is  shown  to  be  so.4  But  one  case 
holds  that  a  bank  carrying  on  an  unlawful  business  by  mak- 
ing a  loan  upon  a  discount  does  an  unlawful  act,  and  can- 
not recover  in  gwas^-contract,8  but  this  ruling  is  not  to  be 
commended.6  Conversely,  the  bank  cannot  defend  against 
a  depositor's  suit  because  the  deposit  was  in  excess  of  the 
limit  allowed  by  law,7  nor  can  it  defend  against  an  unlaw- 
ful loan  where  it  has  received  the  benefit.8  Such  is  the  rule 
as  to  a  special  deposit,9  or  upon  a  purchase  by  a  broker 
where  it  receives  the  stock  and  the  broker  sues  for  his  com- 
mission.10 But  if  the  contract  was  forbidden  by  law  because 

10  In  re  Miners'  Bank,  13  Wkly.  be  enforced  as  for  a  loan.    Pratt  v. 
Notes  Cas.  370.  Eaton,  79  N.  Y.  449.    See  also  Pratt 

11  Fifth  Ward  Sav.  Bank  v.  First  v.  Short,  79  N.  Y.  437,  and  §  33,  ante, 
Nat.  Bank,  48  N.  J.  Law,  513.  « Williams  v.  Imp.  &  Trad.  Nat. 

12  In  re  Mutual  Soc.,  2  Hughes,  374.  Bank,  44  III  App.  295. 

13  Heironimus  v.  Sweeney,  83  Md.  6In  re  Jaycox,  13  Blatch.  70. 
146.  «  See  §33,  ante. 

'Farmington  Sav.  Bank  v.  Fall,  7  Taylor   v.  Empire   State    Sav. 

71  Me.  49.  Bank,  66  Hun,  538. 

2  United  Germ.  Bank  v.  Katz,  57  8  Heironimus  v.  Sweeney,  83  Md. 

Md.  12&  146. 

sHurd  v.   Green,  17  Hun,  327;  9  Cogswell  v.  Rockingham  Sav. 

Hurd  v.  Kelley,  78  N.  Y.  588.    The  Bank,  59  N.  H.  43. 

same  rule  applies  as  to  other  banks.  1°  Sistare  v.  Best,  88  N.  Y.  527. 
If  the  note  is  void,  the  security  may 


§  359.]  SAVINGS   BANKS.  637 

it  was  immoral,  the  bank  having  received  nothing  of  value,11 
and  in  any  case  where  it  has  received  no  property  or  thing 
of  value  under  a  contract,  it  may  defend  on  the  ground  of 
ultra  vires.12  The  rules  of  law  applicable  to  savings  bartks 
do  not  differ  from  the  ordinary  rules  applicable  to  these 
transactions  stated  in  sections  27,  32  and  33,  ante,  which 
should  be  consulted.  The  liability  of  officers  upon  ultra  vires 
acts  is  noticed  in  section  355,  ante. 

§  359.  Powers  of  officers. —  The  power  of  an  officer  as 
agent  to  represent  and  act  for  his  bank  has  been  fully  exam- 
ined in  section  73,  ante,  and  the  following  sections.  Some 
peculiar  instances  as  to  savings  banks  will  be  stated  here. 
The  acts  of  the  officers  within  the  scope  of  their  authority 
bind  the  bank,  but  the  rule  is  held  with  strictness  as  to  the 
authority.  Thus,  while  a  treasurer  with  authority  assigns 
a  note  and  mortgage,  the  bank  is  liable  though  he  convert 
the  proceeds;  *  he  has  no  authority  to  execute  a  release,2  or 
to  transfer  a  promissory  note,3  or  to  discount  the  notes  of 
his  bank.4  But  he  is  presumed  to  have  authority  to  take 
possession  of  land  on  which  the  bank  holds  a  mortgage, 
where  the  possession  is  taken  for  the  purpose  of  gathering 
a  crop.5  But  the  authority  of  the  treasurer  to  indorse  a  note 
may  be  inferred  from  the  conduct  of  the  trustees ; 6  but  such 
inference  is  not  warranted  by  the  fact  that  he  has  indorsed 
before,7  or  that  the  bank  has  voted  to  sell  notes  held  by  it,8 
or  that  the  by-laws  impose  upon  the  treasurer  the  duty  of 
drawing  all  necessary  papers.9  His  act  in  forging  and  trans- 
ferring books  of  deposit  in  order  to  repay  sums  of  money 

»  Jennison  v.  Citizens'  Sav.  Bank,  4  Fifth  Ward  Bank  v.  National 

122  N.  Y.  135.  Bank,  48  N.  J.  Law,  5ia 

12  Greeley  v.  Nashua  Sav.  Bank,  63  »Bangor  Sav.  Bank  v.  Wallace, 

N.  H.  145.  87  Ma  28;  and  see  g  101,  ante,  notes 

1  Whiting  v.  Wellington,  10  Fed.  1,  2. 

R.  810.  6  Chase  v.  Hathorn,  61  Me.  505. 

2  Dedham  Inst.  v.  Slack,  6  Gush.        7  Holden  v.  Phelps,  135  Mass.  61. 
408.  SBradlee  v.  Warren  Sav.  Bank, 

« Holden  v.  Upton,  134  Mass.  177.    127  Mass.  107. 

»  See  last  case  cited. 


€38  BANKS   AND   BANKING.  [§  359. 

borrowed  or  embezzled  by  him  does  not  bind  the  bank.10 
But  where  he  is  given  power  to  release  a  mortgage,  and  he 
forged,  by  an  alteration,  the  bank's  record  of  the  resolution 
so  a's  to  give  him  power  to  assign,  the  bank  is  bound  to  a 
lonafide  assignee  relying  upon  the  record.-11  But  the  treas- 
urer has  the  power  to  execute  a  power  of  sale  in  a  deed  by 
conveying  to  purchasers  under  order  of  the  board  of  invest- 
ment.12 If  authorized  to  extend  a  note,  he  may  do  so  though 
it  release  a  surety.13  He  has  no  power  to  borrow  mo"ney,14 
nor  pledge  collaterals  for  the  bank.15  The  rule  as  to  the 
powers  of  a  cashier  of  a  savings  bank  differs  somewhat  from 
the  rule  as  to  the  cashier  of  a  commercial  bank,16  except 
where  the  savings  bank  is  also  a  commercial  bank.  The 
president  of  a  savings  bank  has  no  power  to  borrow  money 
without  authority;  n  but  where  he  is  authorized  to  sell  stock 
he  may  employ  a  broker.18  But  where  the  governing  au- 
thorities of  the  bank  permit  the  president  to  represent  him- 
self as  in  charge  of  the  savings  department,  deposits  with 
him  bind  the  bank.19  And  the  bank  may  ratify  an  unauthor- 
ized act,  as  by  accepting  a  purchaser's  deed  of  release,  where 
the  treasurer  has  executed  the  power  of  sale  in  a  mortgage.20 
There  is  no  ratification,  however,  where  the  treasurer  under- 
took to  release  a  party  upon  a  joint  and  several  note  by 
becoming  a  party  to  a  deed  of  assignment  and  the  bank  re- 
ceived dividends  on  the  assignment,  and  the  books  contain- 
ing the  payment  were  certified  as  correct.21  A  clerk  in  a 
bank  cannot  bind  the  bank  by  his  agreement  that  a  deposit 
shall  not  be  withdrawn  unless  two  certain  persons  are  pres- 

10  Commonwealth  v.  Reading  Sav.       15  See  last  case  cited. 

Bank,  133  Mass.  16.    The  holders  16  Zimmerman  v.  Miller,  2  Penny, 

here  could  not  claim  to  be  bonafide.  226. 

11  Commonwealth  v.  Reading  Sav.  17  See  case  cited  in  note  14,  supra. 
Bank,  137  Mass.  431.  ™  Sistare  v.  Best,  88  N.  Y.  527. 

12  North  Brookfield  Sav.  Bank  v.  19Beckley  v.  Commercial  Bank, 
Flanders,  161  Mass.  335.  43  a  C.  528. 

13  New  Hampshire  Sav.  Bank  v.  2°  See  case  cited  in  note  12. 

Ela,  11  N.  H.  335.  21  Dedham  Sav.  Inst  v.  Slack,  6 

14  Fifth  Ward  Bank  v.  First  Nat    Cush.  408.    The  alleged  ratification 
Bank,  48  N.  J.  Law,  513.  lacked  the  element  of  knowledge. 


§  360.]  SAVINGS   BANKS.  639 

ent  with  the  depositor.22  But  where  a  bank  receives  a  bond, 
and  the  entry  thereof  in  the  pass-book  of  the  depositor  states 
the  fact,  the  bank  cannot  deny  that  it  received  the  bond  as 
the  depositor's.23 

§360.  The  contract  of  deposit. —  A  savings  bank  does 
not  pay  money  upon  check,  but  upon  production  of  the  pass- 
book accompanied  by  an  order  of  the  depositor.  Such  banks 
have  generally  a  by-law  to  the  effect  that  the  deposit  will 
be  paid  only  upon  production  of  the  pass-book,  and  that  the 
possession  of  the  pass-book  will  be  considered  proof  of  owner- 
ship of  the  deposit.  Depositors  are  generally  required  to 
sign  an  agreement  to  this  effect,  and  the  by-law  or  agreement 
is  always  printed  in  the  depositor's  book.  This  by-law  is  a 
part  of  the  contract  of  deposit.1  The  assent  of  the  depositor 
to  it  may  be  express  by  signing  a  book  kept  for  that  pur- 
pose,2 or  it  may  be  inferred  from  the  retention  without  ob- 
jection of  the  pass-book  containing  the  printed  rules.3  This 
rule  was  held  even  as  against  a  depositor  who  could  neither 
read  nor  write.4  This  contract  is  also  binding  upon  the  bank. 
It  cannot  change  its  by-laws  without  notice  where  the  by- 
laws require  notice,  and  any  change  does  not  affect  a  depos- 

22  Riley  v.  Albany  Sav.  Bank,  36  3  Last  case  cited.  But  where  the 

Hun,  513.  •  by-law  requires  the  book  to  be 

23Zeugner  v.  Best,  44  N.  Y.  Super,  signed,  the  last  case  holds  that  the 

Ct.  393.  assent  may  be  expressed  in  some 

1  Heath  v.  Portsmouth  Sav.  Bank,  other  way;  but  Kress  v.  East  Side 
46  N.  H.  78;  Gifford  v.  Rutland  Sav.  Bank,  21  N.  Y.  Supp.  652?  holds  that 
Bank,  63  Vt.  108;  Appleby  v.  Erie  even  a  signature  to  the  by-laws  is 
Co.  Sav.  Bank,  62  N.  Y.  12;  Levy  v.  not  sufficient  where  the  bank  has 
Franklin  Sav.  Bank,  117  Mass.  448;  not  affirmatively  complied  with  a 
Burrill  v.  Dollar  Sav.  Bank,  92  Pa.  statute  requiring  the  by-law  to  be 
134;    Kummel   v.   Germania    Sav.  posted  up. 

Bank,  127  N.  Y.  488.  Contra,  Eaves  4Geitelsohn  v.  Citizens'  Sav.  Bank, 
v.  Savings  Bank,  27  Conn.  229.  But  40  N.  Y.  Supp.  662;  Warhus  v. 
under  this  last  case,  if  the  rule  had  Bowery  Sav.  Bank,  5  Duer,  67;  Bur- 
been  conspicuously  posted  up  it  rill  v.  Dollar  Sav.  Bank,  92  Pa.  134. 
seems  that  the  ruling  would  have  The  statute  seems  to  make  the  rules 
been  different.  constructive  notice. 

2  Gifford  v.  Rutland  Sav.  Bank,  63 
Vt.  108. 


64:0  BANKS   AND   BANKING.  [§  3GO. 

itor  until  he  is  notified ; 5  and  on  principle,  if  the  by-law  is  a 
part  of  the  contract,  it  cannot  change  it  at  all  as  to  a  previous 
depositor  without  the  assent  of  the  depositor.6  If  the  by-law 
or  rules  require  an  order  from  the  depositor,  the  bank  is 
bound  by  the  rule.7  If  the  by-law  requires  the  order  to  be 
witnessed  the  rule  is  binding  on  the  bank,8  and  it  is  liable 
for  money  paid  contrary  thereto.  But  the  by-law  of  the 
bank  cannot  discharge  the  bank  from  its  own  negligence. 
Whatever  the  by-law  may  be,  though  it  says  that  all  pay- 
ments upon  production  of  the  book  shall  be  valid,  and  though 
the  depositor  has  assented  thereto,  nevertheless  the  bank 
must  exercise  reasonable  care  and  caution  in  making  the 
payment.9  This  duty  is  fully  discharged  only  by  an  active 
vigilance  in  the  protection  of  the  depositor's  rights.10  This 
question  of  due  care  is  for  the  jury  to  decide  as  a  question 
of  fact,11  except  that  one  case  held,  erroneously,  that  where 
the  question  was  upon  due  care  of  the  bank,  and  the  bank 
had  before  it  the  genuine  signature  of  the  depositor,  which 
differed  from  the  signature  upon  the  order  presented,  it  was 
not  necessary  to  submit  to  the  jury  the  question  whether  the 
latter  ought  to  have  noticed  the  difference.12  But  the  ruling 
is  no  longer  authority,  and  is  not  given  any  credence  in  the 
lower  courts  of  the  same  state.18  Another  ruling  in  a  Ver- 

5  Kimins  v.  Boston  Sav.  Bank,  141  pie's  Sav.  Bank,  110  Mick  175;  Allen 
Mass.  33.    The  same  contract  con-  v.  Williamsburg  Sav.  Bank,  69  N.  Y. 
tinues  for  succeeding  deposits  until  314;  Goldrick  v.  Bristol  Sav.  Bank, 
notice  is  given.    The  same  rule  ap-  123  Mass.  320. 

plies  in  favor  of  the  corporation  10  Allen    v.    Williamsburgh   Sav. 

in  its  internal  affairs.    French  v.  Bank,  69  N.  Y.   314;   Kuminel  v. 

O'Brien,  53  How.  Pr.  394.  Germania  Sav.  Bank,  127  N.  Y.  488. 

6  Kimins  v.  Boston  Sav.  Bank,  141  u  Smith  v.  Brooklyn  Sav.  Bank, 
Mass.  33.  101  N.  Y.  58. 

7Kummelv.  Germania  Sav.  Bank,  l2  Appleby  v.  Erie  Co.  Sav.  Bank, 

127  N.  Y.  488.  62  N.  Y.  12.    Two  able  judges  dis- 

8  People's  Sav.  Bank  v.  Cupps,  91  sented. 

Pa.  315.  u  Fricke  v.  German  Sav.  Bank,  4 

»Kimball  v.  Norton,  59  N.  H.  1;  N.  Y.  Supp.  627;  Baling  v.  German 

Kummel  v.  Germania  Sav.  Bank,  Sav.  Bank,  7  N.  Y.  Supp.  643. 
127  N.  Y.  488;  Aukenhausen  v.  Peo- 


§  361.]  SAVINGS   BANKS.  641 

mont  case  did  not  leave  a  question  of  fact  to  the  jury  where 
the  circumstances  were  suspicious.14 

§361.  Ownership  of  the  deposit. —  Deposits  in  savings 
banks  are  peculiarly  prolific  in  questions  as  to  the  real  owner 
of  the  deposit.  Husband  and  wife  often  make  deposits  in 
the  bank  in  their  joint  names,  and  the  rule  as  to  ownership 
when  one  dies  is  difficult  to  find.  One  case  held  such  a  de- 
posit meant  that  the  deposit  belonged  to  the  survivor.1  But 
a  deposit  to  the  credit  of  "  J.,  or  wife  B.,"  was  held  to  prove 
'simply  that  each  should  have  power  to  draw  the  money.2 
Another  case  says  that  such  a  deposit  is  payable  to  either  or 
to  the  survivor,  but  not  to  the  personal  representative  of  one 
and  the  other  equally.3  It  is  plain  that  the  rule  of  survivor- 
ship ought  to  govern  in  such  a  case,  and  the  deposit  should 
belong  to  the  administrator  of  the  one  last  deceased.  But 
where  a  deposit  is  in  the  joint  names  of  two  persons,  not 
husband  and  wife,  without  any  provision  as  to  survivorship, 
no  presumption  as  to  survivorship  ought  to  be  indulged,  and 
the  case  should  be  left  to  proof  as  to  the  respective  portions 
of  each  depositor  where  one  of  them  is  deceased.  In  the 
absence  of  proof  the  deposit  ought  to  be  divided  equally. 
Deposits  are  often  made  by  one  person  in  the  name  of  an- 
other. In  such  a  case  evidence  is  always  admissible  to 
show  the  intention  of  the  depositor  in  making  the  deposit.4 
Thus,  where  a  father  made  a  deposit  in  his  daughter's  name, 
evidence  was  admitted  to  show  that  he  intended  to  make  her 
trustee  for  him,  because  he  already  had  in  his  own  name  as 
much  money  deposited  as  the  law  permitted.5  The  question  as 

i*  Gifford  v.  Rutland  Sav.  Inst,  63  2  Burke  v.  Slattery,  31  N.  Y.  Supp. 

Vt.  108.    The  man  who  drew  the  825. 

deposit  could   not  sign    his   own  3Mulcahey   v.     Emigrant    Sav. 

name  properly,  yet  the  court  says  Bank,  62  How.  Pr.  463.    Compare 

this  was  not  a  suspicious  circum-  In  re  Smith,  17  Abb.  N.  C.  78. 

stance.    It  may  not  be  so  in  Ver-  <Northrup  v.  Hale,  72  Ma  275; 

mont,   but  it  would  probably  be  Gerrish  v.  New  Bedford  Inst,  128 

held  to  be  elsewhere,  even  in  Louisi-  Mass.  159. 

ana.  8Brabrook    v.    Five    Cent   Sav. 

1  In  re  Brooks,  5  Dem.  Sur.  326.  Bank,    104    Mass.    22a    The   case. 
41 


BANKS   AND   BANKING.  [§  361 

to  the  ownership  is  complicated  by  the  rule  that  the  deliv- 
ery of  the  bank-book  is  necessary  in  order  to  draw  the  de- 
posit. So  it  is  held  that  a  deposit  to  the  credit  of  one 
person  as  trustee  for  another,  where  the  deposit  is  made  by 
the  first  person,  and  the  other  was  not  cognizant  of  the  de- 
posit and  did  not  receive  the  pass-book  during  the  life-time 
of  the  depositor,  was  not  a  deposit  owned  by  the  beneficiary 
under  this  rule,  although  there  was  evidence  to  show  that 
the  depositor  intended  to  create  a  trust.6  But  these  cases  are 
wrong,  because  the  by-law  or  rule  is  not  intended  to  regu- 
late deposits  in  trust,  and  at  any  rate  the  book  is  only  nec- 
essary to  the  conveyance  of  the  legal  title.  The  cases  hold- 
ing the  other  rule  are  much  to  be  preferred.7  But  where  a 
deposit  is  made  payable  to  either  of  two  or  the  survivor 
and  no  delivery  of  the  book  is  made,  the  deposit  is  the  prop- 
erty of  the  depositor.8  In  these  cases  also  the  book  ought 
to  have  been  held  merely  evidence  of  the  legal  title,  and  the 
provision  of  survivorship  ought  to  have  created  a  trust  un- 
less there  was  parol  evidence  to  rebut  it.  The  court  makes 
the  mistake  of  considering  the  case'  one  of  gift.  It  ought 
to  have  been  considered  as  a  declaration  of  trust,  just  as  if 
it  were  to  the  use  of  both  during  the  life  of  both,  then  to 

holds  that  the  illegality  in  the  con-  owner  of  the  deposit,  had  the  affi- 

tract  could  not  be  set  up  by  the  davit  proven  untrue, 

daughter,  a  stranger  to  it,  nor  was  6  Clark  v.  Clark,  108  Mass.  522; 

it  an  estoppel  in  her  favor.    In  an-  Bartlett  v.   Remington,  59  N.  H. 

other  case  a  deposit  was  made  in  364    Compare  Pope  v.  Burlington 

an  assumed  name.    Davenport  v.  Sav.  Bank,  56  Vt.  284 

Savings  Bank,  36  Hun,  303.    The  ?Blasdell  v.  Locke,  52  N.  H.  238; 

refusal   of  the  bank  to    pay  the  Boone  v.   Citizens'  Sav.  Bank,  84 

owner  of  the  deposit  was  held  to  N.  Y.  83;  "Weaver  v.  Emigrant  Sav. 

be  unjustifiable,  where  he  proved  Bank,  17  Abb.  N.  C.  82. 

his  ownership  of  the  deposit  by  an  8  Gorman  v.  Gorman,  39  Atl.  R. 

affidavit    and  tendered  the    pass-  1038  (Md.).    The  language  of  this 

book.    But  even  if  the  bank  had  opinion  goes  far  beyond  anything 

paid  under  such  circumstances  it  necessary  to  be  decided.    The  parol 

is  difficult  to  see  how  it  would  have  evidence  rebutted  the  trust  and 

been   protected   against  the  real  that  ended  the  case.    Flanagan  v. 

Nash,  185  Pa.  41. 


§  362.]  SAVINGS   BANKS.  643 

the  use  of  the  survivor.9  The  trust  is  not  executory,  it  is  ex- 
ecuted, and  there  remains  nothing  to  be  done  in  order  to 
complete  the  declaration  of  trust.  Surely  the  depositor  need 
not  say  to  himself,  I  deliver  this  book  from  myself  to  my- 
self as  trustee.  Another  case  holds,  however,  that  a  deposit 
by  a  husband  in  his  wife's  name  is  not  a  deposit  in  trust  for 
her;10  and  in  yet  another  case  the  same  ruling  was  very 
properly  made  where  the  deposit  was  so  made  that  either 
the  husband  or  wife  could  draw  it.11 

§  362.  Transfer  of  deposit. —  As  we  have  seen,  the  courts 
consider  the  matter  of  transferring  the  pass-book  as  con- 
trolling, where  the  pass-book  is  required  to  be  produced  for 
payment.1  But  the  pass-book  is  not  a  document  that  is  ne- 
gotiable, nor  would  a  title  pass  with  the  possession,  as  in 
the  case  of  an  instrument  which  is  negotiable  upon  delivery, 
although  the  rule  of  the  bank  declares  that  a  payment  upon 
the  book  produced  shall  be  a  valid  payment.2  Singularly 
enough  the  courts  give  effect  to  part  of  the  rule  by  holding 
the  transfer  of  the  book  necessary  to  convey  title,  yet  deny 
to  the  rule  efficacy  to  make  the  pass-book  negotiable.  Yet- 
the  same  courts  which  require  a  transfer  upon  the  bank's 
books  to  convey  the  full  legal  title  deny  that  such  a  trans- 
fer is  necessary  to  convey  the  legal  title  in  the  case  of 
certificates  of  stock  made  transferable  only  on  the  books. 
But  it  might  be  said  that  a  pass-book  obtained  by  fraud, 
when  transferred  to  a  lonafide  purchaser,  conveys  a  good 

9  Boone  v.  Citizens'  Sav.  Bank,  21  n  Brown  v.  Brown,  23  Barb.  565. 

Hun,  235;  Fowler  v.  Bowery  Sav.  Compare  Gerrish  v.  New  Bedford 

Bank,  47  Hun,  399.  Inst,  128  Mass.  159. 

1°  Fairfield  Sav.  Bank  v.  Small,  90  l  See  cases  cited  in  note  6  to  last 
Me.  546.  Since  there  was  evidence  section,  which  ought  not  to  have 
to  create  a  trust,  the  form  of  the  been  considered  as  cases  of  trans- 
deposit  being  such  evidence,  this  fer. 

case  is  wrong  in  its  language,  al-  2  McCaskill  v.  Conn.  Sav.  Bank,  60 

though  the  decision  is  correct,  since  Conn/  300 ;  Sm  ith  v.  Brooklyn  Sav. 

the  trust  was  rebutted.    But  see  Bank,  101  N.  Y.  58.     A  by-law  can 

Kennebec  Sav.  Bank  v.  Fogg,  83  not    make    the    book    negotiable. 

Me.  374;  In  re  Smith,  17  Abb.  N.  C.  Witte  v.  Vincent.  43  CaL  325. 


644  BANKS   AND   BANKING.  [§  362. 

title,8  on  the  theory  that  the  transfer  conveyed  an  equitable 
title  and  that  the  defense  of  bonafide  purchaser  would  be 
good.  But  such  a  defense  is  good  only  in  conjunction  with 
a  legal  title.  The  delivery  of  the  pass-book  with  the  inten- 
tion of  transferring  gives  the  transferee  an  equitable  title.4 
An  assignment  of  the  deposit  noticed  to  the  bank  has  the 
same  effect.5  In  either  case  the  transfer  is  good  against  sub- 
sequent attachments  or  garnishments,6  and  hence  would  be 
good  as  against  a  subsequent  assignee,  or  an  executor  or  ad- 
ministrator. The  deposit  is  without  doubt  subject  to  gar- 
nishment,7 but  the  garnishment  only  reaches  the  interest  that 
the  debtor  has  in  the  deposit;  and  while  the  bank  would,  no 
doubt,  be  protected  for  recognizing  a  garnishment,  if  it  had 
no  notice  of  the  depositor's  assignment,  yet  the  creditor  ob- 
tains by  the  garnishment  no  more  than  the  rights  of  his 
debtor,8  and  the  debtor,  whether  he  has  made  a  written  assign- 
ment or  not,  has  parted  with  all  but  the  mere  legal  title.* 
The  rule  is  the  same  for  an  assignment  as  against  an  admin- 
istrator.10 The  assignee  except  by  the  aid  of  a  statute  can-* 
not  maintain  an  action  in  his  own  name,11  but  can  sue  in  the 
name  of  his  assignor  or  of  his  personal  representative.12  The 
rules  of  the  bank  cannot  prevent  gifts  of  the  deposit  inter 
vivos,13  or  gifts  causa  mortis,  and  after  notice  of  the  donee's 
claim  the  bank  cannot  disregard  his  rights;14  nor  when  it  has 
notice  of  assignment  can  it  disregard  the  rights  of  the  as- 

3  See    McCaskill    v.    Conn.    Sav.  9  Appeal  of  Guinan,  70  Conn.  842; 
Bank,  60  Conn.  300.  Policy  v.  Hicks,  50  N.  E.  R  809; 

4  Pierce  v.  Boston  Sav.  Bank,  129  Watson  v.  Watson,  69  Vt.  24a 
Mass.  425.  10Foss  v.  Lowell  Sav.  Bank,  111 

6  Kingman  v.  Perkins,  105  Mass.    Mass.  285. 
111.  » Howard  v.  Savings  Bank,  40  Vt 

6  See  case  last  cited  and  Taft  v.    597. 

Bowker,  132  Mass.  277.  12  Foss  v.  Lowell  Sav.  Bank,  111 

7  Nichols  v.  Schofield,  2  R  I  123,    Mass.  285.  . 

and  cases  cited  in  last  two  notes.          ls  Gammond  v.  Bowery  Sav.  Bank, 

8  Commonwealth  v.  Scituate  Sav.    15  Daly,  483.    Compare  McNamara 
Bank,  137  Mass.  301 ;  Taft  v.  Bowker,    v.  McDonald,  69  Conn.  484. 

132  Mass.  277;  Norton  v.  Piscataqua       14  Walsh  v.  Bowery  Sav.  Bank,  7 
Ins.  Co.,  Ill  Mass.  532.  N.  Y.  Supp.  669. 


§  363.]  SAVINGS    BANKS.  645 

signee,  though  another  person  presents  the  book  with  a  sub- 
sequent assignment.15 

§  363.  Payment  of  the  deposit. —  There  are  two  rules  of 
savings  banks  which  have  a  bearing  upon  the  question  of 
payment.  The  first  is  that  a  payment  upon  the  production 
of  the  bank-book  shall  be  a  good  payment.  This  does  not 
excuse  the  bank  for  paying  negligently  to  one  not  entitled 
to  payment.1  The  book  may  be  lost  or  stolen,  and  if  the 
bank  pays  to  the  holder  of  the  book  and  is  guilty  of  no  neg- 
ligence in  not  discovering  the  fraud  of  the  holder  of  the 
book,  the  bank  is  exonerated.2  The  bank  is  not  required  to 
have  the  depositor  identified,3  but  if  the  circumstances  are 
suspicious  the  bank  ought  to  be  required  to  cfo  so.  But  if 
the  law  governing  savings  banks  is  not  consistent  with  the 
by-law,4  or  if  the  by-laws  require  an  order  from  the  depos- 
itor and  the  bank  pays  without  an  order,5  or  pays  upon  an 
order  not  in  the  form  required  by  the  by-law,6  the  payment 
is  not  good.  If  an  order  is  presented  which  is  forged,  the 
bank  officer  must  be  vigilant  in  detecting  the  forgery ; 7  and 
generally  it  may  be  said  that  any  circumstance  which  tends 
to  show  a  want  of  that  care  and  prudence  which  a  banker 
under  the  circumstances  ought  to  exercise  will  present  a  case 
for  a  jury  to  pass  upon  as  a  question  of  fact,8  whether  the 

15  McCarthy  v.  Provident  Inst.,  159  4  Ackenhausen  v.  People's  Sav. 

Mass.  527.  Bank,  110  Mich.  175. 

1  See  §  860,  ante,  note  9,  and  Clark  5  Kummel     v.    Germania     Sav. 
v.  Saugerties  Bank,  62  Hun,  346.  Bank,  127  N.  Y.  488. 

2  Sullivan  v,  Lewiston  Sav.  Inst.,  6  People's  Sav.  Bank  v.  Cupps,  91 
56  Me.  507;   Donlan  v.  Provident  Pa.  315. 

Inst.,  127  Mass.  183.  1  Allen    v.   Williamsburgh   Sav. 

3  Sullivan  v.  Lewiston  Sav.  Inst..    Bank,  69  N.  Y.  314,  and  case  in  note 
56  Me.  507.    And  see  also  Gifford  v.    5,  supra. 

Rutland  Sav.  Bank,  63  Vt.  108,  a  8  Smith  v.  Brooklyn  Sav.  Bank, 

case  palpably  wrong.    The  court  101  N.  Y.  58.    See  Appleby  v.  Erie 

says  that  a  man  who  failed  to  sign  Co.  Sav.  Bank,  62  N.  Y.  12,  which 

his  own  name  properly,  although  he  can  no  longer  be  considered  an  au- 

was  not  shown  to  have  been  at  all  thority. 
deficient  in  penmanship,  was  not 
an  object  of  suspicion. 


646  BANKS   AND   BANKING.  [§  363, 

negligence  be  in  not  investigating  the  personality  of  the  ap- 
plicant for  payment,9  or  in  not  refusing  to  pay  upon  a  sus- 
picious signature.10  A  valuable  lesson  was  taught  to  bank 
officers  by  the  holding  that,  where  an  alleged  donee  causa 
mortis  sued  the  bank  after  it  refused  payment,  and  the  proof 
showed  that  the  donee's  attorney  had  prepared  the  plead- 
ings on  both  sides  of  the  case  and  the  referee's  decision  and 
paid  all  the  costs,  a  case  of  prima facie  negligence  was  pre- 
sented.11 This  species  of  complaisance  is  too  common  with 
bank  officers.  It  has  been  said  that  the  negligence  of  the 
bank  will  not  make  it  liable,  where  the  depositor  was  also 
guilty  of  negligence  in  not  notifying  the  bank  of  his  loss.12 
One  court  recognizing  the  rule  held  that  where  the  depos- 
itor was  shot  and  grievously  wounded  by  a  robber  who  stole 
the  pass-book,  the  depositor  was  not  guilty  of  negligence, 
when  he  notified  the  bank  the  next  day.13  The  contention 
that  he  was  negligent  under  the  circumstances  was  worthy 
of  the  solemn  advocacy  of  a  chief  of  the  French  army  at  one 
of  their  court-martial  travesties.  But  all  these  cases  that 
hold  the  failure  to  notify  contributory  negligence,  where 
the  bank  was  negligent  in  paying,  are  judicial  errors,  for  the 
simple  reason  that  the  negligence  is  not  contributory.  It  is 

9  Fox  v.  Onondaga  Sav.  Bank,  7  the  depositor.  Israel  v.  Bowery  Sav. 

N.  Y.  Supp.  17;  Allen  v.  Williams-  Bank,  9  Daly,  507.     Contra,  Abra- 

burgh  Sav.  Bank,  69  N.  Y.  314  Com-  mowitz  v.  Citizens'  Sav.  Bank,  40 

pare  Wall  v.  Emigrant  Sav.  Bank,  N.  Y.  Supp.  385,  is  the  better  rule, 

64  Hun,  249.  for  payment  is  an  affirmative  de- 

10  Fricke  v.  German  Sav.  Bank,  4  f ense. 

N.  Y.  Supp.  627;  Saling  v.  German  12  Kelly  v.  Emigrant  Sav.  Bank,  2 
Sav.  Bank,  7  N.  Y.  Supp.  642;  Weg-  Daly,  227.  This  is  a  decision  by  the 
ner  v.  Second  Ward  Sav.  Bank,  76  lamented  Cardozo,  who  once  filled 
Wis.  242;  Hagar  v.  Buffalo  Sav.  so  large  a  place  in  the  public  prints, 
Bank,  31  N.  Y.  Supp.  44^;  Tobin  v.  but  there  are  other  reasons  for  con- 
Manhattan  Bank,  26  N.  Y.  Supp.  14.  sidering  the  case  erroneous.  See 
Compare  Gifford  v.  Rutland  Sav.  notes  14  and  15.  Goldneck  v.  Bris- 
Bank,  63  Vt  108,  a  wrong  decision,  tol  Sav.  Bank,  123  Mass.  320;  Levy 
See  note  3,  supra.  v.  Franklin  Sav.  Bank,  117  Mass. 

11  Farmer  v.  Manhattan  Sav.  Inst.,  448. 

60  Hun,  462.  The  burden  of  proof  13  Wegner  v.  Second  Ward  Sav. 
to  show  negligence  is  said  to  be  on  Bank,  76  Wis.  242. 


§  363.]  SAVINGS   BANKS.  647 

a  settled  rule  of  law  that  where  a  party  has  by  negligence 
put  himself  in  a  position  where  he  is  injured  by  the  negli- 
gence of  another,  his  negligence  is  not  contributory  where 
the  other  party  had  the  clear  opportunity  of  avoiding  com- 
mitting the  injury,  but  through  negligence  did  not  avoid  the 
injury.14  Applying  this  rule  to  the  case  of  the  depositor, 
the  bank  had  the  chance  of  avoiding  the  payment  had  it 
exercised  due  care,  and  it  is  therefore  liable.15  But  if  the 
real  owner  misleads  the  bank  by  his  statements,  he  is  es- 
topped.16 If  he  is  negligent  in  furnishing  information  to  a 
person,  who  was  thereby  enabled  to  mislead  the  bank,  his 
contributory  negligence  is  then  clearly  a  bar  to  his  recovery, 
because  it  contributed  to  the  injury  and  caused  the  bank's 
act.17  But  it  is  more  correct  to  call  this  a  case  of  estoppel. 
The  rule  as  to  payment  upon  the  production  of  the  pass-book 
ceases  on  the  death  of  the  depositor.18  Either  upon  this 
ground  or  because  the  administration  was  void,  a  depositor 
may  recover  a  deposit  paid  to  his  duly  appointed,  so  far  as  the 
record  showed,  personal  representative.19  Under  a  statute  a 
depositor  may  indicate  in  a  book  kept  at  the  bank  a  person 
to  whom  his  deposit  is  payable  upon  his  death,20  and  the  ap- 

14  Da  vies  v.  Mann,  10  M.  &  W.  545,  gence  of  the  depositor.    But  negli- 
was  the  original  case;  but  the  great  gence  to  be  contributory  must  con- 
case  of  Radley  v.  London  Ry.  Co.,  1  cur  with  negligence  of  another.    If 
App.  Cas.  754,  which  passed  on  ap-  what  the  court  says  is  true,  it  is 
peal  through  the  Exchequer  Cham-  perfectly  safe  to  negligently  kill 
ber  to  the  House  of  Lords,  is  the  any  one  who  has  through  negli- 
best  illustration.    The    American  gence  put  himself  in  a  dangerous 
cases  may  be  found  cited  2  Thomp.  position.    The  court  did  not  mean 
Neg.   1157,  but  the  author's  text  to  state  the  proposition  which  it 
shows  that  he  does  not  understand  did. 

the  point  16See  Eagle  Mfg.  Co.  v.  Belcher, 

15  The  courts  have  failed  to  apply    89  Ga.  218. 

this  principle,  although  it  is  hinted  17  Wall  v.  Emigrant  Sav.  Bank,  64 

at  in  People's  Sav.  Bank  v.  Cupps,  Hun,  249. 

91  Pa  315;  but  in  Bank  v.  Mor-  18 Farmer  V.Manhattan  Sav.  Inst, 

gan,  117  U.  S.  96,  the  court  meant  60  Hun,  462,  semble. 

to  state  the  principle,  but  instead  19  Jochumsen  v.  Suffolk  Sav.  Bank, 

said  that  the  antecedent  negligence  85  Mass.  87. 

of  the  bank  would  be  a  complete  20  Appeal  of  Knorr,  89  Pa.  93. 

defense  to  the  subsequent  negli- 


648  BANKS   AND   BANKING.  [§  363. 

pointee  takes  the  fund.21  A  rule  of  savings  banks  requires 
indemnity  to  be  given  by  the  depositor  where  the  book  can- 
not be  produced.  This  rule  is  binding  upon  the  depositor22 
as  well  as  his  personal  representative.23  But  if  the  book  is 
withheld  by  the  depositor's  family,  the  administrator  may 
recover  without  giving  indemnity;24  nor  is  the  fact  that  in- 
demnity is  required  by  the  rule,  any  reason  for  the  depositor 
suing  without  such  a  tender  not  being  permitted  his  action.25 
So  the  real  owner  of  the  deposit  made  for  him  by  another, 
who  received  the  bank-book,  may  recover  the  deposit,  al- 
though his  signature  is  not  with  the  bank,  because  the  per- 
son making  the  deposit  signed  his  name ;  he  needs  not  give 
indemnity  to  the  bank,  though  the  bank's  custom  required 
a  deposit  for  another  to  be  so  entered  on  the  books.  The 
demand  was  held  good  where  it  was  accompanied  by  an  affi- 
davit'as  to  the  circumstances  of  the  deposit.26  Under  no 
circumstances  is  the  bank  permitted  to  retain  the  deposit 
because  the  book  cannot  be  produced.27  Where  a  statute 
provided  that  a  deposit  to  the  credit  of  a  minor  may  be  paid  to 
the  person  making  the  deposit,  yet,  where  the  father  and  the 
minor  both  made  deposits  in  the  name  of  the  minor,  the  pay- 
ments to  the  father  were  good  only  to  the  extent  of  his  con- 
tribution to  the  deposit.28  Payment  by  the  bank  to  the  real 
owner,  however  made,  pays  the  deposit.29  Where  the  bank 
paid  part  of  a  deposit  upon  a  genuine  order  and  part  upon 
a  forged  order,  and  the  depositor  received  a  deposit  to  her 

21  Fidelity  Ins.  Co.  v.  Wright,  10  25  Wagner  v.  Howard  Sav.  Inst, 
Wkly.  Notes  Cas.  177.  52  N.  J.  Law,  225. 

22  Heath  v.  Portsmouth  Sav.  Bank,  26  Wallace  v.  Lowell  Inst.,  7  Gray, 
46  N.  H.  78.    Even  though  the  book  134    The  Massachusetts  cases  are 
be  lost.    Wall  v.  Provident  Inst.,  hard  to  reconcile,  as  to  when  the 
85  Mass.  96;  Mitchell  v.  Home  Sav.  bank  can  insist  upon   indemnity 
Bank,  38  Hun,  255.  and  when  not. 

23  Wall  v.  Provident  Inst,  85  Mass.  &  Palmer  v.  Providence  Inst.,  14 
96,  88  Mass.  320.  R.  L  68. 

24  Palmer  v.  Providence  Sav.  Inst,  a  Dickinson  v.  Leominster  Sav. 
14  R.  L  68.    No  claim  was  made  by  Bank,  152  Mass.  49. 

any  third  party  to  the  deposit  ^Tay  v.  Concord  Sav.  Bank,  60 

N.  H.  277. 


§  364:.]  SAVINGS   BANKS.  649 

credit  from  the  forger  to  the  amount  of  three-fourths  of  the 
genuine  order  to  repay  the  loan  made  by  the  genuine  order, 
the  payment  to  credit  was  held  to  be  upon  the  loan  and  not 
to  reimburse  the  bank  upon  the  forgery.30  Where  notice  is 
required  for  a  payment  of  the  deposit,  the  bank  waives  the 
notice  where  it  refuses  to  pay  because  it  has  paid  to  an- 
other.31 But  there  is  no  presumption  that  notice  is  required  — 
the  fact  must  be  proven.32  The  real  owner,  who  waives  his 
claim  to  the  deposit,  cannot  hold  the  bank.33 

§  364.  Actions  for  deposits. —  The  usual  action  for  a  de- 
posit will  be  the  common-law  action  of  assumpsit  or  debt.1 
The  book  is,  of  course,  evidence  to  show  the  deposit,  and  it 
may  be  offered  solely  for  that  purpose.2  A  suit  is  not  pre- 
maturely brought  where  the  banker  reserves  sixty  days'  no- 
tice of  a  drawing  of  the  deposit,  where  he  does  not  demand 
it.3  Where  conflicting  claims  are  made  upon  the  bank  it 
may  have  an  interpleader  upon  payment  into  court.4  But 
the  application  must  show  a  prima  facie  case  of  conflicting 
claims,  and  the  facts  stated  must  be  sufficient  to  indicate 
adverse  titles.5  Under  the  statute  the  facts  showing  the 
nature  of  the  claim  made  must  be  stated.6  And  it  was  held 
that  the  bank  could  not  interplead  a  claimant  with  title  su- 

30  Underbill  v.  Poughkeepsie  Sav.  2  Brown  v.  Abingdon  Sav.  Inst, 

Bank,  32  Hun,  432.  119  Mass.  69.    The  matter  may  be 

»i  Abramowitz    v.   Citizens'  Sav.  of  advantage  in  not  compelling  the 

Bank,  40  N.  Y.  Supp.  385.  plaintiff  to  offer  the  rules  in  evi- 

32  Weld  v.  Eliot  Sav.   Bank,  158  dence  in  connection  with  the  fact 

Mass.  339.  of  deposit. 

»3  McDermott  v.'Miners' Sav.  Bank,  3  Arnold  v.  Seifert,  76  III  App.  666. 

100  Pa.  285.  4  Faivre  v.  Union  Sav.  Inst.,  13 

»Makin  v.  Inst.  for  Sav.,  19  Me,  N.  Y.  Supp.  423. 

128.     The    beneficiary  of  a   trust  5  Mars  v.  Albany  Sav.  Bank,  69 

must,  of  course,  seek  his  remedy  in  Hun,  398;  Mahro  v.  Greenwich  Sav. 

equity,  except  where  a  right  to  sue  Bank,  38  N.  Y.  Supp.  126. 

at  law  in  exceptional  cases  exists  6  Mahro  v.  Greenwich  Sav.  Bank, 

in  jurisdictions  which  have  been  38  N.  Y.  Supp.  126. 
hampered  by  the  want  of  an  equi- 
table system  of  remedies. 


650  BANKS   AND   BANKING.  [§  365. 

perior  to  the  depositor,  where  the  claimant  does  not  proceed 
by  law  to  enforce  his  rights.7  An  interpleader  in  the  nat- 
ure of  a  summons  was  also  refused  as  against  the  adminis- 
trator of  the  assignor  where  the  assignee  was  suing  in  his 
name,  although  the  statute  permitted  any  other  person  than 
plaintiff  to  be  summoned.8  A  substitution  of  parties  was 
refused  where  the  bank  held  under  a  personal  contract  as 
agent  or  bailee.9 

§  365.  Forfeiture  of  charter   and  insolvency.  —  The 

grounds  for  forfeiture  of  a  charter  of  a  bank  have  been  al- 
ready indicated.1  In  the  case  of  a  savings  bank  a  forfeiture 
for  suspension,  where  no  stockholder  was  complaining,  was 
refused.2  Where  insolvency  occurs,  the  stockholders  or  the 
creditors  have  the  usual  remedies  in  such  cases.3  But  in 
some  forms  of  savings  bank  one  depositor  cannot  sue  to  re- 
cover his  deposit,  where  a  loss  occurs  because  the  assets  be- 
long to  all  the  depositors  alike.4  But  upon  a  petition  for  a 
receiver  there  must  be  a  charge  of  breach  of  trust  by  the 
officers  unless  the  proceeding  is  given  by  statute.5  Unless 
a  statute  forbids  it,  a  savings  bank  may  make  an  assignment 
for  creditors.6  But  upon  winding  up  the  court  cannot  make 
a  reduction  on  deposits  and  provide  for  payment  in  instal- 
ments,7 but  under  a  statute  it  may  do  so.8  Where  a  receiver 

7  German  Sav.  Bank  v.  Friend,  20  595;  Raye  v.  Savings  Inst.,  14  Rich. 

N.  Y.  Supp.  434.  Eq.  54.    And  see  §§  61,  65,  67,  80,  83, 

s  Pierce  v.  Boston  Sav.  Bank,  125  84,  85,  86  and  356.  ante. 

Mass.  593.  4  Bunnell  v.  Collinsville  Sav.  Soc., 

9  Lund  v.  Seamen's  Bank,  20  How.  38  Conn.  203:  Lewis  v.  Lynn  Inst, 

Pr.  461.    The  real  ground  for  this  148  Mass.  235. 

decision  was  that  there  was  no  suf-  5  Gorman  v.  Guardian  Sav.  Bank, 

ficient  showing  as  to  the  adverse  4  Mo.  App.  180. 

claim.  «In  re  Miners'  Bank,  13  Wkly. 

1  See  §  319,  ante.  Notes  Cas.  370. 

2  State  v.   La.  Sav.   Co.,  12  La.  7  In  re  Newport  Sav.   Bank,  68 
Ann.  568.   Courts  in  Louisiana  have  Ma  396. 

been  compelled  in  times  past  to  ex-       8  People  v.  Ulster  Co.  Sav.  Inst, 
tend  much  indulgence  to  its  banks.     133  N.  Y.  689,  affirming  20  N.  Y. 

3  See  Herron  v.  Vance,  17  Ind.    Supp.  148. 


§  365.]  SAVINGS   BANKS.  651 

or  assignee  is  appointed  he  has  power  to  sue  in  his  own 
name,9  or  in  that  of  the  bank  upon  its  claims.  He  may  buy 
in  at  execution  sale  made  for  the  bank.10  He  may  sue  to  set 
aside  a  fraudulent  assignment  or  transfer  by  the  bank,11  and 
he  may  enforce  the  bank's  claims  against  its  officers.12  But 
under  one  statute  it  was  held  that  he  could  not  sue  upon  the 
stockholders'  liability.13  "Where  the  managers  of  a  savings 
bank  have  gone  into  equity  to  protect  the  depositors,  they 
must  realize  upon  the  assets  and  pay  depositors  as  fast  as 
possible  without  sacrifice.14  The  expenses  of  winding  up  a 
savings  bank  of  the  old  type  must  be  paid  first  and  then  the 
debts,  and  last  the  depositors,15  but  under  another  system  the 
depositors  were  on  the  same  plane  with  the  general  cred- 
itors.16 The  claims  against  the  bank  take  precedence  in  the 
order  fixed  by  statute  or  the  general  law.  Thus  the  capital 
cannot  be  claimed  by  the  depositors  alone,17  but  a  promise 
by  the  bank  to  use  certain  securities  for  the  benefit  of  its 
savings  depositors  creates  a  lien  upon  a  trust  in  those  securi- 
ties;18 yet  where  a  savings  bank  with  powers  to  execute 
trusts  received  a  deposit  upon  trust  to  pay  the  income  to 
the  widow  and  the  surplus  of  income  to  her  children,  it  was 
held  that,  as  there  was  nothing  to  show  a  special  deposit  or 
anything  else  than  a  general  deposit,  there  was  no  priority.19 
The  decision  can  be  justified  only  on  the  ground  that  the 
bank  was  a  trustee  for  the  depositors.  If  it  was  not,  the  de- 
cision is  wrong.20  A  check  given  in  payment  of  a  deposit 
but  itself  not  paid  is  not  entitled  to  priority,  but  money  paid 
to  the  bank  to  obtain  its  check  to  accommodate  the  payee 

9  Hall  v.  Bracket,  60  N.  H.  215.  u  Cogswell  v.  Rockingham  Sav. 

NHobart  v.  Bennett,  77  Me.  401.  Bank,  59  N.  H.  43;  Stockton  v.  Sav. 

H  Holden  v.  Phelps,  135  Mass.  61.  Bank,  32  N.  J.  Eq.  163. 

12  Van  Dyck  v.  McQuade,  57  How.  w  People  v.  Mechanics'  Sav.  Inst, 

Pr.  62;  and  see  cases  cited  in  notes  92  N.  Y.  7. 

33  and  34  to  §  356,  ante.  «  Appeal  of  Fox.  93  Pa.  406. 

w  Herron  v.  Vance,  17  Ind.  595.  i8  Ward  v.  Johnson,  95  III  215. 

See  §  66,  ante.  "Vail  v.  Newark  Sav.  Inst,  32  N, 

i*  In  re  Dane  Savings  Inst,  29  N.  J.  Eq.  627.    See  §  353,  ante. 

J.  Eq.  109.  20  See  §  341,  ante. 


<552  BANKS   AND   BANKING.  [§  365. 

is  a  preferred  claim,  where  the  check  was  dishonored.21  The 
last  case  is  called  one  of  special  deposit,  but  the  facts  do  not 
bear  out  that  construction.  It  was  a  mere  general  deposit, 
not  entitled  to  a  priority,  unless  the  bank  was  known  to  be 
insolvent  when  it  took  the  money.  There  are  sometimes 
different  classes  of  depositors,  and  if  the  deposits  of  one 
kind  have  a  lien  on  the  assets  they  are  ahead  of  the  ordi- 
nary depositors.22  Where  one  set  of  depositors  were  entitled 
to  profits  and  the  other  set  were  mere  general  depositors, 
the  bank  was  held  to  be  a  trustee  for  all  alike.23  A  decision 
rendered  against  a  class  of  depositors  who  were  represented 
by  a  chairman  of  their  committee  was  held  binding  upon  all 
of  the  class  in  favor  of  the  receiver.24  The  depositor's  right 
of  set-off  depends  upon  whether  he  is  in  the  position  of  a 
stockholder  when  he  has  no  set-off,25  or  in  the  position  of  a 
creditor  when  he  has.26  But  a  special  agreement  made  by 
the  bank  may  give  him  the  right,27  even  where  he  would 
not  otherwise  have  it.  But  where  the  set-off  exists,  if  there 
be  a  statute  the  case  must  fall  within  the  statute.  Makers 
of  a  joint  and  several  note  were  held  under  a  statute  to  have 
no  set-off  against  the  note  for  their  individual  deposits.28 
An  assignee  of  a  depositor  can  set  off  his  deposit  against  the 
bank's  claim  without  any  previous  notice  of  the  assign- 
ment being  given.29  An  agreement  made  by  the  bank  to 

21  Stockton    v.   Mechanics'   Sav.  27  Hall  v.  Paris,  59  N.  H.  71.  where 
Bank,  32  N.  J.  Eq.  163.  the  set-off  was  allowed  because  the 

22  Heironimus  v.  Sweeney,  83  Md.  deposit  had  been  made  to  pay  the 
146.  particular   debt.     But  the  set-off 

23  Stockton    v.    Mechanics'  Sav.  was  denied  where  the  deposit  rep- 
Bank,  32  N.  J.  Eq.  163.  resented    the    money    borrowed. 

2<  Dewey  v.  St.  Albans  Trust  Co.,  Ilannon  v.  Williams,  34  N.  J.  Eq. 

60  Vt.  1.  255.  Contra,  New  Amsterdam  Sav. 

25  Osborn  v.  Byrne,  43  Conn.  155;  Bank  v.  Tartters,  4  Abb.  N.  C.  215. 

Cogswell  v.Rockingham  Sav.  Bank,  zsBarnstable  Sav.  Bank  v.  Snow, 

59  N.  H.  43;  Stockton  v.  Mechanics'  128  Mass.  512.  The  rule  was  statu- 

Sav.  Bank,  83  N.  J.  Eq.  16&  tory.  But  see  §§  140  and  144,  ante. 

28  The  rule  would  be  the  rule  as  to  29  Bridgewater  Sav.  Bank  v.  Soule, 

commercial  banks.  See  §  144,  ante.  129  Mass.  528. 


§  365.] 


SAVINGS   BANKS. 


655 


hold  the  deposit  of  one  against  the  overdraft  of  another 
not  enforceable  against  the  bank  after  insolvency.30 


so  Van  Dyck  v.  McQuade,  20  Hun, 
262,  85  N.  Y.  616.  If  the  lien  upon 
the  other  deposit  was  created  by 
the  agreement,  then  certainly  it 
would  follow  that  the  bank  itself 
could  not  refuse  to  enforce  its  lien. 
If  it  should  enforce  its  lien  it  could 
do  so  only  by  applying  the  deposit, 
and  if  the  deposit  had  remained 


a  general  deposit,  the  application 
would,  no  doubt,  give  that  general 
depositor  a  preference.  But  the 
effect  of  the  agreement  was  to 
make  the  deposit  special,  and  to 
make  it  security  for  the  overdraft. 
If  that  is  so,  the  special  deposit 
clearly  had  a  priority  and  the  rul- 
ing was  wrong. 


CHAPTEK  XV. 

CLEARING-HOUSES. 

§  366.  Nature  of  the  clearing-house. —  A  clearing-house 
is  a  voluntary  association1  of  banks  for  the  purpose  of  facil- 
itating exchanges  and  settlements  between  them.  Each 
bank  in  the  clearing-house  has  a  representative  there  at  a 
certain  hour.  He  sits  at  a  desk  and  receives  all  paper  against 
his  bank  and  delivers  to  the  representative  of  each  other 
bank  the  paper  which  his  bank  holds  against  that  particular 
bank.  If  the  bank  delivers  more  paper  than  it  receives  it 
is  entitled  to  a  credit  against  the  other  bank;  if  it  delivers 
less  than  it  receives,  it  is  debited  in  favor  of  the  other  bank. 
Settlements  between  banks  are  made  either  by  clearing- 
house certificates  or  in  cash.  If  made  in  clearing-house  cer- 
tificates the  manager  issues  to  the  bank  entitled  to  a  credit 
a  certificate  for  the  amount  and  charges  it  against  the  bank 
from  which  the  credit  is  owing  in  favor  of  the  other  bank. 
Each  bank  has  until  a  certain  hour  to  return  any  paper 
upon  it  as  not  good,  but  those  settlements  are  outside  of  the 
clearing-house  and  between  the  banks;  yet  the  settlement 
is  governed  by  the  rules  of  the  clearing-house.  Each  bank 
in  the  clearing-house  is  required  to  deposit  with  the  clearing- 
house either  money  or  securities  to  secure  the  clearing-house 
certificates  charged  against  it;  or,  if  this  be  not  done,  certain 
restrictions  are  put  upon  the  members  as  to  the  balances  in 
cash  which  they  must  carry.  In  times  of  financial  distress 

1  Crane  v.  Fourth  St.  Bank,  173  bank-notes  (Button  v.  Merchants' 
Pa.  566.  But  it  is  not  a  bank,  says  Nat.  Bank,  16  Phila.  94),  yet  they 
this  case.  Yet  it  may  sue.  Philler  are  not  currency,  says  the  opinion 
v.  Patterson,  168  Pa.  468.  It  may  in  Crane  v.  Bank,  supra,  it  re- 
be  sued.  Yardley  v.  Philler,  58  Fed.  mains  for  the  Pennsylvania  courts 
R  746.  It  may  issue  certificates  or  to  unravel  this  tangle, 
due-bills  which  are  negotiable  like 


§  367.]  CLEARING-HOUSES.  655 

banks  have  received  assistance  in  further  certificates  from 
the  clearing-house  upon  the  deposit  of  securities  with  it. 
Those  banks  in  a  city  which  are  not  in  the  clearing-house, 
generally  do  their  clearing  through  a  membar  of  the  associa- 
tion. 

§  367.  Clearing-house  certificates. —  The  status  of  these 
documents  has  not  been  settled.  They  are  issued  by  a  vol- 
untary association  and  pass  between  the  banks  as  mone3r. 
There  is  no  reason  why  they  should  not  pass  among  individ- 
uals as  money,  because  they  are  supported  by  the  joint  credit 
of  all  the  banks  in  the  clearing-house.  If  the  veracious  daily 
press  may  be  believed,  on  one  occasion  in  New  York  city  the 
banks  would  pay  their  depositors  nothing  but  such  certifi- 
cates. They  do  not  seem  to  differ  in  any  respect,  when  so 
used,  from  the  notes  of  a  private  banker,  since  the  clearing- 
house is  simply  a  voluntary  association.1  The  only  bearing 
this  question  has  is :  Would  they  be  a  violation  of  laws  in- 
hibiting a  private  banker  from  issuing  notes,  and  therefore 
void  because  unlawful,  and  secondly,  would  they  be  taxable 
as  the  note  issues  of  a  private  banker  ?  The  further  question 
as  to  who  would  be  responsible  upon  the  certificates  if  a 
crash  should  come  would  need  to  be  determined  after  wise 
cogitations  by  courts  as  to  whether  or  not  a  bank,  national 
or  state,  has  the  implied  power  to  enter  a  partnership  which 
issues  its  obligation's,  when  the  justification  presented  is  that 
it  is  an  incalculable  facilitation  to  the  transaction  of  a  vast 
volume  of  business  which  could  hardly  be  transacted  in  any 
other  way.  Some  zealous  official  might  find  occupation  for 

1  See  Crane  v.  Fourth  St.  Bank,  vate  issues  by  means  of  the  state- 

173  Pa.  566.    It  is  not  a  bank;  but  if  bank  tax.    This  case  says  the  cer- 

it  is  a  voluntary  association  that  tificates  are  not  currency,  yet  they 

issues  paper  and  performs  many  of  are    negotiable.    Button    v.    Mer- 

the  functions  of  a  bank,  what  is  it?  chants'  Nat.   Bank,    16  Phila.  94. 

The  case  says  that  it  does  not  vio-  But  the  whole  utterance  in  the  case 

late  the  currency  laws  of  the  United  first  above  cited  is  a  mass  of  illy 

States.    That  is  certainly  true,  be-  considered  dictum. 
cause  those  laws  only  prevent  pri- 


656  BANKS   AND   BANKING.  [§  368. 

his  leisure  in  attempting  to  collect  the  state-bank  tax,  but 
he  would  probably  resign  upon  an  urgent  request. 

§  368.  Rules  of  the  clearing-house. — The  rules  of  the 
clearing-house  are  binding  only  upon  the  members.  They 
are  not  binding  upon  the  depositors  in  the  various  banks;1 
nor  can  customers  claim  the  benefit  of  them  or  be  injuriously 
affected  by  them.2  A  rule  does  not  apply  in  favor  of  a  bank 
not  a  member  of  the  clearing-house ; 3  nor  can  the  rule  be 
called  a  general  custom  when  it  is  observed  only  by  the 
banks  in  the  clearing-house.4  It  has  been  seen  that  the 
clearing-houses  allow  mutual  credits  to  be  recalled  between 
the  banks  within  a  certain  time;  and  on  the  theory  that 
this  rule  is  binding  upon  the  members  of  the  clearing-house, 
it  has  been  held  that  mutual  credits  could  be  recalled  only 
in  accordance  with  this  rule;  in  other  words,  that  the  pay- 
ment by  the  bank  of  paper  upon  it,  provisionally  made,  be- 
comes absolute  if  not  objected  to  within  the  time  allowed 
by  the  rule.5  But  the  courts  of  Massachusetts  deny  this 
effect  to  the  rule  and  say  that  the  rule  simply  compels  the 
clearing  banks  to  allow  the  recall  of  the  credit  within  that 
time,  but  otherwise  the  parties  are  left  in  the  situation  they 
are  placed  by  the  general  rules  of  law.  So  it  is  held  that 
as  to  a  mistake  by  a  messenger,6  or  a  mistake  as  to  the  de- 
positor's account,7  or  a  mistake  as  to  the  signature  of  the 
depositor,  or  even  where  there  was  no  mistake,  the  credit 
may  be  recalled,  provided  the  other  bank  has  not  altered  its 
position  to  its  disadvantage.8  But  as  we  have  seen,  a  bank 

1  Louisiana  Ice  Co.  v.  State  Nat.  6  Merchants'   Nat.   Bank  v.   Na- 
Bank,  1  McGloin,  181.  tional  Eagle  Bank,  101  Mass.  281; 

2  Merchants'   Nat    Bank  v.  Na-  National  Bank  of  North  America 
tional  Bank,  139  Mass.  5ia  v.  Bangs,  106  Mass.  441. 

3  Oberman  v.  Hoboken  City  Bank,  ?  National  Ex.  Bank  v.  National 
30  N.  J.  Law,  61.  Bank  of  North  America,  132  Mass. 

4  First  Nat  Bank  v.  Fourth  Nat  147;  Manufacturers'  Nat  Bank  v. 
Bank,  89  N.  Y.  412.  Thompson,  129  Mass.  4381 

8  Blaffer  v.  Louisiana  Nat  Bank,        8  Merchants'  Nat   Bank   v.  Na- 
35  La.  Ann.  251 ;  Preston  v.  Caiia-    tional  Bank,  139  Mass.  513. 
dian  Bank,  23  Fed.  K.  179. 


§  369.]  CLEARING-HOUSES.  657 

can  always  recover  upon  paper  paid  by  it  forged  as  to  the 
amount  or  as  to  an  indorsement,9  and  the  clearing-house  rule 
could  have  no  effect  as  to  such  paper;  and  as  to  paper  where 
the  drawer's  name  is  forged,  the  bank  paying  may  sometimes 
recover  where  the  other  party  has  not  altered  his  position  to 
his  injury.10  But  a  payment  made  upon  a  mistake  as  to  the 
drawer's  account  is  final  and  cannot  be  rescinded 1V  except 
under  and  in  accordance  with  this  clearing-house  rule.  The 
doctrine  of  the  Massachusetts  court  is  singular  in  this  re- 
spect, unless  it  can  be  said  that  the  recovery  is  based  upon 
the  other  bank's  indorsement.12  A  rule  of  the  clearing-house 
may  be  waived  by  refunding.13 

§  369.  Bank  as  clearing  agent. —  The  rule  of  the  clearing- 
house as  to  a  clearing  agent  generally  requires  notice  to  be 
given  before  the  agent  can  withdraw,  and  therefore  the 
clearing  agent  must  keep  on  receiving  and  paying  the  paper 
on  the  bank  for  which  it  acts  until  the  expiration  of  that 
period,  although  the  bank  for  which  it  is  acting  has  become 
insolvent.  The  agent  could  hold  the  securities  deposited 
with  it  by  the  bank  whose  paper  it  paid.1  This  decision,  in 
effect,  permits  a  clearing-house  rule  to  annul  the  statute 
against  preferences,  because  it  allows  claims  against  the 
bank  to  be  paid  after  insolvency,  and  the  bank's  assets  to 
be  impressed  with  a  lien  therefor,  excused  by  the  court  on 
the  ground  that  the  lien  already  existed.  The  decision  is  a 
complete  and  signal  judicial  error,  for  the  lien  existed  only 
as  to  payments  up  to  that  time  made,  and  it  cannot  be  rec- 
onciled with  the  spirit  of  the  opinion  in  Yardley  v.  Philler, 
167  U.  S.  344.  In  another  case  it  was  said  that  a  clearing 
agent's  agreement  to  pay  checks  on  another  bank  did  not 
impose  upon  it  the  same  liabilities  that  were  imposed  upon 

9  See  §  154,  ante.  13  Stuy  vesant   Bank   v.  National 

10  See  §  154,  ante.  Mechanics'  Bank,  7  Lans.  197. 

11  See  §  158,  ante.  1  O'Brien  v.  Grant,  146_N.  Y.  163. 

12  See  §  155,  ante.  Compare    Nat.  Security   Bank  v. 

Butler,  129  U.  &  228. 
42 


658  BANKS   AND   BANKING.  [§  370. 

the  bank  on  which  the  paper  was -drawn.2  Bat  the  latter 
bank  would  be  bound  by  the  act  of  its  clearing  agent  in 
waiving  the  rule  of  the  clearing-house  as  to  a  revocation  of 
credit.8  The  agent  is  not  negligent  for  failure  to  anticipate 
that  a  bank  suspended  on  one  day  would  resume  business 
on  the  next  day.4 

§  370.  Clearing-house  settlements. —  It  has  been  said  that 
a  settlement  through  the  clearing-house  upon  balances  pre- 
sented does  not  become  an  account  stated,  where  made  in 
time  of  great  public  excitement,  when  there  was  no  chance 
to  investigate.1  The  settlements  made  through  the  clear 
ing-house  do  not  inure  to  the  benefit  of  customers  of  the 
various  banks.  Thus,  a  man  deposited  a  draft  with  a  bank 
and  the  draft  was  paid  to  the  first  bank  by  a  second  bank, 
leaving  upon  the  settlement  for  the  day  both  banks  indebted 
to  the  clearing-house.  The  second  bank  paid  its  balance  to 
the  clearing-house,  but  the  first  bank  failed  before  doing  so, 
and  it  failed  having  the  proceeds  of  the  depositor's  collec- 
tion. Thereupon  the  clearing-house  collected  from  the  dif- 
ferent banks  the  total  amount  of  credits  which  had  been 
permitted  to  such  banks  on  items  which  they  had  presented 
against  the  first  bank  which  had  failed.  Thus,  it  will  be 

2  Grant  v.  McNutt,  33  N.  Y.  Supp.  a  good  transfer  by  receipt  of  pay- 
62.    It  was  held  in  Zenner  v.  Nat.  ment    Zenner  v.  National  Bank,  54 
Bank  of  Illinois,  54  111.  App.  602,  111.  App.  602.    A  bank  having  paid 
that  the  clearing  agent,  which  had  a  check  through  the  clearing-house 
paid  a  check  drawn  upon  its  prin-  for  another  bank,  the  latter  bank 
cipal.  could  sue  the  drawer  where  having  failed  without  paying  the 
the    drawee,   its   principal,  failed  check  drawn  on  it,  the  bank  pay- 
without  paying   the   check.    The  ing  was  held  entitled  to  recover 
opinion  is  not  at  all  satisfactory.  from  drawer.    Why  ?    The  obvious 

3  Stuy  vesant   Bank  v.   Nat.  Me-  conclusion  would  be  that  the  clear- 
chanics'  Bank,  7  Lans.  197.  ing  agent  paid  the  check  for  its 

4  Farmers'  Bank  v.  Third   Nat  principal,    not    as    agent   of   the 
Bank,  165  Pa.  500.  drawer.    By  some  wild  theory  it 

1  Nat.  City  Bank  v.  N.  Y.  Gold  might  sue  the  payee,  but  where  it 
Exchange  Bank,  101  N.  Y.  595.  obtained  its  right  to  sue  the  drawer 
The  stamp  of  the  clearing-house  is  is  a  mystery. 


§  370.]  CLEARING-HOUSES.  659 

seen  the  clearing-house  certainly  obtained  through  the  pay- 
ment by  the  second  bank  of  the  balance  due  from  it  and  from 
the  payment  by  all  the  banks  of  the  credits  allowed  to  them, 
the  money  from  the  depositor's  collection.  Yet  it  was  held 
that  the  depositor  of  the  draft  could  not  recover  from  the 
clearing-house  the  amount  of  his  draft.2  The  reason  of  the 
decision  can  only  be  that  the  first  bank  had  obtained  the  pro- 
ceeds and  it  was  immaterial  how  the  various  banks  settled 
among  themselves.  The  second  bank  was  the  one  injured 
by  the  transaction.  In  yet  another  case  a  draft  on  one 
bank  was  indorsed  for  collection  to  a  second  bank,  which 
sent  it  to  the  clearing-house  in  due  course  with  other  checks 
and  drafts.  The  second  bank  failed  before  the  collection 
was  complete,  but  the  clearing-house  collected  the  draft 
from  the  first  bank,  the  drawee.  Thereupon  the  depositor 
for  collection  sued  the  drawer  upon  the  draft  and  collected 
it,  the  payment  to  the  clearing-house  being  no  defense.3  If 
there  is  any  reason  for  making  such  a  decision  it  is  not  ap- 
parent from  -the  opinion.  The  clearing-house  demanded 
and  obtained  payment  as  agent  for  the  insolvent  bank.  The 
holder  of  the  collection  had  the  right  to  reclaim  the  pro- 
ceeds from  the  clearing-house,  because  the  power  of  the  sec- 
ond bank  to  collect  was  revoked  by  the  insolvency;  but  the 
insolvency  did  not  revoke  the  power  of  the  clearing-house 
to  proceed  with  the  collection,  and  the  payment  by  tho 
drawee  to  the  clearing-house  was  a  good  payment  to  the 
owner.  The  opinion  fails  to  explain  how  the  holder  could 
sue  the  bank  on  which  the  check  was  drawn. 

2  Crane  v.  Clearing-house,  2  Pa.  decision   seems  exceedingly  ques- 
Dist  R.  509.                         .  tionable.    It  is   entirely  illogical, 

3  Crane  v.  Fourth  St.  Bank,  173  because  the  holder  could  not  sue 
Pa.  566.  It  would  naturally  occur  to  the  bank  on  which  the  check  was 
any  one  to  inquire  what  the  clear-  drawn  except  on  the  theory  that 
ing-house    did    with    the   money,  the  payment  to  the  clearing-house 
Could  the  Fourth  Street  Bank  sue  was  an  acceptance;  but  the  clear- 
for  a  payment  voluntarily  made  ?  ing-house  was  a  stranger,  says  the 
Even  if  it  could,  the  policy  of  the  court 


660  BANKS   AND   BANKING.  [§  371. 

§  371.  Clearing-house  lien. — Since  insolvency  of  a  na- 
tional bank  does  not  interfere  with  or  change  any  liens  exist- 
ing at  the  time  of  the  insolvency,  the  clearing-house  has  a 
perfect  right  to  enforce  upon  the  securities  deposited  with 
it  any  lien  which  is  existing  at  the  date  of  the  insolvency, 
but  not  a  lien  for  any  claims  against  an  insolvent  national 
bank  accruing  after  insolvency.  It  is  for  this  reason  that 
the  decision  referred  to  in  the  last  section  but  one  in  the 
case  of  O^Brien  v.  Chant,  146  N.  Y.  163,  is  so  radically  un- 
sound. The  reason  that  such  a  lien  will  not  be  permitted 
is  that  it  creates  an  unlawful  preference.  This  is  the  result 
arrived  at  in  the  litigation  that  culminated  in  the  decision 
of  the  Supreme  Court  of  the  United  States  in  Yardley  v. 
Philler,  167  U.  S.  344.  The  deposit  of  securities  in  that 
case  was  twofold  —  a  deposit  to  secure  clearing-house  certifi- 
cates, and  the  retention  of  the  paper  of  the  insolvent  bank 
upon  each  day  until  it  settled  its  balance  with  the  clearing- 
house for  that  day.  The  clearing-house  was  allowed  its  lien 
for  the  daily  balances  up  to  notice  of  the  insolvency  upon 
the  proceeds  of  the  collections  in  its  hands,  but  it  was  not 
allowed  a  lien  upon  these  proceeds  for  its  certificates  of  de- 
posit issued  on  the  security  of  other  deposits  of  paper,  nor 
for  a  balance  accruing  from  the  transactions  had  after  no- 
tice of  the  insolvency.1  Another  case  arising  upon  the  in- 
solvency of  a  clearing-house  member  showed  the  following 
state  of  facts:  Securities  were  deposited  with  the  clearing- 
house to  secure  the  members'  daily  balances  and  then  any 
other  indebtedness  due  to  members  of  the  association.  The 
clearing-house  was  given  a  lien  for  its  certificates  issued  to 
aid  in  maintaining  the  credit  of  the  bank.2  Another  case 
presented  facts  similar  to  Yardley  v.  PMller,  supra,  and  the 
clearing-house  was  held  to  be  a  holder  for  value  of  such  de- 

1  See  §  327,  ante,  note  8.  ness  to  the  clearing-house.    But  it 
2Philler  v.  Jewett,  166  Pa.  456.  would  appear  that  the  clearing- 
Indebtedness  to  members  of  the  house  had  notice  of  insolvency.    . 
association  was  treated  as  indebted- 


§  371.]  CLEAEINQ-HOUSES.  661 

posits  of  paper  to  the  amount  of  its  lien.*  In  a  former  sec- 
tion (327)  it  was  pointed  out  that  these  decisions  are  ques- 
tionable because  the  clearing-house  must  have  had  notice 
that  the  bank  was  so  near  insolvency  that  it  could  not  main- 
tain its  daily  business  without  help.  If  it  could  be  shown 
that  the  bank  was  actually  insolvent,  there  might  be  a  se- 
rious question  whether  the  clearing-house  was  justified  in 
lending  it  funds  so  that  it  could  continue  longer  to  deceive 
and  defraud  the  public. 

sphillerv.  Patterson,  168  Pa.  468.  house  of  its  certificates  is  not  a 
This  case  informs  the  profession  violation  of  the  national  banking 
that  the  issuance  by  a  clearing-  act  They  are  therefore  valid. 


APPENDIX. 


REVISED    STATUTES    OF   THE    UNITED    STATES    AND    ACTS 
AMENDATORY  THEREOF. 

SEC.  324  BUREAU  OP  THE  COMPTROLLER  OF  THE  CURRENCY.— There 
shall  be  in  the  Department  of  the  Treasury  a  bureau  charged  with  the 
execution  of  all  laws  passed  by  Congress  relating  to  the  issue  and  reg- 
ulation of  a  national  currency  secured  by  United  States  bonds;  the  chief 
officer  of  which  shall  be  called  the  Comptroller  of  the  Currency,  and 
shall  perform  his  duties  under  the  general  direction  of  the  Secretary  of 
the  Treasury. 

[Act  of  March  14,  1900,  creates  separate  divisions  of  issue  and  re- 
demption.] 

SEC,  325.  COMPTROLLER  OP  THE  CURRENCY.— The  Comptroller  of  the 
Currency  shall  be  appointed  by  the  President,  on  the  recommendation 
of  the  Secretary  of  the  Treasury,  by  and  with  the  advice  and  with  the 
consent  of  the  Senate,  and  shall  hold  his  office  for  the  term  of  five  years 
unless  sooner  removed  by  the  President,  on  reasons  to  be  communicated 
by  him  to  the  Senate;  and  he  shall  be  entitled  to  a  salary  of  $5,000  a  year. 

SEC.  326.  BOND  AND  OATH.— The  Comptroller  of  the  Currency  shall 
within  fifteen  days  from  the  time  of  notice  of  his  appointment,  take  and 
subscribe  the  oath  of  office;  and  he  shall  give  to  the  United  States  a  bond 
in  the  penalty  of  $100,000  with  not  less  than  two  responsible  sureties,  to 
be  approved  by  the  Secretary  of  the  Treasury,  conditioned  for  the  faith- 
ful discharge  of  the  duties  of  his  office. 

SEC.  327.  DEPUTY  COMPTROLLER.— There  shall  be  in  the  Bureau  of  the 
Comptroller  of  the  Currency  a  Deputy  Comptroller  of  the  Currency  to 
be  appointed  by  the  Secretary,  who  shall  be  entitled  to  a  salary  of  $2,500 
a  year,  and  who  shall  possess  the  power  and  perform  the  duties  attached 
by  law  to  the  office  of  the  Comptroller  during  a  vacancy  in  the  office  or 
during  the  absence  or  inability  of  the  Comptroller.  The  Deputy  Comp- 
troller shall  also  take  the  oath  of  office  prescribed  by  the  constitution 
and  laws  of  the  United  States,  and  shall  give  a  like  bond  in  the  penalty 
of  $50,000. 

SEC.  328.  CLERKS.— The  Comptroller  of  the  Currency  shall  employ, 
from  time  to  time,  the  necessary  clerks,  to  be  appointed  and  classified 
by  the  Secretary  of  the  Treasury,  to  discharge  such  duties  as  the  Comp- 
troller shall  direct. 


664:  BANKS   AND    BANKING. 

SEC.  329.  INTEREST  IN  NATIONAL  BANKS.— It  shall  not  be  lawful  for 
the  Comptroller  or  the  Deputy  Comptroller  of  the  Currency,  either  di- 
rectly or  indirectly,  to  be  interested  in  any  association  issuing  national 
currency  under  the  laws  of  the  United  States. 

SEC.  330.  SEAL. —  The  seal  devised  by  the  Comptroller  of  the  Currency 
for  his  office  and  approved  by  the  Secretary  of  the  Treasury  shall  con- 
tinue to  be  the  seal  of  office  of  the  Comptroller,  and  may  be  renewed 
when  necessary.  A  description  of  the  seal  with  an  impression  thereof 
and  a  certificate  of  approval  by  the  Secretary  of  the  Treasury  shall  be 
filed  in  the  office  of  the  Secretary  of  State. 

SEC.  331.  ROOMS,  VAULTS,  FURNITURE,  ETC.— There  shall  be  assigned 
from  time  to  time  to  the  Comptroller  of  the  Currency  by  the  Secretary  of 
the  Treasury,  suitable  rooms  in  the  Treasury  Building  for  conducting  the 
business  of  the  Currency  Bureau,  containing  safe  and  secure  fire-proof 
vaults,  in  which  the  Comptroller  shall  deposit  and  safely  keep  all  the 
plates  not  necessarily  in  the  possession  of  engravers  or  printers,  and  other 
valuable  things  belonging  to  his  department,  and  the  Comptroller  shall 
from  time  to  time  furnish  the  necessary  furniture,  stationery,  fuel,  lights 
aad  other  proper  conveniences  for  the  transaction  of  the  business  of  his 
office. 

SEC.  332.  BANKS  IN  DISTRICT  OF  COLUMBIA. — The  Comptroller  of  the 
Currency  in  addition  to  the  powers  conferred  upon  him  by  law  for  the 
examination  of  national  banks  is  further  authorized,  whenever  he  may 
deem  it  useful,  to  cause  examination  to  be  made  into  the  condition  of 
any  bank  in  the  District  of  Columbia  organized  under  Act  of  Congress. 
The  Comptroller,  at  his  discretion,  may  report  to  Congress  the  results  of 
such  examination.  The  expense  necessarily  incurred  in  such  examina- 
tion shall  be  paid  out  of  any  appropriation  made  by  Congress  for  special 
bank  examiners. 

SEC.  333.  REPORT  OF  THE  ^COMPTROLLER.— (This  section  is  not  deemed 
necessary  to  be  inserted.) 

SEC.  563.  JURISDICTION  OF  THE  DISTRICT  COURTS. —  Clause  15th.  The 
District  Court  shall  have  jurisdiction  as  follows: 

15th.  Of  all  suits  by  or  against  any  association  established  under  a 
law  providing  for  national  banking  associations  within  the  district  for 
which  the  court  is  held. 

SEC.  629.  JURISDICTION  OF  THE  CIRCUIT  COURTS. —  Clause  10th.  The  Cir- 
cuit Court  shall  have  original  jurisdiction  as  follows: 

10th.  Of  all  suits  by  or  against  any  banking  association  established  in 
the  district  for  which  the  court  is  held  under  a  law  providing  for  na- 
tional banking  associations. 

llth.  Of  all  suits  brought  by  (or  against)  any  banking  association  es- 
tablished in  the  district  for  which  the  court  is  held  under  the  provis- 
ions of  title  "The  National  Banks"  to  enjoin  the  Comptroller  of  the 
Currency,  or  any  Receiver  acting  under  his  direction,  as  provided  by 
said  title. 


APPENDIX.  CG5 

Section  4,  Act  of  July  12,  1882,  22  Stat.  162.— Proviso:  Pro- 
vided, however,  that  the  jurisdiction  for  suits  hereafter  brought  by  or 
against  any  association  established  under  any  law  providing  for  national 
banking  associations,  except  suits  between  them  and  the  United  States, 
or  its  officers  and  agents,  shall  be  as,  and  not  other  than,  the  jurisdiction 
for  suits  by  or  against  banks  not  organized  under  any  law  of  the  United 
States  which  do  or  might  do  banking  business  where  such  national  bank- 
ing association  may  be  doing  business  when  such  suits  may  be  begun ; 
and  all  laws  and  parts  of  laws  of  the  United  States  inconsistent  with 
this  proviso  be,  and  the  same  are  hereby  repealed. 

Section  4,  Act  of  March.  3,  1887,  24  Stat.  54,  25  Stat.  434.— 
That  all  banking  associations  established  under  the  laws  of  the  United 
States  shall,  for  the  purposes  of  all  actions  by  or  against  them,  real,  per- 
sonal or  mixed,  and  all  suits  in  equity,  be  deemed  citizens  of  the  States 
in  which  they  are  respectively  located;  and  in  such  cases  the  Circuit 
and  District  Courts  shall  not  have  jurisdiction  other  than  such  as  they 
would  have  in  cases  between  individual  citizens  of  the  same  State.  The 
provisions  of  this  section  shall  not  be  held  to  affect  the  jurisdiction  of 
the  courts  of  the  United  States  in  cases  commenced  by  the  United  States 
or  by  direction  of  any  officer  thereof,  or  cases  for  winding  up  the  affairs 
of  any  such  bank. 

SEC.  736.  PROCEEDINGS  TO  ENJOIN  COMPTROLLER. —  All  proceedings  by 
any  national  banking  association  to  enjoin  the  Comptroller  of  the  Cur- 
rency, under  the  provisions  of  any  law  relating  to  national  banking  as- 
sociations, shall  be  had  in  the  district  where  such  association  is  located. 

SEC.  885.  COPIES  AS  EVIDENCE. —  Copies  of  the  organization  certificate 
of  any  national  banking  association,  duly  certified  by  the  Comptroller  of 
the  Currency,  and  authenticated  by  his  seal  of  office,  shall  be  evidence 
in  all  courts  and  places  within  the  jurisdiction  of  the  United  States  of 
the  existence  of  the  association,  and  of  every  matter  which  could  be 
proved  by  the  production  of  the  original  certificate. 

SEC.  3417.  PROVISIONS  FOR  BANK  TAX  AND  RETURNS  NOT  TO  APPLY 
TO  NATIONAL  BANKS. —  (The  section  is  not  deemed  necessary  to  be  in- 
serted.) 

SEC.  5133.  FORMATION  OF  NATIONAL  BANKING:  ASSOCIATIONS. —  Associ- 
ations for  carrying  on  the  business  of  banking  under  this  title  may  be 
formed  by  any  number  of  natural  persons,  not  less  in  any  case  than  five. 
They  shall  enter  into  articles  of  association,  which  shall  specify  in  gen- 
eral terms  the  object  for  which  the  association  is  formed,  and  may  con- 
tain any  other  provisions,  not  inconsistent  with  law,  which  the  association 
may  see  fit  to  adopt  for  the  regulation  of  its  business  and  the  conduct  of 
its  affairs.  These  articles  shall  be  signed  by  the  persons  uniting.to  form 
the  association,  and  a  copy  of  them  shall  be  forwarded  to  the  Comptroller 
of  the  Currency,  to  be  filed  and  preserved  in  his  office. 

SEC.  5134  REQUISITES  OF  ORGANIZATION  CERTIFICATE. — The  persona 


666  BANKS   AND   BANKING. 

uniting  to  form  such  an  association  shall,  under  their  hands,  make  ai> 
organization  certificate,  which  shall  specifically  state: 

First  The  name  assumed  by  such  association ;  which  name  shall  be 
subject  to  the  approval  of  the  Comptroller  of  the  Currency. 

Second.  The  place  where  its  operations  of  discount  and  deposit  are  to 
be  carried  on,  designating  the  State,  Territory,  or  district,  and  the  par- 
ticular county  and  city,  town,  or  villaga 

Third.  The  amount  of  capital  stock  and  the  number  of  shares  into 
which  the  same  is  to  be  divided. 

Fourth.  The  names  and  places  of  residence  of  the  shareholders  and 
the  number  of  shares  held  by  each  of  them. 

Fifth.  The  fact  that  the  certificate  is  made  to  enable  such  persons  to 
avail  themselves  of  the  advantages  of  this  title. 

Act  of  May  1,  1886,  24  Stat.  18,  provides,  section  two:  That 
any  national  banking  association  may  change  its  name  or  the  place 
where  its  operations  of  discount  and  deposit  are  to  be  carried  on,  to  any 
other  place  within  the  same  State,  not  more  than  thirty  miles  distant, 
with  the  approval  of  the  Comptroller  of  the  Currency,  by  the  vote  of 
shareholders  owning  two-thirds  of  the  stock  of  such  association,  and 
duly  authenticated  notice  of  the  vote,  and  the  new  name  of  location 
selected  snail  be  sent  to  the  office  of  the  Comptroller  of  the  Currency; 
but  no  change  of  name  or  location  shall  be  valid  until  the  Comptroller 
shall  have  issued  his  certificate  of  approval  of  the  same. 

§  3.  That  all  debts,  liabilities,  rights,  provisions  and  powers  of  the  asso- 
ciation under  its  old  name  shall  devolve  upon  and  inure  to  the  associa- 
tion under  its  new  name. 

§  4.  That  nothing  in  this  act  contained  shall  be  so  construed  as  in  any 
manner  to  release  any  national  banking  association  under  its  old  name 
or  at  its  old  location  from  any  liability,  or  affect  any  action  or  proceed- 
ing at  law  in  which  said  association  may  be  or  become  a  party  or  inter- 
ested. 

SEC.  5135.  ACKNOWLEDGMENT  AND  FILING. —  The  organization  certifi- 
cate shall  be  acknowledged  before  a  judge  of  some  court  of  record,  or 
notary  public;  and  shall  be,  together  with  the  acknowledgment  thereof, 
authenticated  by  the  seal  of  such  court,  or  notary,  transmitted  to  the 
Comptroller  of  the  Currency,  who  shall  record  and  carefully  preserve 
the  same  in  his  offica 

SEC.  5136.  COEPORATE  POWERS.— Upon  duly  making  and  filing  arti- 
cles of  association  and  an  organization  certificate,  the  association  shall 
become,  as  from  the  date  of  the  execution  of  its  organization  certificate, 
a  body  corporate,  and  as  such,  and  in  the  name  designated  in  the  organ- 
ization certificate,  it  shall  have  power  — 

First.  To  adopt  and  use  a  corporate  seal 

Second.  To  have  succession  for  the  period  of  twenty  years  from  its 
organization,  unless  it  is  sooner  dissolved  according  to  the  provisions  of 


APPENDIX.  66T 

its  articles  of  association,  or  by  the  act  of  its  shareholders  owning  two- 
thirds  of  its  stock,  or  unless  its  franchise  becomes  forfeited  by  some 
violation  of  law. 

Third.  To  make  contracts. 

Fourth.  To  sue  and  be  sued,  complain  and  defend,  in  any  court  of 
law  and  equity,  as  fully  as  natural  persons. 

Fifth.  To  elect  or  appoint  directors,  and  by  its  board  of  directors  ta 
appoint  a  president,  vice-president,  cashier,  and  other  officers,  define 
their  duties,  require  bonds  of  them  and  fix  the  penalty  thereof,  Dismiss 
such  officers  or  any  of  them  at  pleasure,  and  appoint  others  to  fill  their 
places. 

Sixth.  To  prescribe  by  its  board  of  directors,  by-laws  not  inconsistent 
with  law,  regulating  the  manner  in  which  its  stock  shall  be  transferred, 
its  directors  elected  or  appointed,  its  officers  appointed,  its  property 
transferred,  its  general  business  conducted,  and  the  privileges  granted 
to  it  by  law  exercised  and  enjoyed. 

Seventh.  To  exercise  by  its  board  of  directors,  or  duly  authorized 
officers  or  agents,  subject  to  law,  all  such  incidental  powers  as  shall  be 
necessary  to  carry  on  the  business  of  banking;  by  discounting  and  ne- 
gotiating promissory  notes,  drafts,  bills  of  exchange,  and  other  evidences 
of  debt;  by  receiving  deposits;  by  buying  and  selling  exchange,  coin, 
and  bullion ;  by  loaning  money  on  personal  security ;  and  by  obtaining, 
issuing  and  circulating  notes  according  to  the  provisions  of  this  title. 
But  no  association  shall  transact  any  business  except  such  as  is  inci- 
dental and  necessarily  preliminary  to  its  organization,  until  it  has  been 
authorized  by  the  Comptroller  of  the  Currency  to  commence  the  busi- 
ness of  banking. 

Act  of  July  12,  1882,  22  Stat.  162,  provides:  That  any  national 
banking  association  may,  at  any  time  within  the  two  years  next  pre- 
vious to  the  date  of  the  expiration  of  its  corporate  existence  under  pres- 
ent law,  and  with  the  approval  of  the  Comptroller  of  the  Currency,  to 
be  granted  as  hereinafter  provided,  extend  its  period  of  succession  by 
amending  its  articles  of  association  for  a  term  of  not  more  than  twenty 
years  from  the  expiration  of  the  period  of  succession  named  in  said  ar- 
ticles of  association,  and  shall  have  succession  for  such  extended  period,, 
unless  sooner  dissolved  by  the  act  of  shareholders  owning  two-thirds  of 
its  capital  stock,  or  unless  its  franchise  becomes  forfeited  by  some  vio- 
lation of  law,  or  unless  hereafter  modified  and  repealed. 

§  2.  That  such  amendment  of  said  articles  of  association  shall  be  au- 
thorized by  the  consent  in  writing  of  the  shareholders  owning  not  less 
than  two-thirds  of  the  capital  stock  of  the  association;  and  the  board  of 
directors  shall  cause  such  consent  to  be  certified  under  the  seal  of  the 
association,  by  its  president,  or  cashier,  to  the  Comptroller  of  the  Cur- 
rency, accompanied  by  an  application  made  by  the  president  or  cashier 
for  the  approval  of  the  amended  articles  of  association  by  the  Comp- 
troller: and  such  amended  articles  of  association  shall  not  be  valid  until 


668  BANKS   AND   BANKING. 

the  Comptroller  shall  give  to  such  association  a  certificate  under  his 
hand  and  seal  that  the  association  has  complied  with  all  the  provisions 
required  to  be  complied  with,  and  is  authorized  to  have  succession  for 
the  extended  period  named  in  the  amended  articles  of  association. 

§  3.  That  upon  the  receipt  of  the  application  of  a  certificate  of  the  as- 
sociation,  provided  for  in  the  preceding  section,  the  Comptroller  of  the 
Currency  shall  cause  a  special  examination  to  be  made,  at  the  expense 
of  the  association,  to  determine  its  condition;  and  if  after  such  exam- 
ination or  otherwise  it  appears  to  him  that  said  association  is  in  a  satis- 
factory condition,  he  shall  grant  his  certificate  of  approval  provided  for 
in  the  preceding  section,  or  if  it  appears  that  the  condition  of  said  associa- 
tion is  not  satisfactory,  he  shall  withhold  such  certificate  of  approval 

§  4.  That  any  association  so  extending  the  period  of  its  succession, 
shall  continue  to  enjoy  all  the  rights  and  privileges  and  immunities 
granted,  and  shall  continue  to  be  subject  to  all  the  duties,  liabilities  and 
restrictions  imposed  by  the  Revised  Statutes  of  the  United  States  and 
other  acts  having  reference  to  national  banking  associations,  and  it  shall 
continue  to  be  in  all  respects  the  identical  association  it  was  before  the 
extension  of  its  period  of  succession:  Provided,  however,  that  the  juris- 
diction for  suits  hereafter  brought  by  or  against  any  association  estab- 
lished under  any  law  providing  for  national  banking  associations,  except 
suits  between  them  and  the  United  States,  or  its  officers  and  agents, 
shall  be  the  same  as,  and  not  other  than,  the  jurisdiction  for  suits  by  or 
against  banks  not  organized  under  any  law  of  the  United  States  which 
do  or  might  do  banking  business  where  such  national  banking  associa- 
tions may  be  doing  business  when  such  suits  may  be  begun ;  and  all 
laws  and  parts  of  laws  of  the  United  States  inconsistent  with  this  pro- 
viso be,  and  the  same  are  hereby  repealed. 

§  5.  That  when  any  national  banking  association  has  amended  its  ar- 
ticled of  association  as  provided  in  this  act,  and  the  Comptroller  has 
granted  his  certificate  of  approval,  any  shareholder  not  assenting  to 
such  amendment,  may  give  notice  in  writing  to  the  directors  within 
thirty  days  from  the  date  of  the  certificate  of  approval,  of  his  desire  to 
withdraw  from  said  association,  in  which  case  he  shall  be  entitled  to 
receive  from  said  banking  association  the  value  of  the  shares  so  held  by 
him,  to  be  ascertained  by  an  appraisal  made  by  a  committee  of  three 
persons,  one  to  be  selected  by  such  shareholder,  one  by  the  directors, 
and  the  third  by  the  first  two;  and  in  case  the  value  so  fixed  shall  not 
be  satisfactory  to  any  such  shareholder,  he  may  appeal  to  the  Comp- 
troller of  the  Currency,  who  shall  cause  a  re-appraisal  to  be  made,  which 
shall  be  final  and  binding;  and  if  said  re-appraisal  shall  exceed  the  value 
fixed  by  said  committee,  the  bank  shall  pay  said  expenses,  and  the  value 
so  ascertained  and  determined  shall  be  deemed  to  be  a  debt  due,  and  be 
forthwith  paid  to  said  shareholder  from  said  bank;  and  the  shares  so 
surrendered  and  appraised  shall,  after  due  notice,  be  sold  at  public  sale, 
•within  thirty  days  after  the  final  appraisal  provided  in  this  section: 


APPENDIX.  G60 

Provided,  that  in  the  organization  of  any  banking  association  intended 
to  replace  any  existing  banking  association,  and  retaining  the  name 
thereof,  the  holders  of  stock  in  the  expiring  association  shall  be  entitled 
to  preference  in  the  allotment  of  the  shares  in  the  new  association  in 
proportion  to  the  number  of  shares  held  by  them  respectively  in  the  ex 
piring  association. 

§  6  provides  for  the  redemption  of  the  circulating  notes  of  the  bank 
securing  an  extension. 

§  7.  That  national  banking  associations  whose  corporate  existence  ha» 
expired  or  shall  hereafter  expire,  and  which  do  not  avail  themselves  of 
the  provisions  of  this  act,  shall  be  required  to  comply  with  the  provis- 
ions of  Revised  Statutes,  £§  5221  and  5222,  in  the  same  manner  as  if  the 
shareholders  had  voted  to  go  into  liquidation,  as  provided  in  the  Revised 
Statutes,  §  5220;  and  the  provisions  of  the  Revised  Statutes,  g§  5224  and 
5225,  shall  also  be  applicable  to  such  associations,  except  as  modified  by 
this  act;  and  the  franchise  of  such  association  is  hereby  extended  for 
the  sole  purpose  of  liquidating  their  affairs  until  such  affairs  are  finally 
closed. 

§  8.  That  national  banks  now  organized  or  hereafter  organized,  hav- 
ing a  capital  of  one  hundred  and  fifty  thousand  dollars  or  less,  shall  not 
be  required  to  keep  on  deposit  or  deposited  with  the  Treasurer  of  the 
United  States,  bonds  in  excess  of  one  quarter  of  their  capital  stock  as 
security  for  their  circulating  notes;  but  such  banks  shall  keep  on  de- 
posit or  deposited  with  the  Treasurer  of  the  United  States  the  amount 
of  bonds  as  herein  required.  And  such  of  those  banks  having  on  deposit 
boads  in  excess  of  that  amount,  are  authorized  to  reduce  their  circula- 
tion by  the  deposit  of  lawful  money  as  provided  by  law:  Provided  that 
the  amount  of  such  circulation  shall  not  in  any  case  exceed  ninety  per 
centum  of  the  par  value  of  the  bonds  deposited  as  herein  provided: 
Provided  further,  that  the  national  banks  which  shall  hereafter  make 
deposits  of  lawful  money  for  the  retirement  in  full  of  circulating  note* 
shall  at  the  time  of  their  deposit  be  assessed  for  the  cost  of  transporting 
and  redeeming  their  notes  then  outstanding,  a  sum  equal  to  the  average 
cost  of  redemption  of  national  bank  notes  during  the  preceding  year, 
and  shall  thereupon  pay  such  assessment.  And  all  national  banks 
which  have  heretofore  made  or  shall  hereafter  make  deposits  of  lawful 
money  for  the  redemption  of  their  circulation  shall  be  assessed  and  pay 
such  assessment  in  the  manner  specified  in  section  three  of  the  act  ap- 
proved June  20,  1874,  for  the  cost  of  transporting  and  redeeming  their 
notes  redeemed  from  such  deposits  subsequently  to  June  30,  1881. 

8  9.  That  any  national  banking  association  now  organized  or  here- 
after organized,  desiring  to  withdraw  its  circulating  notes,  upon  a  de- 
posit of  lawful  money  with  the  Treasurer  of  the  United  States,  as 
provided  in  section  four  of  the  act  of  June  20,  1874,  or  as  provided  in 
this  act,  is  authorized  to  deposit  lawful  money  and  withdraw  a  propor- 
tionate amount  of  the  bonds  held  as  security  for  the  circulating  notes> 


£70  BANKS   AND   BANKING. 

in  the  order  of  such  deposits;  and  no  national  bank  which  makes  any 
deposit  of  lawful  money  in  order  to  withdraw  its  circulating  notes,  shall 
be  entitled  to  receive  any  increase  of  its  circulation  for  the  period  of 
six  months  from  the  time  it  m^,de  such  deposit  of  lawful  money  for  the 
purpose  aforesaid :  Provided,  that  not  more  than  three  millions  of  dol- 
lars of  lawful  money  shall  be  deposited  during  any  calendar  month  for 
this  purpose;  and  provided  further,  that  the  provisions  of  this  section 
shall  not  apply  to  bonds  called  for  redemption  by  the  Secretary  of  t-he 
Treasury,  nor  to  the  withdrawal  of  circulating  notes  in  consequence 
thereof. 

§  10.  That  upon  a  deposit  of  bonds  as  described  by  §§  5159, 5160,  except 
as  modified  by  section  four,  of  the  act  of  June  20,  1874.  and  as  modified 
by  section  eight  of  this  act.  the  association  making  the  same  shall  be 
entitled  to  receive  from  the  Comptroller  of  the  Currency  circulating 
notes  of  different  denominations,  in  blank,  registered  and  countersigned 
as  provided  by  law,  equal  in  amount  to  ninety  per  centum  of  the  cur- 
rent market  value,  not  exceeding  par,  of  the  United  States  bonds  so 
transferred  and  delivered,  and  at  no  time  shall  the  total  amount  of  such 
notes  issued  to  any  such  association  exceed  ninety  per  centum  of  the 
amounts  at  such  time  paid  in  of  its  capital  stock;  and  the  provisions  of 
Revised  Statutes,  §£  5171  and  5176,  are  hereby  repealed. 

[Act  of  March  14,  1900,  allows  national  banking  associations  to 
issue  circulating  notes  up  to  the  par  value  of  the  bonds  deposited  and 
up  to  the  full  amount  of  the  capital  stock.] 

§  11  provides  for  the  exchange  of  three  and  one-half  per  centum  bonds 
for  registered  bonds  of  the  United  States. 

§  12  provides  for  the  reception  by  the  Secretary  of  the  Treasury  of 
gold  coin  and  the  issuance  of  certificates  therefor  in  denominations  of 
not  less  than  twenty  dollars  and  provides  for  the  retaining  of  the  coin 
deposits  in  the  Treasury.  Said  certificates  shall  be  receivable  for  cus- 
toms, taxes,  and  all  public  dues,  and  when  so  received  may  be  re-issued; 
and  such  certificates  and  also  silver  certificates  when  held  by  any  na- 
tional banking  association,  shall  be  counted  as  part  of  its  lawful  reserve; 
and  no  national  banking  association  shall  be  a  member  of  any  clearing- 
house in  which  such  certificates  shall  not  be  receivable  in  the  settlement 
of  clearing-house  balances:  Provided,  that  the  Secretary  of  the  Treasury 
shall  suspend  the  issue  of  such  gold  certificates  whenever  the  amount 
of  gold  coin  and  gold  bullion  in  the  treasury  reserve  for  the  redemption 
of  United  States  notes  falls  below  one  hundred  million  dollars;  and  the 
provisions  of  Revised  Statutes,  §  5207,  shall  be  applicable  to  the  certifi- 
cates herein  authorized  and  directed  to  be  issued. 

[Act  of  March  14,  1900,  makes  the  gold  reserve  in  the  Treasury 
one  hundred  and  fifty  million  dollars.] 

§  13.  That  any  officer,  clerk  or  agent  of  any  national  banking  associa- 
tion who  shall  wilfully  violate  the  provisions  of  §  5208,  Revised  Statutes, 
or  who  shall  resort  to  any  device,  or  receive  a  fictitious  obligation,  directly 


APPENDIX.  671 

or  as  collateral,  in  order  to  avoid  the  provisions  thereof,  or  who  shall 
certify  checks  before  the  amount  thereof  shall  have  been  regularly  en- 
tered to  the  credit  of  the  dealer  upon  the  books  of  the  banking  associa- 
tion, shall  be  guilty  of  a  misdemeanor,  and  shall  on  conviction  thereof 
in  any  circuit  or  district  court  of  the  United  States,  be  fined  not  more 
than  five  thousand  dollars,  or  shall  be  imprisoned  not  more  than  five 
years,  or  both,  in  the  discretion  of  the  court. 

SEC.  5137.  POWER  TO  HOLD  REAL  PROPERTY. —  A  national  banking 
association  may  purchase,  hold,  and  convey  real  estate"  for  the  following 
purposes,  and  for  no  others: 

First.  Such  as  shall  be  necessary  for  its  immediate  accommodation  in 
the  transaction  of  its  business. 

Second.  Such  as  shall  be  mortgaged  to  it  in  good  faith  by  way  of  se- 
curity for  debts  previously  contracted. 

Third.  Such  as  shall  be  conveyed  to  it  in  satisfaction  of  debts  previ- 
ously contracted  in  the  course  of  its  dealings. 

Fourth.  Such  as  it  shall  purchase  at  sales  under  judgments,  decrees, 
or  mortgages  held  by  the  association,  or  shall  purchase  to  secure  debts 
due  to  it. 

But  no  such  association  shall  hold  the  possession  of  any  real  estate 
under  mortgage,  or  the  title  and  possession  of  any  real  estate  purchased 
to  secure  any  debts  due  to  it,  for  a  longer  period  than  five  years. 

SEC.  5138.  REQUISITE  AMOUNT  OF  CAPITAL. — No  association  shall  be 
organized  under  this  title  with  a  less  capital  than  one  hundred  thou- 
sand dollars;  except  that  banks  with  a  capital  of  not  less  than  fifty 
thousand  dollars  may,  with  the  approval  of  the  Secretary  of  the  Treas- 
ury, be  organized  in  any  place  the  population  of  which  does  not  exceed 
flix  thousand  inhabitants.  No  association  shall  be  organized  in  a  city 
the  population  of  which  exceeds  fifty  thousand  persons  with  a  less  cap- 
ital than  two  hundred  thousand  dollars. 

[Act  of  March  14,  1900,  allows  formation  of  national  banking  asso- 
ciations with  capital  of  $25,000  in  cities  with  less  than  8,000  inhabitants.] 

SEC.  5139.  SHARES  OF  STOCK  AND  TRANSFERS. —  The  capital  stock  of 
such  association  shall  be  divided  into  shares  of  one  hundred  dollars  each, 
and  be  deemed  personal  property,  and  transferable  on  the  books  of  the 
association  in  such  manner  as  may  be  prescribed  in  the  by-laws  or  arti- 
cles of  association.  Every  person  becoming  a  shareholder  by  such  trans- 
fer shall,  in  proportion  to  his  shares,  succeed  to  all  the  rights  and  liabili- 
ties of  the  prior  holder  of  such  shares;  and  no  change  shall  be  made  in 
the  articles  of  association,  by  which  the  rights,  remedies,  or  security  of 
the  existing  creditors  of  the  association  shall  be  impaired. 

SEC.  5140.  PAYMENT  OF  CAPITAL  STOCK. —  At  least  fifty  per  centum 
of  the  capital  stock  of  every  association  shall  be  paid  in  before  it  shall 
be  authorized  to  commence  business;  and  the  remainder  of  the  capital 
stock  of  such  association  shall  be  paid  in  instalments  of  at  least  ten  per 
centum  each,  on  the  whole  amount  of  the  capital,  as  frequently  as  one 


672  BANKS    AND   BANKING. 

instalment  at  the  end  of  each  succeeding  month  from  the  time  it  shall 
be  authorized  by  the  Comptroller  of  the  Currency  to  commence  busi- 
ness; and  the  payment  of  each  instalment  shall  be  certified  to  the 
Comptroller,  under  oath,  by  the  president  or  cashier  of  the  associa- 
tion. 

SEC.  5141.  FAILURE  TO  PAY  INSTALMENTS. — Whenever  any  shareholder, 
or  his  assignee,  fails  to  pay  any  instalment  on  the  stock  when  the  same 
is  required  by  the  preceding  section  to  be  paid,  the  directors  of  such 
association  may  sell  the  stock  of  such  delinquent  shareholder  at  public 
auction,  having  given  three  weeks'  previous  notice  thereof  in  a  news- 
paper published  and  of  general  circulation  in  the  city  or  county  where 
the  association  is  located,  or  if  no  newspaper  is  published  in  said  city  or 
county,  then  in  a  newspaper  published  nearest  thereto,  to  any  person 
who  will  pay  the  highest  price  therefor,  to  be  not  less  than  the  amount 
then  due  thereon,  with  the  expenses  of  advertisement  and  sale;  and  the 
excess,  if  any,  shall  bs  paid  to  the  delinquent  shareholder.  If  no  bidder 
can  be  found  who  will  pay  for  such  stock  the  amount  due  thereon  to 
the  association,  and  the  cost  of  advertisement  and  sale,  the  amount  pre- 
viously paid  shall  be  forfeited  to  the  association,  and  such  stock  shall  bo 
sold  as  the  directors  may  order,  within  six  months  from  the  time  of  sucli 
forfeiture,  and  if  not  sold  it  shall  be  canceled  and  deducted  from  the 
capital  stock  of  the  association.  If  any  such  cancellation  and  reduction 
shall  reduce  the  capital  of  the  association  below  the  minimum  of  capital 
required  by  law,  the  capital  stock  shall,  within  thirty  days  from  the 
date  of  such  cancellation,  be  increased  to  the  required  amount;  in  de- 
fault of  which  a  receiver  may  be  appointed,  according  to  the  provisions 
of  section  fifty-two  hundred  and  thirty-four,  to  close  up  the  business  of 
the  association. 

SEC.  5143.  INCREASE  OF  STOCK. —  Any  association  formed  under  tins- 
title  may,  by  its  articles  of  association,  provide  for  an  increase  of  its 
capital  from  time  to  time,  as  may  be  deemed  expedient,  subject  to  the 
limitations  of  this  title.  But  the  maximum  of  such  increase  to  be  pro- 
vided in  the  articles  of  association  shall  be  determined  by  the  Comp- 
troller of  the  Currency;  and  no  increase  of  capital  shall  be  valid  until 
the  whole  amount  of  such  increase  is  paid  in,  and  notice  thereof  has 
been  transmitted  to  the  Comptroller  of  the  Currency,  and  his  certificate 
obtained  specifying  the  amount  of  such  increase  of  capital  stock,  with  hi* 
approval  thereof,  and  that  it  has  been  duly  paid  in  as  part  of  the  capital 
of  such  association. 

Act  May  1,  1886,  24  Stat.  18.— That  any  national  banking  asso- 
ciation may,  with  the  approval  of  the  Comptroller  of  the  Currency,  by 
the  vote  of  shareholders  owning  two-thirds  of  the  stock  of  such  associa- 
tion, increase  its  capital  stock,  in  accordance  with  the  existing  laws,  to 
any  sum  approved  by  the  said  Comptroller,  notwithstanding  the  limit 
fixed  in  its  orignal  articles  of  association  as  determined  by  said  Comp- 
troller; and  no  increase  of  the  capital  stock  of  any  national  banking 


APPENDIX.  G73 

association,  either  within  or  beyond  the  limit  fixed  in  its  original  articles 
of  association,  shall  be  made  except  in  the  manner  herein  provided. 

SEC.  5143.  REDUCTION  OF  CAPITAL  STOCK. —  Any  association  formed 
under  this  title  may.  by  the  vote  of  shareholders  owning  two-thirds  of 
its  capital  stock,  reduce  its  capital  to  any  sum  not  below  the  amount 
required  for  its  outstanding  circulation,  nor  shall  any  such  reduction  be 
made  until  the  amount  of  the  proposed  reduction  has  been  reported  to 
the  Comptroller  of  the  Currency  and  his  approval  thereof  obtained. 

SEC."  5144  RIGHT  OF  SHAREHOLDERS  TO  VOTE. —  In  all  elections  of 
directors,  and  in  deciding  all  questions  at  meetings  of  shareholders, 
each  shareholder  shall  be  entitled  to  one  vote  on  each  share  of  stock 
held  by  him.  Shareholders  may  vote  by  proxies  duly  authorized  in 
writing;  but  no  officer,  clerk,  teller,  or  bookkeeper  of  such  association 
shall  act  as  proxy;  and  no  shareholder  whose  liability  is  past  due  and 
unpaid  shall  be  allowed  to  vote. 

SEC.  5145.  ELECTION  OF  DIRECTORS. —  The  affairs  of  each  association 
shall  be  managed  by  not  less  than  five  directors,  who  shall  be  elected 
by  the  shareholders  at  a  meeting  to  be  held  at  any  time  before  the  asso- 
ciation is  authorized  by  the  Comptroller  of  the  Currency  to  commence 
the  business  of  banking;  and  afterward  at  meetings  to  be  held  on  such 
day  in  January  of  each  year  as  is  specified  therefor  in  the  articles  of 
association.  The  directors  shall  hold  office  for  one  year,  and  until  their 
successors  are  elected  and  have  qualified. 

SEC.  5146.  REQUISITE  QUALIFICATIONS  OF  DIRECTORS. —  Every  director 
must,  during  his  whole  term  of  service,  be  a  citizen  of  the  United  States, 
and  at  least  three-fourths  of  the  directors  must  have  resided  in  the 
State,  Territory,  or  district  in  which  the  association  is  located,  for  at 
least  one  year  immediately  preceding  their  election,  and  must  be  resi- 
dents therein  during  their  continuance  in  office.  Every  director  must 
own,  in  his  own  right,  at  least  ten  shares  of  the  capital  stock  of  the  as- 
sociation of  which  he  is  a  director.  Any  director  who  ceases  to  be  the 
owner  of  ten  shares  of  the  stock,  or  who  becomes  in  any  other  manner 
disqualified,  shall  thereby  vacate  his  place. 

SEC.  5147.  OATH  OF  DIRECTORS  AND  FILING  THEREOF. —  Each  director, 
when  appointed  or  elected,  shall  take  an  oath  that  he  will,  so  far  as  the 
duty  devolves  on  him,  diligently  and  honestly  administer  the  affairs  of 
such  association,  av  1  will  not  knowingly  violate,  or  willingly  permit  to 
be  violated,  any  of  the  provisions  of  this  title,  and  that  he  is  the  owner 
in  good  faith,  and  in  his  own  right,  of  the  number  of  shares  of  stock  re- 
quired by  his  title,  subscribed  by  him,  or  standing  in  his  name  on  the 
books  of  the  association,  and  that  the  same  is  not  hypothecated,  or  in 
any  way  pledged,  as  security  for  any  loan  or  debt  Such  oath,  sub- 
scribed by  the  director  making  it,  and  certified  by  the  officer  before 
whom  it  is  taken,  shall  be  immediately  transmitted  to  the  Comptroller 
of  the  Currency,  and  shall  be  filed  and  preserved  in  his  office. 
43 


674  BANKS   AND   BANKING. 

SEC.  5148.  FILLING  VACANCIES. —  Any  vacancy  in  the  board  shall  be 
filled  by  appointment  by  the  remaining  directors,  and  any  director  so 
appointed  shall  hold  his  place  until  the  next  election. 

SEC.  5149.  PROCEEDINGS  WHERE  NO  ELECTION. —  If,  from  any  cause,  an 
election  of  directors  is  not  made  at  the  time  appointed,  the  association 
shall  not  for  that  cause  be  dissolved,  but  an  election  may  be  held  on  any 
subsequent  day,  thirty  days'  notice  thereof  in  all  cases  having  been  given 
in  a  newspaper  published  in  the  city,  town,  or  county  in  which  the  as- 
sociation is  located:  and  if  no  newspaper  is  published  in  such  city,  town, 
or  county,  such  notice  shall  be  published  in  a  newspaper  published  near- 
est thereto.  If  the  articles  of  association  do  not  fix  the  day  on  which 
the  election  shall  be  held,  or  if  no  election  is  held  on  the  day  fixed,  the 
day  for  the  election  shall  be  designated  by  the  board  of  directors  in  their 
by-laws,  or  otherwise;  or  if  the  directors  fail  to  fix  the  date,  shareholders 
representing  two-thirds  of  the  shares  may  do  so. 

SEC.  5150.  PRESIDENT.—  One  of  the  directors,  to  be  chosen  by  the  board, 
shall  be  the  president  of  the  board. 

SEC.  5151.  INDIVIDUAL  LIABILITY  OP  SHAREHOLDERS. — The  sharehold- 
ers of  every  national  banking  association  shall  be  held  individually  re- 
sponsible, equally  and  ratably,  and  not  one  for  another,  for  all  contracts, 
debts,  and  engagements  of  such  association  to  the  extent  of  the  amount 
of  their  stock  therein,  at  the  par  value  theroof,  in  addition  to  the  amount 
invested  in  such  shares;  except-that  shareholders  of  any  banking  asso- 
ciation now  existing  under  State  laws,  having  not  less  than  five  millions 
of  dollars  of  capital  actually  paid  in,  and  a  surplus  of  twenty  per  centum 
on  hand,  both  to  be  determined  by  the  Comptroller  of  the  Currency, 
shall  be  liable  only  to  the  amount  invested  in  such  shares;  and  such  sur- 
plus of  twenty  per  centum  shall  be  kept  undiminished,  and  be  in  addi- 
tion to  the  surplus  provided  for  in  this  title;  and  if  at  any  time  there  is 
a  deficiency  in  such  surplus  of  twenty  per  centum,  such  association  shall 
not  pay  any  dividends  to  its  shareholders  until  the  deficiency  is  made 
good;  and  in  case  of  such  deficiency,  the  Comptroller  of  the  Currency 
may  compel  the  association  to  close  its  business  and  wind  up  its  affairs 
under  the  provisions  of  Chapter  four  of  this  title. 

SEC.  5152.  EXECUTORS,  TRUSTEES,  &c.—  Persons  holding  stock  as  exec- 
utors, administrators,  guardians,  or  trustees,  shall  not  be  personally  sub- 
ject to  any  liabilities  as  stockholders;  but  the  estates  and  funds  in  their 
hands  shall  be  liable  in  like  manner  and  to  the  same  extent  as  the  tes- 
tator, intestate,  ward,  or  person  interested  in  such  trust  funds  would  be, 
if  living  and  competent  to  act  and  hold  the  stock  in  his  own  name. 

SEC.  5153.  PUBLIC  DEPOSITARIES. —  All  national  banking  associations, 
designated  for  that  purpose  by  the  Secretary  of  the  Treasury,  shall  be 
depositaries  of  public  money,  except  receipts  from  customs,  under  such 
regulations  as  may  be  prescribed  by  the  Secretary;  and  they  may  also 
be  employed  as  financial  agents  of  the  Government;  and  they  shall  per- 


APPENDIX.  675 

form  all  such  reasonable  duties,  as  depositaries  of  public  moneys  and 
financial  agents  of  the  Government,  as  may  be  required  of  them.  The 
Secretary  of  the  Treasury  shall  require  the  associations  thus  designated 
to  give  satisfactory  security,  by  the  deposit  of  United  States  bonds  and 
otherwise,  for  the  safe  keeping  and  prompt  payment  of  the  public 
money  deposited  with  them,  and  for  the  faithful  performance  of  their 
duties  as  financial  agents  of  the  Government.  And  every  association 
so  designated  as  receiver  or  depositary  of  the  public  money,  shall  take 
and  receive  at  par  all  of  the  national  currency  bills,  by  whatever  asso- 
ciation issued,  which  have  been  paid  into  the  Government,  for  internal 
revenue,  or  for  loans  or  stocks. 

SEC.  5154  CHANGE  OF  STATE  BANKS  TO  NATIONAL  BANKS.— Any  bank 
incorporated  by  special  law,  or  any  banking  institution  organized  under 
a  general  law  of  any  State,  may  become  a  national  association  under 
this  title  by  the  name  prescribed  in  its  organization  certificate;  and  in 
such  case  the  articles  of  association  and  the  organization  certificate 
may  be  executed  by  a  majority  of  the  directors  of  the  bank  or  banking 
institution;  and  the  certificate  shall  declare  that  the  owners  of  two- 
thirds  of  the  capital  stock  have  authorized  the  directors  to  make  such 
certificate,  and  to  change  and  convert  the  bank  or  banking  institution 
into  a  national  association.  A  majority  of  the  directors,  after  execut- 
ing the  articles  of  association  and  organization  certificate,  shall  have 
power  to  execute  all  other  papers,  and  to  do  whatever  may  be  required 
to  make  its  organization  perfect  and  complete  as  a  national  association. 
The  shares  of  any  such  bank  may  continue  to  be  for  the  same  amount 
each  as  they  were  before  the  conversion,  and  the  directors  may  con- 
tinue to  be  the  directors  of  the  association  until  others  are  elected  or 
appointed  in  accordance  with  the  provisions  of  this  chapter;  and  any 
State  bank  which  is  a  stockholder  in  any  other  bank,  by  authority  of 
State  laws,  may  continue  to  hold  its  stock,  although  either  bank,  or 
both,  may  be  organized  under  and  have  accepted  the  provisions  of  this 
title.  When  the  Comptroller  of  the  Currency  has  given  to  such  asso- 
ciation a  certificate,  under  his  hand  and  official  seal,  that  the  provisions 
of  this  title  have  been  complied  with,  and  that  it  is  authorized  to  com- 
mence the  business  of  banking,  the  association  shall  have  the  same 
powers  and  privileges,  and  shall  be  subject  to  the  same  duties,  respon- 
sibilities, and  rules,  in  all  respects,  as  are  prescribed  for  other  associa- 
tions originally  organized  as  national  banking  associations,  and  shall  be 
held  and  regarded  as  such  an  association.  But  no  such  association  shall 
have  a  less  capital  than  the  amount  prescribed  for  associations  organ- 
ized under  this  titla 

Act  of  February  14,  1880,  21  Stat.  66,  provides:  That  any  na- 
tional gold  bank  organized  under  the  provisions  of  the  laws  of  the  United 
States,  may,  in  the  manner  and  subject  to  the  provisions  prescribed  by 
Revised  Statutes,  §  5154,  for  the  conversion  of  banks  incorporated  under 
the  laws  of  any  State,  cease  to  be  a  gold  bank,  and  become  such  an 


676  BANKS    AND    BANKING. 

association  as  is  authorized  by  §  5133,  for  carrying  on  the  business  of 
banking,  and  shall  have  the  same  powers  and  privileges,  and  shall  be 
subject  to  the  same  duties,  responsibilities,  and  rules,  in  all  respects,  as 
are  by  law  prescribed  for  such  associations:  Provided,  that  all  certificates 
of  organization  which  shall  be  included  under  this  act,  shall  bear  the 
date  of  the  original  organization  of  each  bank  respectively  as  a  gold  bank. 

SEC.  5155.  STATE  BANKS  WITH  BRANCHES. —  It  shall  be  lawful  for  any 
bank  or  banking  association  organized  under  State  laws,  and  having 
branches,  the  capital  being  joint  and  assigned  to  and  used  by  the  mother 
bank  and  brandies  in  definite  proportions,  to  become  a  national  banking 
association  in  conformity  with  existing  laws,  and  to  retain  and  keep  in 
operation  its  branches,  or  such  one  or  more  of  them  as  it  may  elect  to 
retain;  the  amount  of  the  circulation  redeemable  at  the  mother  bank, 
and  each  branch,  to  be  regulated  by  the  amount  of  capital  assigned  to 
and  used  by  each. 

SEC.  5156.  Reserves  the  rights  of  associations  organized  under  the  Act 
of  1863. 

SEC.  5158.  REGISTERED  BONDS.— The  term  "United  States  bonds,"  as 
used  throughout  this  chapter,  shall  be  construed  to  mean  registered 
bonds  of  the  United  States. 

SEC.  5159.  DEPOSITED  BONDS. —  Every  association,  after  having  com- 
plied with  the  provisions  of  this  title,  preliminary  to  the  commencement 
of  the  banking  business,  and  before  it  shall  be  authorized  to  commence 
banking  business  under  this  title,  shall  transfer  and  deliver  to  the  Treas- 
urer of  the  United  States  any  United  States  registered  bonds,  bearing 
interest,  to  an  amount  not  less  than  thirty  thousand  dollars  and  not  less 
than  one-third  of  the  capital  stock  pa  id  in.  Such  bonds  shall  be  received 
by  the  Treasurer  upon  deposit,  and  shall  be  by  him  safely  kept  in  his 
office,  until  they  shall  be  otherwise  disposed  of,  in  pursuance  of  the 
provisions  of  this  title. 

SEC.  5160.  INCREASE  OR  REDUCTION  OF  DEPOSIT.— The  deposit  of  bonds 
made  by  each  association  shall  be  increased  as  its  capital  may  be  paid 
up  or  increased,  so  that  every  association  shall  at  all  times  have  on  de- 
posit with  the  Treasurer  registered  United  States  bonds  to  the  amount 
of  at  least  one-third  of  its  capital  stock  actually  paid  in.  And  any  asso- 
ciation that  may  desire  to  reduce  its  capital  or  to  close  up  its  business 
and  dissolve  its  organization,  may  take  up"  its  bonds  upon  returning  to 
the  Comptroller  its  circulating  notes  in  the  proportion  hereinafter  re- 
quired, or  may  take  up  any  excess  of  bonds  beyond  cfne-third  of  its  cap- 
ital stock,  and  upon  which  no  circulating  notes  have  been  delivered. 

SEC.  5161.  EXCHANGE  OP  COUPON  FOR  REGISTERED  BONDS.—  To  facili- 
tate a  compliance  with  the  two  preceding  sections,  the  Secretary  of  the 
Treasury  is  authorized  to  receive  from  any  association,  and  cancel,  any 
United  States  coupon  bonds,  and  to  issue  in  lieu  thereof  registered  bonds 
of  like  amounts,  bearing  a  like  rate  of  interest,  and  having  the  same 
time  to  run. 


APPENDIX.  677 

SEC.  5162.  MANNER  OF  MAKING  TRANSFERS  OF  BONDS.—  All  transfers 
in  United  States  bonds,  made  by  any  association  under  the  provisions 
of  this  title,  shall  be  made  to  the  Treasurer  of  the  United  States  in  trust 
for  the  association,  with  a  memorandum  written  or  printed  on  each 
bond,  and  signed  by  the  cashier,  or  some  other  officer  of  the  association 
making  the  deposit.  A  receipt  shall  be  given  to  the  association,  by  the 
Comptroller  of  the  Currency,  or  by  a  clerk  appointed  by  him  for  that 
purpose,  stating  that  the  bond  is  held  in  trust  for  the  association  on 
whose  behalf  the  transfer  is  made,  and  as  security  for  the  redemption 
and  payment  of  any  circulating  notes  that  have  been  or  may  be  deliv- 
ered to  such  association.  No  assignment  or  transfer  of  any  such  bond 
by  the  Treasurer  shall  be  deemed  valid  unless  countersigned  by  the 
Comptroller  of  the  Currency. 

SEC.  5163.  REGISTRY  OF  TRANSFERS.— The  Comptroller  of  the  Cur- 
rency shall  keep  in  his  office  a  book  in  which  he  shall  cause  to  be  en- 
tered, immediately  upon  countersigning  it,  every  transfer  or  assignment 
by  the  Treasurer,  of  any  bonds  belonging  to  a  national  banking  associa- 
tion, presented  for  his  signature.  He  shall  state  in  such  entry  the  name 
of  the  association  from  whose  accounts  the  transfer  is  made,  the  name 
of  the  party  to  whom  it  is  made,  and  the  par  value  of  the  bonds  trans- 
ferred. 

SEC.  5164  NOTICE  OF  TRANSFER.— The  Comptroller  of  the  Currency 
shall,  upon  countersigning  and  entering  any  transfer  or  assignment  by 
the  Treasurer,  of  any  bonds  belonging  to  a  national  banking  association, 
advise  by  mail  the  association  from  whose  accounts  the  transfer  is 
made,  of  the  kind  and  numerical  designation  of  the  bonds,  and  the 
amount  thereof  so  transferred. 

SEC.  5165.  EXAMINATION  OF  REGISTRY.—  The  Comptroller  of  the  Cur- 
rency shall  have  at  all  times,  during  office  hours,  access  to  the  books  of 
the  Treasurer  of  the  United  States  for  *the  purpose  of  ascertaining  the 
correctness  of  any  transfer  or  assignment  of  the  bonds  deposited  by  an 
association,  presented  to  the  Comptroller  to  countersign ;  and  the  Treas- 
urer shall  have  the  like  access  to  the  book  mentioned  in  section  fifty-one 
hundred  and  sixty-three,  during  office  hours,  to  ascertain  the  correctness 
of  the  entries  in  the  same;  and  the  Comptroller  shall  also  at  all  times 
have  access  to  the  bonds  on  deposit  with  the  Treasurer,  to  ascertain 
their  amount  and  condition. 

SEC.  5166.  ANNUAL  EXAMINATION  OF  BONDS. —  Every  association  hav- 
ing bonds  deposited  in  the  office  of  the  Treasurer  of  the  United  States 
shall,  once  or  oftener  in  each  fiscal  year,  examine  and  compare  the  bonds 
pledged  by  the  association  with  the  books  of  the  Comptroller  of  the 
Currency  and  with  the  accounts  of  the  association,  and,  if  they  are  found 
correct,  shall  execute  to  the  Treasurer,  a  certificate  setting  forth  the  dif- 
ferent kinds  and  the  amounts  thereof,  and  that  the  same  are  in  the  pos- 
session and  custody  of  the  Treasurer  at  the  date  of  the  certificate.  Such 
examination  shall  be  made  at  such  time  or  times,  during  the  ordinary 


678  BANKS   A1TD   BANKING. 

business  hours,  as  the  Treasurer  and  Comptroller,  respectively,  may  se- 
lect, and  may  be  made  by  the  officer  or  agent  of  such  association,  duly 
appointed  in  writing  for  that  purpose;  and  his  certificate  before-men- 
tioned shall  be  of  like  force  and  validity  as  if  executed  by  the  president 
or  cashier.  A  duplicate  of  such  certificate  signed  by  the  Treasurer,  shall 
be  retained  by  the  association. 

SEC.  5167.  CUSTODY  OP  BONDS  AND  COLLECTION  OF  INTEREST.— The 
bonds  transferred  to  and  deposited  with  the  Treasurer  of  the  United 
States,  by  any  association,  for  the  security  of  its  circulating  notes,  shall 
be  held  exclusively  for  that  purpose,  until  such  notes  are  redeemed,  as 
provided  in  this  title.  The  Comptroller  of  the  Currency  shall  give  to 
any  such  association  powers  of  attorney  to  receive  and  appropriate  to  its 
own  use  the  interest  on  the  bonds  which  it  has  so  transferred  to  the 
Treasurer;  but  such  powers  shall  become  inoperative  whenever  such 
association  fails  to  redeem  its  circulating  notes.  Whenever  the  market 
or  cash  value  of  any  bonds  thus  deposited  with  the  Treasurer  is  reduced 
below  the  amount  of  the  circulation  issued  for  the  same,  the  Comptroller 
may  demand  and  receive  the  amount  of  such  depreciation  in  other 
Dnited  States  bonds  at  cash  value,  or  in  money,  from  the  association,  to 
be  deposited  with  the  Treasurer  as  long  as  such  association  continues. 
And  the  Comptroller,  upon  the  terms  prescribed  by  the  Secretary  of  the 
Treasury,  may  permit  an  exchange  to  be  made  of  any  of  the  bonds  de- 
posited with  the  Treasurer  by  any  association  for  other  bonds  of  the 
United  States  authorized  to  be  received  as  security  for  circulating  notes' 
if  he  is  of  opinion  that  such  an  exchange  can  be  made  without  prejudice 
to  the  United  States;  and  he  may  direct  the  return  of  any  bonds  to  the 
association  which  transferred  the  same,  in  sums  of  not  less  than  one 
thousand  dollars  upon  the  surrender  to  him  and  the  cancellation  of  a 
proportionate  amount  of  such  circulating  notes:  Provided,  that  the  re- 
maining bonds  which  shall  have  been  transferred  by  the  association 
offering  to  surrender  circulating  notes,  are  equal  to  the  amount  required 
for  the  circulating  notes  not  surrendered  by  such  association,  and  that 
the  amount  of  bonds  in  the  hands  of  the  Treasurer  is  not  diminished 
below  the  amount  required  to  be  kept  on  deposit  with  him,  and  that 
there  has  been  no  failure  by  the  association  to  redeem  its  circulating 
notes,  nor  any  other  violation  by  it  of  the  provisions  of  this  title,  and 
that  the  market  or  cash  value  of  the  remaining  bonds  is  not  below  the 
amount  required  for  the  circulation  issued  for  the  same. 

SEC.  5168.  COMPTROLLER'S  EXAMINATION.— Whenever  a  certificate  is- 
transmitted  to  the  Comptroller  of  the  Currency  as  provided  in  this 
title,  and  the  association  transmitting  the  same  notifies  the  Comptroller 
that  at  least  fifty  per  centum  of  its  capital  stock  has  been  duly  paid  in,  and 
that  such  association  has  complied  with  all  the  provisions  of  this  title 
required  to  be  complied  with  before  an  association  shall  be  authorized 
to  commence  the  business  of  banking,  the  Comptroller  shall  examine 
into  the  condition  of  such  association,  ascertain  especially  the  amount 


APPENDIX.  679 

of  money  paid  in  on  account  of  its  capital,  the  name  and  place  of  resi- 
dence of  each  of  its  directors,  and  the  amount  of  capital  stock  of  which 
each  is  the  owner  in  good  faith,  and  generally  whether  such  association 
has  complied  with  all  the  provisions  of  this  title  required  to  entitle  it 
to  engage  in  the  business  of  banking;  and  shall  cause  to  be  made  and 
attested  by  the  oath  of  a  majority  of  the  directors,  and  by  the  president 
or  cashier  of  the  association,  a  statement  of  all  the  facts  necessary  to 
enable  the  Comptroller  to  determine  whether  the  association  is  lawfully 
entitled  to  commence  the  business  of  banking. 

SEC.  5169.  CERTIFICATE  OF  AUTHORITY. —  If,  upon  a  careful  examina- 
tion of  the  facts  so  reported  and  of  any  other  facts  which  may  come  to 
the  knowledge  of  the  Comptroller,  whether  by  means  of  a  special  com- 
mission appointed  by  him  for  the  purpose  of  inquiry  into  the  condition 
of  such  association,  or  otherwise,  it  appears  that  such  association  is  law- 
fully entitled  to  commence  the  business  of  banking,  the  Comptroller 
shall  give  to  such  association  a  certificate,  under  his  hand  and  official 
seal,  that  such  association  has  complied  with  all  the  provisions  required 
to  be  complied  with  before  commencing  the  business  of  banking,  and 
that  such  association  is  authorized  to  commence  such  business.  But 
the  Comptroller  may  withhold  from  an  association  v  his  certificate  au- 
thorizing the  commencement  of  business,  whenever  he  has  reason  to 
suppose  that  the  shareholders  have  formed  the  same  for  any  other  than 
the  legitimate  objects  contemplated  by  this  title. 

SEC.  5170.  PUBLICATION  OF  CERTIFICATE.—  The  association  shall  cause 
the  certificate  issued  under  the  preceding  section  to  be  published  in 
some  newspaper  printed  in  the  city  or  county  where  the  association  is 
located,  for  at  least  sixty  days  next  after  the  issuing  thereof;  or,  if  no 
newspaper  is  published  in  such  city  or  county,  then  in  the  newspaper 
published  nearest  thereto. 

SEC.  5171.  Repealed.    See  section  10,  Act  of  July  12, 1882. 

SEC.  5172.  Prescribes  directions  for  the  printing,  denominations  and 
form  of  the  circulating  notes. 

SEC.  5173.  Provides  for  the  custody  of  the  plates  and  special  dies  for 
the  printing  of  notes. 

SEC.  5174  Provides  for  an  annual  examination  of  the  plates  and  dies. 

SEC.  5175.  DENOMINATIONS  OF  NOTES. —  Not  more  than  one-sixth  part 
of  the  notes  furnished  to  any  association  shall  be  of  a  less  denomination 
than  five  dollars.  After  specie  payments  are  resumed,  no  association 
shall  be  furnished  with  notes  of  a  less  denomination  than  five  dollars. 

SEC.  5176.  Repealed. 

SEC.  5177.  Repealed. 

SEC.  5178.  Apportions  aggregate  amount  of  circulating  notes  among 
the  various  States  and  Territories. 

SEC.  5179.  Provides  for  equalizing  the  distribution. 

SEC.  5180.  Provides  for  the  withdrawal  of  notes  of  associations  in  pur 
suance  of  such  equalization. 


680  BANKS   AND   BANKING. 

SEC.  5181.  Provides  for  the  removal  of  any  association  located  in  a 
State  having  more  than  its  proportion  of  circulation  to  a  State  having 
less  than  its  proportion. 

Act  of  January  19,  1875,  18  Stat.  296,  provides:  That  each  ex- 
isting banking  association  may  increase  its  circulating  notes  in  accord- 
ance with  existing  law  without  respect  to  said  aggregate  limit;  and  new- 
banking  associations  may  be  organized  in  accordance  with  existing  law 
without  respect  to  said  aggregate  limit;  and  the  provisions  of  law  for 
the  withdrawal  and  redistribution  of  national  bank  currency  among  the 
several  States  and  Territories  are  hereby  repealed. 

SEC.  5182.  NATIONAL  BANK  NOTES  AND  MONEY.— After  any  associa- 
tion receiving  circulating  notes  under  this  title  has  caused  its  promise 
to  pay  such  notes  on  demand  to  be  signed  by  the  president  or  vice-presi- 
dent and  cashier  thereof,  in  such  manner  as  to  make  them  obligatory 
promissory  notes,  payable  on  demand,  at  its  place  of  business,  such  as- 
sociation may  issue  and  circulate  the  same  as  money.  And  the  same 
shall  be  received  at  par  in  all  parts  of  the  United  States  in  payment  of 
taxes,  excises,  public  lands,  and  all  other  dues  to  the  United  States,  ex- 
cept duties  on  imports:  and  also  for  all  salaries  and  other  debts  and 
demands  owing  by  the  United  States  to  individuals,  corporations  and 
associations  within  the  United  States,  except  interest  on  the  public  debt, 
and  in  redemption  of  the  national  currency. 

Act  of  July  28,  1892,  27  Stat.  322,  provides  that  the  provisions 
of  the  Revised  Statutes  of  the  United  States  providing  for  the  redemp- 
tion of  national  bank  notes,  shall  apply  to  all  national  bank  notes  that 
have  been  or  may  be  issued  to,  or  received  by.  any  national  bank,  not- 
withstanding such  notes  may  have  been  lost  by  or  stolen  from  a  bank 
and  put  in  circulation  without  the  signature  or  upon  the  forged  signa- 
ture of  the  president  or  vice-president  and  cashier. 

SEC.  5183.  PROHIBITION  OF  OTHER  NOTES. — No  national  banking  asso- 
ciation shall  issue  post  notes  or  any  other  notes  to  circulate  as  money 
than  such  as  are  authorized  by  the  provisions  of  this  titla 

SEC.  5184  WORN-OUT  AND  MUTILATED  NOTES. —  It  shall  be  the  duty  of 
the  Comptroller  of  the  Currency  to  receive  worn-out  or  mutilated  circu- 
lating notes  issued  by  any  banking  association,  and  also,  on  due  proof  of 
the  destruction  of  any  such  circulating  notes,  to  deliver  in  place  thereof 
to  the  association  other  blank  circulating  notes  to  an  equal  amount. 
Such  worn-out  or  mutilated  notes,  after  a  memorandum  has  been  en- 
tered in  the  proper  books,  in  accordance  with  such  regulations  as  may 
be  established  by  the  Comptroller,  as  well  as  all  circulating  notes  which 
shall  have  been  paid  or  surrendered  to  be  canceled,  shall  be  burned  to 
ashes  in  presence  of  four  persons,  one  to  be  appointed  by  the  Secretary 
of  the  Treasury,  one  by  the  Comptroller  of  the  Currency,  one  by  the 
Treasurer  of  the  United  States,  and  one  by  the  association,  under  such 
regulations  as  the  Secretary  of  the  Treasury  may  prescribe.  A  certificate 
of  such  burning,  signed  by  the  parties  so  appointed,  shall  be  made  in 


APPENDIX.  681 

the  books  of  the  Comptroller,  and  a  duplicate  thereof  forwarded  to  the 
association  whose  notes  are  thus  canceled. 

SEC.  5185.  ORGANIZATION  OP  ASSOCIATIONS  TO  ISSUE  GOLD  NOTES.— 
Associations  may  be  organized  in  the  manner  prescribed  by  this  title  for 
the  purpose  of  issuing  notes  payable  in  gold;  and  upon  the  deposit  of 
any  Unitsd  States  bonds  bearing  interest  payable  in  gold  with  the  Treas- 
urer of  the  United  States,  in  the  manner  prescribed  for  other  associa- 
tions, it  shall  be  lawful  for  the  Comptroller  of  the  Currency  to  issue  to 
the  association  making  the  deposit  circulating  notes  of  different  de- 
nominations, but  none  of  them  of  less  than  five  dollars  and  not  exceed- 
ing in  amount  eighty  per  centum  of  the  par  value  of  the  bonds  deposited, 
which  shall  express  the  promise  of  the  association  to  pay  them,  upon 
presentation  at  the  office  at  which  they  are  issued,  in  gold  coin  of  the 
United  States,  and  shall  be  so  redeemable.  But  no  such  association 
shall  have  a  circulation  of  more  than  one  million  of  dollars. 

Act  of  January  19,  1875,  18  Stat.  302,  provides  that  each  of 
such  existing  banking  associations  may  increase  its  circulating  notes, 
and  new  banking  associations  may  be  organized,  in  accordance  with  ex- 
isting law,  without  respect  to  such  limitation. 

SEC.  5186.  LAWFUL  MONEY  RESERVES. —  Every  association  organized 
under  the  preceding  section  shall  at  all  times  keep  on  hand  not  less  than 
twenty-five  per  centum  of  its  outstanding  circulation,  in  gold  or  silver 
coin  of  the  United  States;  and  shall  receive  at  par  in  the  payment  of 
debts  the  gold  notes  of  every  other  such  association  which  at  the  time 
of  such  payment  is  redeeming  its  circulating  notes  in  gold  coin  of  the 
United  States,  and  shall  be  subject  to  all  the  provisions  of  this  title: 
Provided,  that,  in  applying  the  same  to  associations  organized  for 
issuing  gold  notes,  the  terms  "  lawful  money  "  and  "  lawful  money  of 
the  United  States  "  shall  be  construed  to  mean  gold  or  silver  coin  of  the 
United  States;  and  the  circulation  of  such  associations  shall  not  be 
within  the  limitation  of  circulation  mentioned  in  the  title. 

SEC.  5187.  PENALTY  FOR  ISSUING  CIRCULATING  NOTES  TO  UNAUTHOR- 
IZED ASSOCIATIONS. —  No  officer  acting  under  the  provisions  of  this  title 
shall  countersign  or  deliver  to  any  association,  or  to  any  other  Company 
or  person,  any  circulating  notes  contemplated  by  this  title,  except  in  ac- 
cordance with  the  true  intent  and  meaning  of  its  provisions.  Every 
officer  who  violates  this  section  shall  be  deemed  guilty  of  a  high  misde- 
meanor, and  shall  be  fined  not  more  than  double  the  amount  so  counter- 
signed and  delivered,  and  imprisoned  not  less  than  one  year  and  not 
more  than  fifteen  years. 

SEC.  5188.  IMITATION  OF  NOTES  FOR  ADVERTISING. —  It  shall  not  be 
lawful  to  design,  print,  or  in  any  manner  make  or  execute,  or  to  utter, 
issue,  distribute,  circulate,  or  use,  any  business  or  professional  card,  no- 
tice, placard,  circular,  hand-bill,  or  advertisement,  in  the  likeness  or 
similitude,  of  any  circulating  note  or  other  obligation  or  security  of  any 
banking  association  organized  or  acting  under  the  laws  of  the  United 


682  BANKS   AND   BANKING. 

States  which  has  been  or  may  be  issued  under  this  title,  or  any  act  of 
Congress,  or  to  write,  print,  or  otherwise  impress  upon  any  such  note, 
obligation,  or  security  any  business  or  professional  card,  notice  or  adver- 
tisement, or  any  notice  or  advertisement  of  any  matter  or  thing  what- 
ever. Every  person  who  violates  this  section  shall  be  liable  to  a  penalty 
of  one  hundred  dollars,  recoverable  one  half  to  the  use  of  the  informer. 

SEC.  5189.  MUTILATION  OF  BANK  NOTES.—  Every  person  who  mutilates, 
cuts,  defaces,  disfigures,  or  perforates  with  holes,  or  unites  or  cements 
together,  or  does  any  other  thing  to  any  bank  bill,  draft,  note,  or  other 
evidence  of  debt,  issued  by  any  national  banking  association,  or  who 
causes  or  procures  the  same  to  be  done,  with  intent  to  render  such  bank 
bill,  draft,  note  or  other  evidence  of  debt  unfit  to  be  re-issued  by  said 
association,  shall  be  liable  to  a  penalty  of  fifty  dollars,  recoverable  by 
the  association. 

SEC.  5190.  PLACE  OF  BUSINESS. —  The  usual  business  of  each  national 
banking  association  shall  be  transacted  at  an  office  or  banking  house 
located  in  the  place  specified  in  its  organization  certificate. 

SEC.  5191.  LAWFUL  MONEY  RESERVE. —  Every  national  banking  asso- 
ciation in  either  of  the  following  cities:  Albany,  Baltimore,  Boston,  Cin- 
cinnati, Chicago,  Cleveland,  Detroit,  Louisville,  Milwaukee,  New  Orleans, 
New  York,  Philadelphia,  Pittsburgh,  Saint  Louis,  San  Francisco,  and 
Washington,  shall  at  all  times  have  on  hand,  in  lawful  money  of  the 
United  States,  an  equal  amount  to  at  least  twenty-five  per  centum  of  the 
aggregate  amount  of  its  notes  in  circulation  and  its  deposits;  and  every 
other  association  shall  at  all  times  have  on  hand,  in  lawful  money  of  the 
United  States,  an  equal  amount  to  at  least  fifteen  per  centum  of  the 
aggregate  amounts  of  its  notes  in  circulation,  and  of  its  deposits.  When- 
ever the  lawful  money  of  any  association  in  any  of  the  cities  named 
shall  be  below  the  amount  of  twenty-five  per  centum  of  its  circulation 
and  deposits,  and  whenever  the  lawful  money  of  any  other  association 
shall  be  below  fifteen  per  centum  of  its  circulation  and  deposits,  such 
association  shall  not  increase  its  liabilities  by  making  any  new  loans  or 
discounts  otherwise  than  by  discounting  or  purchasing  bills  of  exchange 
payable  at  sight,  nor  make  any  dividend  of  its  profits  until  the  required 
proportion,  between  the  aggregate  amount  of  its  outstanding  notes  of 
circulation  and  deposits  and  its  lawful  money  of  the  United  States,  has 
been  restored.  And  the  Comptroller  of  the  Currency  may  notify  any 
association,  whose  lawful  money  reserve  shall  be  below  the  amount 
above  required  to  be  kept  on  hand,  to  make  good  such  reserve;  and  if 
such  association  shall  fail  for  thirty  days  thereafter  so  as  to  make  good 
its  reserve  of  lawful  money,  the  Comptroller  may,  with  the  concurrence 
of  the  Secretary  of  the  Treasury,  appoint  a  receiver  to  wind  up  the  busi- 
ness of  the  association,  as  provided  in  section  fifty  two  hundred  and 
thirty-four. 

Stat.  of  March  3,  1887,  25  Stat.  559,  provides  that  whenever 
three-fourths  in  number  of  the  national  banks  located  in  any  city  in 


APPENDIX.  683 

the  United  States  having  a  population  of  fifty  thousand  people  shall 
make  application  to  the  Comptroller  of  the  Currency,  in  writing,  asking 
that  the  name  of  the  city  in  which  such  banks  are  located  shall  be 
added  to  the  cities  named  in  the  Revised  Statutes,  sections  fifty-one 
hundred  and  ninety-one  and  fifty-one  hundred  and  ninety-two,  the  Comp- 
troller shall  have  authority  to  grant  such  request,  and  every  bank  located 
in  such  city  shall  at  all  times  thereafter  have  on  hand,  in  lawful  money 
of  the  United  States,  an  amount  equal  to  at  least  twenty-five  per  centum 
of  its  deposits,  as  provided  in  Revised  Statutes,  sections  fifty-one  hun- 
dred and  ninety-one  and  fifty-one  hundred  and  ninety-five. 

§  2.  That  whenever  three-fourths  in  number  of  the  national  banks 
located  in  any  city  of  the  United  States  having  a  population  of  two- 
hundred  thousand  people  shall  make  application  to  the  Comptroller  of 
the  Currency,  in  writing,  asking  that  such  city  may  be  a  central  reserve 
city,  like  the  City  of  New  York,  in  which  one-half  of  the  lawful  money 
reserve  of  the  national  banks  located  in  other  reserve  cities,  may  be  de- 
posited, as  provided  in  Revised  Statutes,  section  fifty-one  hundred  and 
ninety-five,  the  Comptroller  shall  have  authority,  with  the  approval  of 
the  Secretary  of  the  Treasury,  to  grant  such  request,  and  every  bank 
located  in  such  city  shall  at  all  times  thereafter  have  on  hand,  in  law- 
ful money  of  the  United  States,  twenty-five  per  centum  of  its  deposits,  aa 
provided  in  the  Revised  Statutes,  section  fifty-one  hundred  and  ninety- 
ona 

SEC.  5192.  WHAT  MAY  BE  COUNTED  TOWARD  LAWFUL  MONEY  RE- 
SERVE.—  Three-fifths  of  the  reserve  of  fifteen  per  centum  required  by 
the  preceding  section  to  be  kept,  may  consist  of  balances  due  to  an  as- 
sociation, available  for  the  redemption  of  its  circulating  notes,  from 
associations  approved  by  the  Comptroller  of  the  Currency,  organized 
under  the  act  of  June  three,  eighteen  hundred  and  sixty-four,  or  under 
this  title,  and  doing  business  in  the  cities  of  Albany,  Baltimore,  Boston, 
Charleston,  Chicago,  Cleveland,  Detroit,  Louisville,  Milwaukee,  New  Or- 
leans, New  York,  Philadelphia,  Pittsburgh,  Richmond,  Saint  Louis,  San 
Francisco,  and  Washington.  Clearing-house  certificates,  representing 
specie  or  lawful  money  specially  deposited  for  the  purpose,  of  any  clear- 
ing-house association,  shall  also  be  deemed  to  be  lawful  money  in  the  pos- 
session of  any  association  belonging  to  such  clearing-house,  holding  and 
owning  such  certificate,  within  the  preceding  section. 

Act  of  June  20,  1874,  18  Stat.  123,  provides,  section  two,  that 
section  thirty-one  of  the  National  Bank  Act  (section  fifty-one  hundred 
and  ninety-one,  fifty-one  hundred  and  ninety-two,  Revised  Statutes)  be  so- 
amended  that  the  central  associations  therein  provided  for  shall  not 
hereafter  be  required  to  keep  on  hand  any  amount  of  money  whatever, 
by  reason  of  the  amount  of  their  respective  circulations;  but  the  moneys 
required  by  said  section  to  be  kept  at  all  times  on  hand  shall  be  deter- 
mined by  the  amount  of  deposits  in  all  respects,  as  provided  for  in  said 
section. 


BANKS   AND   BANKING. 

§  3.  That  every  association  organized,  or  to  be  organized  under  the 
provisions  of  said  act,  and  of  the  several  acts  amendatory  thereof,  shall 
at  all  times  keep  and  have  on  deposit  in  the  Treasury  of  the  United 
States  in  lawful  money  of  the  United  States,  a  sum  equal  to  five  per 
centum  of  its  circulation,  to  be  held  and  used  for  the  redemption  of 
such  circulation;  which  sum  shall  be  counted  as  a  part  of  its  general 
reserve,  as  provided  in  section  two  of  this  act;  and  when  the  circul  it- 
ing  notes  of  any  such  associations,  assorted  or  unassorted  shall  be  pre- 
sented for  redemption,  in  sums  of  one  thousand  dollars,  or  any  multiple 
thereof,  to  the  Treasurer  of  the  United  States,  the  same  shall  be  re- 
deemed in  United  States  notes.  All  notes  so  redeemed  shall  be  charged 
by  the  Treasurer  of  the  United  States  to  the  respective  associations 
issuing  the  same,  and  he  shall  notify  them  separately  on  the  first  day 
of  each  month,  or  oftener,  at  his  discretion,  of  the  amount  of  such  re- 
demptions; and  whenever  such  redemptions  for  any  association  shall 
amount  to  the  sum  of  five  hundred  dollars,  such  association  so  notified 
shall  forthwith  deposit  with  the  Treasurer  of  the  United  States  a  sum 
in  UnitoJ.  States  notes  equal  to  the  amount  of  its  circulating  notes  so 
redeemed.  And  all  notes  of  national  banks,  worn,  defaced,  mutilated, 
or  otherwise  unfit  for  circulation  shall,  when  received  by  any  assistant 
treasurer,  or  at  any  designated  depositary  of 'the  United  States,  be  for- 
warded to  the  Treasurer  of  the  United  States  for  redemption  as  pro- 
vided herein.  And  when  such  redemptions  have  been  so  reimbursed, 
the  circulating  notes  so  redeemed  shall  be  forwarded  to  the  respective 
associations  by  which  they  were  issued;  but  if  any  such  notes  are  worn, 
mutilated,  defaced,  or  rendered  otherwise  unfit  for  use,  they  shall  be 
forwarded  to  the  Comptroller  of  the  Currency  and  destroyed  and  re- 
placed as  now  provided  by  law:  Provided,  that  each  of  said  associa- 
tions shall  reimburse  to  the  treasury  the  charges  for  transportation 
and  the  cost  for  assorting  such  notes;  and  the  associations  hereafter 
organized  shall  also  severally  reimburse  to  the  treasury  the  cost  of  en- 
graving such  plates  as  shall  be  ordered  by  each  association  respectively; 
and  the  amount  assessed  by  each  association  shall  be  in  proportion  to 
the  circulation  redeemed,  and  be  charged  to  the  fund  on  deposit  with 
the  Treasurer;  and  provided  further,  that  so  much  of  section  thirty -two 
of  said  National  Bank  Act  requiring  or  permitting  the  redemption  of 
its  circulating  notes  elsewhere  than  at  its  own  counter,  except  as  pro- 
vided for  in  this  section,  is  hereby  repealed. 

(Act  of  March  3,  1875,  18  Stat.  399,  provides  for  the  reimburse- 
ment of  the  Treasurer  by  the  Secretary  of  the  Treasury  of  the  expenses 
incurred  under  this  act.) 

§  4.  That  any  association  organized  under  this  act  or  any  of  the  acts 
of  which  this  is  an  amendment,  desiring  to  withdraw  its  circulating 
notes,  in  whole  or  in  part,  may,  upon  the  deposit  of  lawful  money  with 
the  Treasurer  of  the  United  States  in  sums  of  not.  less  than  nine  thou- 
sand dollars,  take  up  the  bonds  which  said  association  has  on  deposit 


APPENDIX.  685 

with  the  Treasurer  for  the  security  of  such  circulating  notes;  which 
bonds  shall  be  assigned  to  the  bank  in  the  manner  specified  in  section 
nineteen  of  the  National  Bank  Act;  and  the  outstanding  notes  of  the 
association  to  an  amount  equal  to  the  legal  tender  notes  deposited,  shall 
be  redeemed  at  the  Treasury  of  the  United  States,  and  destroyed  as  now 
provided  by  law:  Provided,  that  the  amount  of  the  bonds  on  deposit 
for  circulation  shall  not  be  reduced  below  fifty  thousand  dollars. 

§  5.  Requires  the  Comptroller  of  the  Currency  to  cause  the  charter 
numbers  of  the  association  to  be  printed  upon  all  national  bank  note* 
hereafter  issued. 

§  6.  That  the  amount  of  United  States  notes  outstanding  and  to  be 
used  as  a  part  of  the  circulating  medium,  shall  not  exceed  the  sum  of 
three  hundred  and  eighty-two  millions  of  dollars,  which  said  sum  shall 
appear  in  each  monthly  statement  of  the  public  debt,  and  no  part  thereof 
shall  be  held  or  used  as  the  reserve. 

SEC.  5193.  CERTIFICATES  OF  DEPOSIT.— The  Secretary  of  the  Treasury 
may  receive  United  States  notes  on  deposit,  without  interest,  from  any 
national  banking  associations,  in  sums  of  not  less  than  ten  thousand  dol- 
lars, and  issue  certificates  therefor'  in  such  form  as  he  may  prescribe,  in 
denominations  of  not  less  than  five  thousand  dollars,  and  payable  on  de- 
mand in  United  States  notes  at  the  place  where  the  deposits  were  made. 
The  notes  so  deposited  shall  not  be  counted  as  part  of  the  lawful  money 
reserve  of  the  association ;  but  the  certificates  issued  therefor  may  be 
counted  as  part  of  its  lawful  money  reserve,  and  may  be  accepted  in  the 
settlement  of  clearing-house  balances  at  the  places  where  the  deposits 
therefor  were  made. 

SEC.  5194.  LIMITATION  ON  CERTIFICATES.— The  power  conferred  on  the 
Secretary  of  the  Treasury,  by  the  preceding  section,  shall  not  be  exer- 
cised so  as  to  create  any  expansion  or  contraction  of  the  currency.  And 
United  States  notes  for  which  certificates  are  issued  under  that  section, 
or  other  United  States  notes  of  like  amount,  shall  be  held  as  special  de- 
posits in  the  Treasury,  and  used  only  for  the  redemption  of  such  certifi- 
cates. 

SEC.  5195.  PLACE  OP  REDEMPTION. —  Each  association  organized  in  any 
of  the  cities  named  in  section  fifty-one  hundred  and  ninety-one  shall 
select,  subject  to  the  approval  of  the  Comptroller  of  the  Currency,  an 
association  in  the  city  of  New  York,  at  which  it  will  redeem  its  circu- 
lating notes  at  par;  and  may  keep  one-half  of  its  lawful  money  reserve 
in  cash  deposits  in  the  city  of  New  York.  But  the  foregoing  provision 
shall  not  apply  to  associations  organized  and  located  in  the  city  of  San 
Francisco  for  the  purpose  of  issuing  notes  payable  in  gold.  Each  asso- 
ciation not  organized  within  the  cities  named,  shall  select,  subject  to 
the  approval  of  the  Comptroller,  an  association  in  either  of  the  cities 
named,  at  which  it  will  redeem  its  circulating  notes  at  par.  The  Comp- 
troller shall  give  public  notice  of  the  names  of  the  associations  selected, 
at  which  redemptions  are  to  be  made  by  the  respective  associations,  and 


686  BANKS   AND   BANKING. 

of  any  change  that  may  be  made  of  the  association  at  which  the  notes 
of  any  association  are  redeemed.  Whenever  any  association  fails  either 
to  make  the  selection  or  to  redeem  its  notes  as  aforesaid,  the  Comptrol- 
ler of  the  Currency  may,  upon  receiving  satisfactory  evidence  thereof, 
appoint  a  receiver  in  the  manner  provided  for  in  section  fifty-two  hun- 
dred and  thirty-four,  to  wind  up  its  affairs.  But  this  section  shall  not 
relieve  any  association  from  its  liability  to  redeem  its  circulating  notes 
at  its  own  counter,  at  par.  in  lawful  money  on  demand. 

(See  section  three  of  act  of  June  20,  1874,  ante,) 

SEC.  5196.  NATIONAL  BANK  NOTES. —  Every  national  banking  associa- 
tion formed  or  existing  under  this  title,  shall  take  and  receive  at  par, 
for  any  debt  or  liability  to  it,  any  and  all  notes  or  bills,  issued  by  any 
lawfully  organized  national  banking  association.  But  this  provision 
shall  not  apply  to  any  association  organized  for  the  purpose  of  issuing 
notes  payable  in  gold. 

SEC.  5197.  RATE  OF  INTEREST. —  Any  association  may  take,  receive,  re- 
serve,  and  charge  on  any  loan  or  discount  made,  or  upon  any  note,  bill 
of  exchange,  or  other  evidence  of  debt,  interest  at  the  rate  allowed  by 
the  State.  Territory,  or  district  where  the  bank  is  located,  and  no  more, 
except  that  where  by  the  laws  of  any  State,  a  different  rate  is  limited 
for  banks  of  issue  organized  under  State  laws,  the  rate  so  limited  shall 
be  allowed  for  associations  organized  or  existing  in  any  such  State, 
under  this  Titla  Where  no  rate  is  fixed  by  the  laws  of  the  State,  or 
Territory,  or  district,  the  bank  may  take,  receive,  reserve,  or  charge  a 
rate  not  exceeding  seven  per  centum,  and  such  interest  may  be  taken 
in  advance,  reckoning  the  days  for  which  the  note,  bill,  or  other  evi- 
dence of  debt  has  to  run.  And  the  purchase,  discount,  or  sale  of  a  bona 
fide  bill  of  exchange,  payable  at  another  place  than  the  place  of  such 
purchase,  discount,  or  sale,  at  not  more  than  the  current  rate  of  ex- 
change for  sight  drafts  in  addition  to  the  interest,  shall  not  be  consid- 
ered as  taking  or  receiving  a  greater  rate  of  interest. 

SEC.  5198.  EFFECT  OF  USURIOUS  INTEREST.— The  taking,  receiving, 
reserving  or  charging  a  rate  of  interest  greater  than  is  allowed  by  the 
preceding  section,  when  knowingly  done,  shall  be  deemed  a  forfeiture 
of  the  entire  interest  which  the  note,  bill,  or  other  evidence  of  debt  car- 
ries with  it,  or  which  has  been  agreed  to  be  paid  thereon.  In  case  the 
greater  rate  of  interest  has  been  paid,  the  person  by  whom  it  has  been 
paid,  or  his  legal  representatives,  may  recover  back,  in  an  action  in  the 
nature  of  an  action  of  debt,  twice  the  amount  of  the  interest  thus  paid 
from  the  association  taking  or  receiving  the  same;  provided  such  ac- 
tion is  commenced  within  two  years  from  the  time  the  usurious  trans- 
action occurred. 

Act  of  February  18,  1875,  18  Stat.  32O,  provides  that  suits, 
actions,  and  proceedings  against  any  association  under  this  title  may  be 
had  in  any  Circuit,  District,  or  territorial  court  of  the  United  States 
held  within  the  district  in  which  such  association  may  be  established, 


APPENDIX.  687 

or  in  any  state,  county,  or  municipal  court  in  the  County  or  City  in 
which  said  association  is  located  having  jurisdiction  in  similar  cases. 

SEC.  5199.  DIVIDENDS. —  The  directors  of  any  association  may,  semi- 
annually,  declare  a  dividend  of  so  much  of  the  net  profits  of  the  asso- 
ciation as  they  shall  judge  expedient;  but  each  association  shall,  before 
the  declaration  of  a  dividend,  carry  one-tenth  part  of  its  net  profits  of 
the  preceding  half  year. to  its  surplus  fund  until  the  same  shall  amount 
to  twenty  per  centum  of  its  Capital  stock. 

SEC.  5200.  LIMITATION  OF  LIABILITY  OP  ANY  BORROWER.—  The  total 
liabilities  to  any  association,  of  any  pei-son,  or  of  any  company,  corpora- 
tion, or  firm  for  money  borrowed  including,  in  the  liabilities  of  a  com- 
pany or  firm,  the  liabilities  of  the  several  members  thereof,  shall  at  no 
time  exceed  one-tenth  part  of  the  amount  of  the  Capital  stock  of  such 
association  actually  paid  in.  But  the  discount  of  bills  of  exchange 
drawn  in  good  faith  against  actually  existing  values,  and  the  discount 
of  commercial  or  business  paper  actually  owned  by  the  person  nego- 
tiating the  same,  shall  not  be  considered  as  money  borrowed. 

SEC.  5201.  PURCHASE  OF  ITS  OWN  STOCK.—  No  association  shall  make 
any  loan  or  discount  on  the  security  of  the  shares  of  its  own  capital 
stock,  nor  be  the  purchaser  or  holder  of  any  such  shares,  unless  such 
security  or  purchase  shall  be  necessary  to  prevent  loss  upon  a  debt 
previously  contracted  in  good  faith;  and  stock  so  purchased  or  acquired 
shall,  within  six  months  from  the  time  of  its  purchase,  be  sold  or  dis- 
posed of  at  public  or  private  sale;  or  in  default  thereof,  a  receiver  may 
be  appointed  to  close  up  the  business  of  the  association,  according  to 
section  fifty-two  hundred  and  thirty-four. 

SEC.  5202.  LIMIT  UPON  INDEBTEDNESS.— No  association  shall  at  any 
time  be  indebted,  or  in  any  way  liable,  to  an  amount  exceeding  the 
amount  of  its  capital  stock  at  such  time  actually  paid  in  and  remaining 
undiminished  by  losses  or  otherwise,  except  on  account  of  demands  of 
the  nature  following: 

First.  Notes  of  circulation. 

Second.  Moneys  deposited  with  or  collected  by  the  association. 

Third.  Bills  of  exchange  or  drafts  drawn  against  money  actually  on 
deposit  to  the  credit  of  the  association  or  due  thereto. 

Fourth.  Liabilities  to  the  stockholders  of  the  association  for  dividends 
and  reserved  profits. 

SEC.  5203.  RESTRICTION  UPON  USE  OF  CIRCULATING  NOTES. —  No  as- 
sociation shall,  either  directly  or  indirectly,  pledge  or  hypothecate  any 
of  its  notes  or  circulation,  for  the  purpose  of  procuring  money  to  be 
paid  in  on  its  capital  stock  or  to  be  used  in  its  banking  operations  or 
otherwise;  nor  shall  any  association  use  its  circulating  notes,  or  any  part 
thereof,  in  any  manner  or  form,  to  create  or  increase  its  capital  stock. 

SEC.  5204.  PROHIBITION  FROM  WITHDRAWAL  OF  CAPITAL.— No  asso- 
ciation, or  any  member  thereof,  shall,  during  the  time  it  shall  continue 
its  banking  operations,  withdraw,  or  permit  to  be  withdrawn,  either  in 


688  BANKS    AND   BANKING. 

the  form  of  dividends  or  otherwise,  any  portion  of  its  capital.  If  losses 
have  at  any  time  been  sustained  by  any  such  association,  equal  to  or  ex- 
ceeding its  undivided  profits  then  on  hand,  no  dividend  shall  be  made; 
and  no  dividend  shall  ever  be  made  by  any  association,  while  it  contin- 
ues its  banking  operations,  to  an  amount  greater  than  its  net  profits 
then  on  hand,  deducting  therefrom  its  losses  and  bad  debts.  All  debts 
due  to  any  association,  on  which  interest 's  past  due  and  unpaid  for  a 
period  of  six  months,  unless  the  same  are  well  secured,  and  in  process  of 
collection,  shall  be  considered  bad  debts  within  the  meaning  of  this  sec- 
tion. But  nothing  in  this  section  shall  prevent  the  reduction  of  the 
capital  stock  of  the  association  under  section  fifty-one  hundred  and 
forty-three. 

SEC.  5205.  PAYMENT  OF  DEFICIENCY. —  Every  association  which  shall 
have  failed  to  pay  up  its  capital  stock,  as  required  by  law,  and  every 
association  whose  capital  stock  shall  have  become  impaired  by  losses  or 
otherwise,  shall,  within  three  months  after  receiving  notice  thereof  from 
the  Comptroller  of  the  Currency,  pay  the  deficiency  of  the  capital  stock, 
by  assessment  upon  the  shareholders  pro  rata  for  the  amount  of  capital 
stock  held  by  each;  and  the  Treasurer  of  the  United  States  shall  with- 
hold the  interest  upon  all  bonds  held  by  him  in  trust  for  any  such  asso- 
ciation, upon  notification  from  the  Comptroller  of  the  Currency,  until 
otherwise  notified  by  him.  If  any  such  association  shall  fail  to  pay  up 
its  capital  stock,  and  shall  refuse  to  go  into  liquidation,  as  provided  by 
law,  for  three  months  after  receiving  notice  from  the  Comptroller,  a 
receiver  may  be  appointed  to  close  up  the  business  of  the  association, 
according  to  the  provisions  of  section  fifty-two  hundred  and  thirty-four. 
[And  provided,  that  if  any  shareholder  or  shareholders  of  such  bank 
shall  neglect  or  refuse,  after  three  months'  notice,  to  pay  the  assessment, 
as  provided  in  this  section,  it  shall  be  the  duty  of  the  board  of  directors 
to  cause  a  sufficient  amount  of  the  capital  stock  of  such  shareholder  or 
shareholders  to  be  sold  at  public  auction  (after  thirty  days'  notice  shall 
be  given  by  posting  such  notice  of  sale  in  the  office  of  the  bank,  and  by 
publishing  such  notice  in  a  newspaper  of  the  city  or  town  in  which  the 
bank  is  located,  or  in  a  newspaper  published  nearest  thereto),  to  make 
good  the  deficiency,  and  the  balance,  if  any,  shall  be  returned  to  such 
delinquent  shareholder  or  shareholders.] 

SEC.  5206.  RESTRICTION  UPON  USE  OF  NOTES  OF  OTHER  BANKS.— No 
association  shall  at  any  time  pay  out  on  loans  or  discounts,  or  in  pur- 
chasing drafts  or  bills  of  exchange,  or  in  payment  of  deposits,  or  in  any 
other  mode  pay  or  put  in  circulation,  the  notes  of  any  bank  or  banking 
association  which  are  not,  at  any  such  time,  receivable,  at  par,  on  de- 
posit, and  in  payment  of  debts  by  the  association  so  paying  out  or  circu- 
lating such  notes;  nor  shall  any  association  knowingly  pay  out  or  put 
n  circulation  any  notes  issued  by  any  bank  or  banking  association 
which  at  the  time  of  such  paying  out  or  putting  in  circulation,  is  not 
redeeming  its  circulating  notes,  in  lawful  money  of  the  United  States. 


APPENDIX.     '  CS9 

SEC.  5207.  UNITED  STATES  NOTES  OR  BANK  NOTES  AS  COLLATERAL.— 
No  association  shall  hereafter  offer  or  receive  United  States  notes  or 
national  bank  notes  as  security  or  as  collateral  security  for  any  loan  of 
money,  or  for  a  consideration  agree  to  withhold  the  same  from  use,  or 
offer  or  receive  the  custody  or  promise  of  custody  of  sucli  notes  as  secu- 
rity, or  as  collateral  security,  or  consideration  for  any  loan  of  money. 
Any  association  offending  against  the  provisions  of  this  section  shall  be 
deemed  guilty  of  a  misdemeanor,  and  shall  be  fined  not  more  than  one 
thousand  dollars  and  a  further  sum  equal  to  one-third  of  the  money  so 
loaned.  The  officer  or  officers  of  any  association  who  shall  make  any 
such  loan  shall  be  liable  for  a  further  sum  equal  to  one-quarter  of  the 
money  loaned;  and  any  fine  or  penalty  incurred  by  a  violation  of  this 
section  shall  be  recoverable  for  the  benefit  of  the  party  bringing  such 
suit. 

SEC.  5208.  FALSELY  CERTIFYING  CHECKS. —  It  shall  be  unlawful  for 
any  officer,  clerk,  or  agent  of  any  national  banking  association  to  certify 
any  check  drawn  upon  the  association  unless  the  person  or  company 
drawing  the  check  has  on  deposit  with  the  association,  at  the  time  such 
check  is  certified,  an  amount  of  money  equal  to  the  amount  specified  in 
such  check.  Any  check  so  certified  by  duly  authorized  officers  shall  be 
a  good  and  valid  obligation  against  the  association;  but  the  act  of  any 
officer,  clerk,  or  agent  of  any  association,  in  violation  of  this  section, 
shall  subject  such  bank  to  the  liabilities  and  proceedings  on  the  part  of 
the  Comptroller  as  provided  for  in  section  fifty-two  hundred  and  thirty- 
four. 

SEC.  5209.  EMBEZZLEMENT.—  Every  President,  director,  cashier,  teller, 
clerk,  or  agent  of  any  association,  who  embezzles,  abstracts  or  willfully 
misapplies  any  of  the  moneys,  funds,  or  credits  of  the  association;  or 
who,  without  authority  from  the  directors,  issues  or  puts  in  circulation 
any  of  the  notes  of  the  association ;  or  who,  without  such  authority, 
issues  or  puts  forth  any  certificate  of  deposit,  draws  any  order  or  bill  of 
exchange,  makes  any  acceptance,  assigns  any  note,  bond,  draft,  bill  of 
exchange,  mortgage,  judgment,  or  decree;  or  who  makes  any  false 
entry  in  any  book,  report,  or  statement  of  the  association,  with  intent, 
in  either  case,  to  injure  or  defraud  the  association  or  any  other  com- 
pany, body  politic  or  corporate,  or  any  individual  person,  or  to  deceive 
any  officer  of  the  association,  or  any  agent  appointed  to  examine  the 
affairs  of  any  such  association;  and  every  person  who  with  like  intent 
aids  or  abets  any  officer,  clerk,  or  agent  in  any  violation  of  this  section, 
shall  be  deemed  guilty  of  a  misdemeanoi-,  and  shall  be  imprisoned  not 
less  than  five  years  nor  more  than  ten. 

SEC.  5210.  LIST  OF  SHAREHOLDERS.— The  president  and  cashier  of 
every  national  banking  association  shall  cause  to  be  kept  at  all  times  a 
full  and  correct  list  of  names  and  residences  of  all  the  shareholders  in 
the  association,  and  the  number  of  shares  held  by  each,  in  the  office 
where  its  business  is  transacted.  Such  list  shall  be  subject  to  the  ia- 
44 


690  BANKS   AND   BANKING. 

speetion  of  all  the  shareholders  and  creditors  of  the  association,  and  the 
officers  authorized  to  assess  taxes  under  State  authority,  during  busi- 
ness hours  of  each  day  in  which  business  may  be  legally  transacted.  A 
copy  of  such  list,  on  the  first  Monday  of  July  of  each  year,  verified  by 
the  oath  of  such  President  or  cashier,  shall  be  transmitted  to  the  Comp- 
troller of  the  Currency. 

SEC.  5211.  REPORTS  TO  COMPTROLLER. —  Every  association  shall  make 
to  the  Comptroller  of  the  Currency  not  less  than  five  reports  during  each 
year,  according  to  the  form  which  may  be  prescribed  by  him,  verified 
by  the  oath  or  affirmation  of  the  president  or  cashier  of  such  association, 
and  attested  by  the  signature  of  at  least  three  of  the  directors.  Each 
such  report  shall  exhibit,  in  detail  and  under  appropriate  heads,  the  re- 
sources and  liabilities  of  the  association  at  the  close  of  business  on  any 
past  day  by  him  specified;  and  shall  be  transmitted  to  the  Comptroller 
within  five  days  after  a  request  or  requisition  therefor  from  him,  and  in 
the  same  form  in  which  it  is  made  to  the  Comptroller  shall  be  published 
•in  a  newspaper  published  in  the  place  where  such  association  is  estab- 
lished, or  if  there  is  no  newspaper  in  the  place,  then  in  one  published 
nearest  thereto  in  the  same  county  at  the  expense  of  the  association : 
and  such  proof  of  publication  shall  be  furnished  as  may  be  required  by 
the  Comptroller.  The  Comptroller  shall  also  have  power  to  call  for  spe- 
cial reports  from  any  particular  association  whenever  in  his  judgment 
the  same  are  necessary  in  order  to.a  full  and  complete  knowledge  of  its 
condition. 

Act  of  February  26,  1881,  21  Stat.  352,  provides  that  the  oath 
or  affirmation  required  by  section  fifty-two  hundred  and  eleven  of  the 
Revised  Statutes,  verifying  the  returns  made  by  national  banks  to  the 
Comptroller  of  the  Currency,  when  taken  before  a  notary  public  prop- 
erly authorized  and  commissioned  by  the  State  in  which  such  notary 
resides  and  the  bank  is  located,  or  any  other  officer  having  an  official 
seal,  authorized  in  such  State  to  administer  oaths,  shall  be  sufficient 
verification  as  contemplated  by  said  section  fifty-two  hundred  and 
eleven:  Provided,  that  the  officer  administering  the  oath  is  not  an  offi- 
cer of  the  bank. 

SEC.  5212.  REPORT  AS  TO  DIVIDENDS. —  In  addition  to  the  reports  re- 
quired by  the  preceding  section,  each  association  shall  report  to  the 
Comptroller  of  the  Currency,  within  ten  days  after  declaring  any  divi- 
dend, the  amount  of  such  dividend,  and  the  amount  of  net  earnings  in 
excess  of  such  dividend.  Such  reports  shall  be  attested  by  the  oath  of 
the  president  or  cashier  of  the  association. 

SEO.  5213.  PENALTY  FOR  FAILURE  TO  MAKE  REPORT.— Every  associa- 
tion which  fails  to  make  and  transmit  any  report  required  under  either 
of  the  two  preceding  sections  shall  be  subject  to  a  penalty  of  one  hun- 
dred dollars  for  each  day  after  the  periods,  respectively,  therein  men- 
tioned, that  it  delays  to  make  and  transmit  its  report.  Whenever  any 
association  delays  or  refuses  to  pay  the  penalty  herein  imposed,  after 


APPENDIX.  691 

it  has  been  assessed  by  the  Comptroller  of  the  Currency,  the  amount 
thereof  may  be  retained  by  the  Treasurer  of  the  United  States,  upon 
the  order  of  the  Comptroller  of  the  Currency,  out  of  the  interest,  as  it 
may  become  due  to  the  association,  on  the  bonds  deposited  with  him  to 
secure  circulation.  All  sums  of  money  collected  for  penalties  under 
this  section  shall  be  paid  into  the  Treasury  of  the  United  States. 

SEC.  5214.  TAXES  PAYABLE  TO  THE  UNITED  STATES.—  In  lieu  of  all 
existing  taxes,  every  association  shall  pay  to  the  Treasurer  of  the  United 
States,  in  the  months  of  January  and  July,  a  duty  of  one-half  of  one 
per  centum  each  half  year  upon  the  average  amount  of  its  notes  in  cir- 
culation, and  a  duty  of  one  quarter  of  one  per  centum  each  half  year 
on  the  average  amount  of  its  capital  stock,  beyond  the  amount  invested 
in  United  States  bonds. 

SEC.  5315.  RETURN  OF  CIRCULATION,  DEPOSITS  AND  CAPITAL  STOCK. — 
In  order  to  enable  the  Treasurer  to  assess  the  duties  imposed  by  the 
preceding  section,  each  association  shall,  with  ten  days  from  the  first 
days  of  January  and  July  of  each  year,  make  a  return,  under  the  oath 
of  its  president  or  cashier,  to  the  Treasurer  of  the  United  States,  in  such 
form  as  the  Treasurer  may  prescribe,  of  the  average  amount  of  its  notes 
in  circulation,  and  of  the  average  amount  of  its  deposits,  and  of  tiie 
average  amount  of  its  capital  stock,  beyond  the  amount  invested  in 
United  States  bonds,  for  the  six  months  next  preceding  the  most  recent 
first  day  of  January  or  July.  Every  association  which  fails  so  to  make 
such  return  shall  be  liable  to  a  penalty  of  two  hundred  dollars,  to  be 
collected  either  out  of  the  interest  as  it  may  become  due  such  asso- 
ciation on  the  bonds  deposited  with  the  Treasurer,  or,  at  his  option,  in 
the  manner  in  which  penalties  are  to  be  collected  of  other  corporations 
under  the  laws  of  the  United  States. 

SEC.  5216.  PENALTY  FOR  FAILURE  TO  MAKE  RETURN. —  Whenever  an 
association  fails  to  make  the  half  yearly  return  required  by  the  preced- 
ing section,  the  duties  to  be  paid  by  such  association  shall  be  assessed 
upon  the  amount  of  notes  delivered  to  such  association  by  the  Comp- 
troller of  the  Currency,  and  upon  the  highest  amount  of  its  deposits  and 
capital  stock,  to  be  ascertained  in  such  manner  as  the  Treasurer  may 
deem  best. 

SEC.  5217.  PENALTY  FOR  FAILURE  TO  PAY  DUTIES. —  Whenever  an 
association  fails  to  pay  the  duties  imposed  by  the  three  preceding  sec- 
tions, the  sums  due  may  be  collected  in  the  manner  provided  for  the 
collection  of  United  States  taxes  from  other  corporations;  or  the  Treas- 
urer may  reserve  the  amount  out  of  the  interest,  as  it  may  become  due, 
on  the  bonds  deposited  with  him  by  such  defaulting  association. 

SEC.  5218.  REFUNDING  EXCESSIVE  DUTIES.—  In  all  cases  where  an  asso- 
ciation has  paid  or  may  pay  in  excess  of  what  may  be  or  has  been  found 
due  from  it,  on  account  of  the  duty  required  to  be  paid  to  the  Treasurer 
of  the  United  States,  the  association  may  state  an  account  therefor, 
which,  on  being  certified  by  the  Treasurer  of  the  United  States,  and 


G92  BANKS    AND   BANKING. 

found  correct  by  the  fisrt  Comptroller  of  the  Treasury,  shall  be  refunded 
in  the  ordinary  manner  by  warrant  on  the  Treasury. 

SEC.  5219.  TAXATION  BY  STATE. —  Nothing  herein  shall  prevent  all  the 
shares  in  any  association  from  being  included  in  the  valuation  of  the 
personal  property  of  the  owner  or  holder  of  such  shares,  in  assessing 
taxes  imposed  by  authority  of  the  State  within  which  the  association  is 
located;  but  the  legislature  of  each  State  may  determine  and  direct  the 
manner  and  place  of  taxing  all  the  shares  of  national  banking  associa- 
tions located  within  the  State,  subject  only  to  the  two  restrictions,  that 
the  taxation  shall  not  be  at  a  greater  rate  than  is  assessed  upon  other 
moneyed  capital  in  the  hands  of  individual  citizens  of  such  State,  and 
that  the  shares  of  any  national  banking  association  owned  by  non-res- 
idents of  any  State  shall  be  taxed  in  the  city  or  town  where  the  bank  is 
located,  and  not  elsewhere.  Nothing  herein  shall  be  construed  to  ex- 
empt the  real  property  of  associations  from  either  State,  county,  or  mu- 
nicipal taxes,  to  the  same  extent,  according  to  its  value,  as  other  real 
property  is  taxed. 

SEC.  53.20.  VOLUNTARY  DISSOLUTION. —  Any  association  may  go  into 
liquidation  and  be  closed  by  the  vote  of  its  shareholders  owning  two- 
thirds  of  its  stock. 

SEC.  5221.  NOTICE  OF  INTENT  TO  DISSOLVE. —  Whenever  a  vote  is  taken 
to  go  into  liquidation  it  shall  be  the  duty  of  the  board  of  directors  to 
cause  notice  of  this  fact  to  be  certified,  under  the  seal  of  the  association, 
by  its  president  or  cashier,  to  the  Comptroller  of  the  Currency,  and  pub- 
lication thereof  to  be  made  for  a  period  of  two  months  in  a  newspaper 
published  in  the  city  of  New  York,  and  also  in  a  newspaper  published 
in  the  city  or  town  in  which  the  association  is  located,  or  if  no  news- 
paper is  there  published,  then  in  the  newspaper  published  nearest  thereto, 
that  the  association  is  closing  up  its  affairs,  and  notifying  the  holders  of 
its  notes  and  of  her  creditors  to  present  the  notes  and  other  claims  against 
the  association  for  payment. 

SEC.  5222.  DEPOSIT  OF  LAWFUL  MONEY  TO  REDEEM  NOTES.—  Within 
six  months  from  the  date  of  the  vote  to  go  into  liquidation,  the  associa- 
tion shall  deposit  with  the  Treasurer  of  the  United  States,  lawful  money 
of  the  United  States  sufficient  to  redeem  all  its  outstanding  circulation. 
The  Treasurer  shall  execute  duplicate  receipts  for  money  thus  deposited, 
and  deliver  one  to  the  association  and  the  other  to  the  Comptroller  of 
the  Currency,  stating  the  amount  received  by  him,  and  the  purpose  for 
which  it  has  been  received;  and  the  money  shall  be  paid  into  the  Treas- 
ury of  the  United  States,  and  placed  to  the  oredit  of  such  association 
upon  redemption  account. 

SEC.  5223.  ASSOCIATIONS  CONSOLIDATING.—  An  association  which  is  in 
good  faith  winding  up  its  business  for  the  purpose  of  consolidating  with 
another  association  shall  not  be  required  to  deposit  lawful  money  for 
its  outstanding  circulation;  but  its  assets  and  liabilities  shall  be  reported 
by  the  association  with  which  it  is  in  process  of  consolidation. 


APPENDIX.  C93 

SEC.  5224  RE-ASSIGNMENT  OP  BONDS.— Whenever  a  sufficient  deposit 
of  lawful  money  to  redeem  the  outstanding  circulation  of  an  association 
proposing  to  close  its  business  has  been  made,  the  bonds  deposited  by 
the  association  to  secure  the  payment  of  its  notes  shall  be  re-assigned 
to  it,  iu  the  manner  prescribed  by  section  fifty-one  hundred  and  sixty- 
two.  And  thereafter  the  association  and  its  shareholders  shall  stand 
discharged  from  all  liabilities  upon  the  circulating  notes,  and  those 
notes  shall  be  redeemed  at  the  Treasury  of  the  United  States.  [And  if 
any  such  bank  shall  fail  to  make  the  deposit  and  take  up  its  bonds  for 
thirty  days  after  the  expiration  of  the  time  specified,  the  Comptroller  of 
the  Currency  shall  have  power  to  sell  the  bonds  pledged  for  the  circula- 
tion of  said  bank,  at  public  auclion  in  New  York  City,  and,  after  providing 
for  the  redemption  and  cancellation  of  said  circulation  and  the  neces- 
sary expenses  of  the  sale,  to  pay  over  any  balance  remaining  to  the  bank 
or  its  legal  representative.] 

SEC.  5225.  DESTRUCTION  OF  REDEEMED  NOTES.— Whenever  the  Treas- 
urer has  redeemed  any  of  the  notes  of  an  association  which  has  com- 
menced to  close  its  affairs  under  the  (six)  (five)  preceding  sections,  he 
shall  cause  the  notes  to  be  mutilated  and  charged  to  the  redemption  ac- 
count of  the  association;  and  all  notes  so  redeemed  by  the  Treasurer 
shall,  every  three  months,  be  certified  to  and  burned  in  the  manner  pre- 
scribed in  section  fifty-one  hundred  and  eighty-four. 

SEC.  5226.  MODE  OP  PROTESTING  NOTES. —  Whenever  any  national 
banking  association  fails  to  redeem  in  the  lawful  money  of  the  United 
States  any  of  its  circulating  notes,  upon  demand  of  payment  duly  made 
during  the  usual  hours  of  business,  at  the  office  of  such  association,  or 
at  its  designated  place  of  redemption,  the  holder  may  cause  the  same  to 
be  protested,  in  one  package,  by  a  Notary  Public,  unless  the  President 
or  Cashier  of  the  association  whose  notes  are  presented  for  payment,  or 
the  President  or  Cashier  of  the  association  at  the  place  at  which  they 
are  redeemable  offers  to  waive  demand  and  notice  of  the  protest,  and,  in 
pursuance  of  such  offer,  makes,  signs,  and  delivers  to  the  party  making 
such  demand  an  admission  in  writing,  stating  the  time  of  the  demand, 
the  amount  demanded,  and  the  fact  of  the  non-payment  thereof.  The 
Notary  Public,  on  making  such  protest,  or  upon  receiving  such  admis- 
sion, shall  forthwith  forward  such  admission  or  notice  of  protest  to  the 
Comptroller  of  the  Currency,  retaining  a  copy  thereof.  If,  however, 
satisfactory  proof  is  produced  to  the  Notary  Public  that  the  payment  of 
the  notes  demanded  is  restrained  by  an  order  of  any  court  of  competent 
jurisdiction,  he  shall  not  protest  the  sama  When  the  holder  of  any 
notes  causes  more  than  one  note  or  package  to  be  protested  on  the  same 
day,  he  shall  not  receive  pay  for  more  than  one  protest. 

SEC.  5227.  EXAMINATION  BY  SPECIAL  AGENT.— On  receiving  notice 
that  any  banking  association  has  failed  to  redeem  any  of  its  circulating 
notes,  as  specified  in  the  preceding  section,  the  Comptroller  of  the  Cur- 
rency, with  the  concurrence  of  the  Secretary  of  the  Treasury,  may  ap- 


694:  BANKS   AND   BANKING. 

point  a  special  agent,  of  whose  appointment  immediate  notice  shall  be 
given  to  such  association,  who  shall  immediately  proceed  to  ascertain 
whether  it  has  refused  to  pay  its  circulating  notes  in  the  lawful  money 
of  the  United  States,  when  demanded,  and  shall  report  to  the  Comp- 
troller the  fact  so  ascertained.  If,  from  such  protest,  and  the  report  so 
made,  the  Comptroller  is  satisfied,  that  such  association  has  refused  to 
pay  its  circulating  notes  and  is  in  default,  he  shall,  within  thirty  days 
after  he  has  received  notice  of  such  failure,  declare  the  bonds  deposited 
by  such  association  forfeited  to  the  United  States,  and  they  shall  there- 
upon be  so  forfeited. 

SEC.  5228.  BUSINESS  AFTER  DEFAULT.—  After  a  default  on  the  part 
of  an  association  to  pay  any  ©f  its  circulating  notes  has  been  ascertained 
by  the  Comptroller,  and  notice  (of  forfeiture  of  bonds)  (thereof)  has  been 
given  by  him  to  the  association,  it  shall  not  be  lawful  for  the  association 
suffering  the  same  to  pay  out  any  of  its  notes,  discount  any  notes  or  bills, 
or  otherwise  prosecute  the  business  of  banking,  except  to  receive  and 
safely  keep  money  belonging  to  it,  and  to  deliver  special  deposits. 

SEC.  5229.  NOTICE  TO  NOTE  HOLDERS. —  Immediately  upon  declaring 
the  bonds  of  an  association  forfeited  for  non-payment  of  its  notes,  the 
Comptroller  shall  give  notice,  in  such  manner  as  the  Secretary  of  the 
Treasury  shall,  by  general  rules  or  otherwise,  direct,  to  the  holders  of 
the  circulating  notes  of  such  association,  to  present  them  for  payment 
at  the  Treasury  of  the  United  States;  and  the  same  shall  be  paid  as  pre- 
sented in  lawful  money  of  the  United  States;  whereupon  the  Comp- 
troller may  in  his  discretion,  cancel  an  amount  of  bonds  pledged  for  such 
association  equal  at  current  market  rates,  not  exceeding  par,  to  the  notes 
paid. 

SEC.  5230.  SALE  OF  BONDS  AT  AUCTION.—  Whenever  the  Comptroller 
has  become  satisfied,  by  the  protest  or  the  waiver  and  admission  speci- 
fied in  section  fifty-two  hundred  and  twenty-six,  or  by  the  report  pro- 
vided for  in  section  fifty-two  hundred  and  twenty-seven,  that  any  associa- 
tion has  refused  to  pay  its  circulating  notes,  he  may,  instead  of  canceling 
its  bonds,  cause  so  much  of  them  as  may  be  necessary  to  redeem  its  out- 
standing notes  to  be  sold  at  public  auction  in  the  city  of  New  York,  after 
giving  thirty  days'  notice  of  such  sale  to  the  association.  For  any  de- 
ficiency in  the  proceeds  of  all  the  bonds  of  an  association,  when  thus 
sold,  to  reimburse,  to  the  United  States,  the  amount  expended  in  pay- 
ing the  circulating  notes  of  the  association,  the  United  States  shall  have 
a  paramount  lien  upon  all  its  assets;  and  such  deficiency  shall  be  made 
good  out  of  such  assets  in  preference  to  any  and  all  other  claims  what- 
soever, except  the  necessary  costs  and  expenses  of  administering  the 
same. 

SEC.  5231.  SALE  OF  BONDS  AT  PRIVATE  SALE,— The  Comptroller  may, 
if  he  deems  it  for  the  interest  of  the  United  States,  sell  at  private  sale 
any  of  the  bonds  of  an  association  shown  to  have  made  default  in  pay- 
ing its  notes,  and  receive  therefor  either  money  or  the  circulating  notes 


APPENDIX.  695 

of  the  association.  But  no  such  bonds  shall  he  sold  by  private  sale  for 
less  than  par,  nor  for  less  than  the  market  value  thereof  at  the  time  of 
sale;  and  no  sales  of  any  such  bonds,  either  public  or  private,  shall  be 
complete  until  the  transfer  of  the  bonds  shall  have  been  made  with  the 
formalities  prescribed  by  section  fifty-one  hundred  and  sixty-two,  fifty- 
one  hundred  and  sixty-three,  and  fifty-one  hundred  and  sixty-four. 

SEC.  5232.  DISPOSAL  OF  PROTESTED  NOTES. —  The  Secretary  of  the 
Treasury  may,  from  time  to  time,  make  such  regulations  respecting  the 
disposition  to  be  made  of  circulating  notes  after  presentation  at  the 
Treasury  of  the  United  States  for  payment,  and  respecting  the  perpetu- 
ation of  the  evidence  of  the  payment  thereof,  as  may  seem  to  him  proper. 

SEC.  5233.  CANCELLATION  OP  BANK  NOTES. —  All  notes  of  national 
banking  associations  presented  at  the  Treasury  of  the  United  States  for 
payment  shall,  on  being  paid,  be  canceled. 

SEC.  5234.  APPOINTMENT  OF  RECEIVERS. —  On  becoming  satisfied,  as 
specified  in  section  fifty-two  hundred  and  twenty-six  and  fifty-two  hun- 
dred and  twenty-seven  that  any  association  has  refused  to  pay  its  circu- 
lating notes  as  therein  mentioned,  and  is  in  default,  the  Comptroller  of 
the  Currency  may  forthwith  appoint  a  receiver,  and  require  of  him 
such  bond  and  security  as  he  deems  proper.  Such  receiver,  under  the 
direction  of  the  Comptroller,  shall  take  possession  of  the  books,  records, 
and  assets  of  every  description  of  such  association,  collect  all  debts,  dues, 
and  claims  belonging  to  it,  and,  upon  the  order  of  a  court  of  record  of 
competent  jurisdiction,  may  sell  or  compound  all  bad  or  doubtful  debts, 
and,  on  a  like  order,  may  sell  all  the  real  and  personal  property  of  such 
association,  on  such  terms  as  the  court  shall  direct,  and  may,  if  neces- 
sary to  pay  the  debts  of  such  association,  enforce  the  individual  liability 
of  the  stockholders.  Such  receiver  shall  pay  over  all  money  so  made  to 
the  Treasurer  of  the  United  States,  subject  to  the  order  of  the  Comp- 
troller, and  also  make  report  to  the  Comptroller  of  all  his  acts  and  pro- 
ceedings. 

Act  of  June  30,  1876,  19  Stat.  63,  provides  that  whenever  any 
national  banking  association  shall  be  dissolved,  and  its  rights,  privileges 
and  franchises  declared  forfeited,  as  prescribed  in  Revised  Statutes,  sec- 
tion fifty-two  hundred  and  thirty-nine,  or  whenever  any  creditor  of  any 
national  banking  association  shall  have  obtained  a  judgment  against  it 
in  any  court  of  record,  and  made  application,  accompanied  by  a  certifi- 
cate from  the  clerk  of  the  court  stating  that  such  judgment  has  been 
rendered  and  has  remained  unpaid  for  the  space  of  thirty  days,  or  when- 
ever the  Comptroller  shall  become  satisfied  of  the  insolvency  of  the 
national  banking  association,  he  may,  after  due  examination  of  its  fran- 
chise, in  either  case,  appoint  a  receiver,  who  shall  proceed  to  close  up 
such  association,  and  enforce  the  personal  liability  of  the  shareholders, 
as  provided  in  section  fifty-two  hundred  and  thirty-four  of  said  statutes. 

§  2.  That  when  any  national  banking  association  shall  have  gone  into 
liquidation  under  the  provisions  of  section  fifty-two  hundred  and  twenty 


696  BANKS    AND   BANKING. 

of  said  statutes,  the  individual  liability  of  the  shareholders  provided  for 
by  section  fifty-one  hundred  and  fifty-one  of  said  statutes,  may  be  en- 
forced by  any  creditor  of  such  association,  by  a  bill  in  equity,  in  the  nat- 
ure of  a  creditor's  bill,  brought  by  such  creditor  on  behalf  of  himself 
and  of  all  other  creditors  of  the  association,  against  the  shareholders 
thereof,  in  any  court  of  the  United  States  having  original  jurisdiction 
in  equity  for  the  district  in  which  such  association  may  have  been  lo- 
cated or  established. 

§  8.  That  whenever  any  association  shall  have  been  or  shall  be  placed 
in  the  hands  of  a  receiver,  as  provided  in  section  fifty-two  hundred  and 
thirty-four  and  other  sections  of  said  statutes,  and  when,  as  provided  in 
section  fifty-two  hundred  and  thirty-six  thereof,  the  Comptroller  shall 
have  paid  to  each  and  every  creditor  of  such  association,  not  including 
shareholders  who  are  creditors  of  such  association,  whose  claim  or  claims 
as  such  creditors  shall  have  been  approved  or  allowed  as  therein  pre- 
scribed, the  full  amount  of  such  claims  and  all  expenses  of  such  receiver- 
ship and  the  redemption  of  the  circulating  notes  of  such  association 
shall  have  been  provided  for  by  depositing  lawful  money  of  the  United 
States  with  the  Treasurer  of  the  United  States,  the  Comptroller  of  the 
Currency  shall  call  a  meeting  of  the  shareholders  of  such  association  by 
giving  notice  thereof  for  thirty  days  in  a  newspaper  published  in  the 
town,  city,  or  county  where  the  business  of  such  association  was  carried 
on,  or  if  no  newspaper  is  there  published,  in  the  newspaper  published 
nearest  thereto,  at  which  meeting  the  stockholders  shall  elect  an  agent, 
voting  by  ballot,  in  person  or  by  proxy,  each  share  of  stock  entitling 
the  holder  to  one  vote;  and  when  such  agent  shall  have  received  votes 
representing  at  least  a  majority  of  the  stock  in  value  and  number  of 
shares,  and  when  any  of  the  shareholders  of  the  association  shall  have 
executed  and  filed  a  bond  to  the  satisfaction  of  the  Comptroller  of  the 
Currency,  conditioned  for  the  payment  and  discharge  in  full  of  any  aud 
every  claim  that  may  thereafter  be  approved  and  allowed  against  sucli 
association  by  and  before  a  competent  court,  and  for  the  faithful  per- 
formance aud  discharge  of  all  and  singular  the  duties  of  such  agent,  the 
Comptroller  and  the  receiver  shall  thereupon  transfer  and  deliver  to  such 
agent  all  the  undivided  or  uncollected  or  other  assets  and  property  of 
such  association  then  remaining  in  the  hands  or  subject  to  the  order  or 
control  of  said  Comptroller  and  said  receiver,  or  either  of  them;  and  for 
this  purpose  said  Comptroller  and  said  receiver  are  hereby  severally  em- 
powered to  execute  any  deed,  assignment,  transfer,  or  other  instrument 
in  writing  that  may  be  necessary  and  proper;  whereupon  the  said 
Comptroller  and  the  said  receiver  shall,  by  virtue  of  this  act,  be  dis- 
charged and  released  from  any  and  all  liabilities  of  such  association,  as 
to  each  and  all  the  creditors  and  shareholders  thereof;  and  such  agent 
is  hereby  authorized  to  sell,  compromise  or  compound  the  debts  due  to 
such  association  upon  the  order  of  a  competent  court  of  record  or  of  the 
United  States  Circuit  Court  for  the  district  where  the  business  of  the 


APPENDIX.  C97 

association  was  carried  on.  Such  agent  shall  hold,  control,  and  dispose 
of  the  assets  and  property  of  any  association  which  he  may  receive  as 
hereinbefore  provided  for  the  benefit  of  the  shareholders  of  such  asso- 
ciation as  they,  or  the  majority  of  them  in  value  or  number  of  shares, 
may  direct,  distributing  such  assets  and  property  among  such  share- 
holders in  proportion  to  the  shares  by  each  held;  and  he  may,  in  his  own 
name  or  in  the  name  of  such  association,  sue  and  be  sued,  and  do  all 
other  lawful  acts  and  things  necessary  to  finally  settle  and  distribute 
the  assets  and  property  in  his  hands.  In  selecting  an  agent  as  hereinbe- 
fore provided,  administrators  or  executors  of  deceased  stockholders  may 
act  the  same  as  the  decedent  might  have  done  if  living,  and  guardians 
may  so  act  and  sign  for  their  ward  or  wards. 

§  4.  This  will  be  found  incorporated  in  section  fifty-two  hundred  and 
five,  ante. 

§  5.  That  all  United  States  officers  charged  with  the  receipt  or  the  dis- 
bursement of  public  moneys,  and  all  officers  of  national  banks,  shall 
stamp  or  write  in  plain  letters  the  words  '•  counterfeit,"  "  altered,"  or 
"  worthless  "  upon  all  fraudulent  notes  issued  in  the  form  of,  and  intended 
to  circulate  as  money,  which  shall  be  presented  at  their  places  of  busi- 
ness; and  if  such  officers  shall  wrongfully  stamp  a  genuine  note  of  the 
United  States  or  of  the  national  banks,  they  shall  upon  presentation,  re- 
deem such  notes  at  the  face  value  thereof. 

§  6.  That  all  savings  banks  or  savings  and  trust  companies  organized 
under  authority  of  any  act  of  Congress,  shall  be,  and  are  hereby,  re- 
quired to  make,  to  the  Comptroller  of  the  Currency,  and  publish,  all  the 
reports  which  national  banking  associations  are  required  to  make  and 
to  publish  under  the  provisions  of  section  fifty-two  hundred  and  eleven, 
fifty-two  hundred  and  twelve  and  fifty-two  hundred  and  thirteen,  and 
shall  be  subject  to  the  same  penalties  for  failure  to  make  or  publish  such 
reports  as  are  herein  provided;  which  penalties  may  be  collected  by  suit 
before  any  court  of  the  United  States  in  the  district  in  which  said  sav- 
ings banks  or  savings  and  trust  companies  may  be  located.  And  all 
savings  or  other  banks  now  organized,  or  which  shall  hereafter  be  or- 
ganized, in  the  District  of  Columbia,  under  any  act  of  Congress,  which 
shall  have  capital  stock  paid  up  in  whole  or  in  part,  shall  be  subject  to 
all  the  provisions  of  the  Revised  Statutes,  and  of  all  acts  of  Congress  ap- 
plicable to  national  banking  associations,  so  far  as  the  same  may  be 
applicable  to  such  savings  or  other  banks:  Provided,  that  such  savings 
banks  now  established  shall  not  be  required  to  have  a  paid  iu  capital 
exceeding  one  hundred  thousand  dollars. 

Section  three  of  the  preceding  act  was  amended  by  act  of  August  3, 
1892,  to  read  as  follows: 

§  3.  That  whenever  any  association  shall  have  been  or  shall  be  placed 
in  the  hands  of  a  receiver,  as  provided  in  section  fifty-two  hundred  and 
fifty-four  and  other  sections  of  the  Revised  Statutes  of  the  United  States, 
and  when,  as  provided  in  section  fifty-two  hundred  and  thirty-six,  the 


698  BANKS   AND    BANKING. 

Comptroller  of  the  Currency  shall  have  paid  to  each  and  every  creditor 
of  such  association,  not  including  shareholders,  who  are  creditors  of  such 
association,  whose  claim  or  claims  as  such  creditors  shall  have  been  ap- 
proved or  allowed  as  therein  prescribed,  the  full  amount  of  such  claims, 
and  all  expenses  of  the  receivership  and  the  redemption  of  the  circulat- 
ing notes  of  such  association  shall  have  been  provided  for  by  depositing 
lawful  money  of  the  United  States  with  the  Treasurer  of  the  United 
States,  the  Comptroller  of  the  Currency  shall  call  a  meeting  of  the  share- 
holders of  such  association  by  giving  notice  thereof-thirty  days  in  a 
newspaper  published  in  a  town,  city  or  county  where  the  business  of  such 
association  was  carried  on.  or  if  no  newspaper  is  so  published,  in  a  news- 
paper published  nearest  thereto;  at  such  meeting  the  shareholders  shall 
determine  whether  the  receiver  shall  be  continued  and  shall  wind  up 
the  affairs  of  such  association,  or  whether  an  agent  shall  be  elected  for 
that  purpose,  and  in  so  determining  the  said  shareholders  shall  vote  by 
ballot  in  person  or  by  proxy,  each  share  of  stock  entitling  the  holder  to 
one  vote,  and  a  majority  of  the  stock  in  value  and  number  of  shares 
shall  be  necessary  to  determine  whether  the  said  receiver  shall  be  con- 
tinued or  whether  an  agent  shall  be  elected.  In  case  such  majority  shall 
determine  that  the  said  receiver  shall  be  continued,  the  said  receiver  shall 
thereupon  proceed  with  the  execution  of  his  trust,  and  shall  sell,  dispose 
of  or  otherwise  collect  the  assets  of  said  association,  and  shall  possess  all 
the  powers  and  authority,  and  be  subject  to  all  the  duties  and  liabilities 
originally  conferred  or  imposed  upon  him  by  his  appointment  as  such  re- 
ceiver, so  far  as  the  same  remain  applicable.  In  case  the  said  meeting 
shall  by  the  vote  of  the  majority  of  the  stock  in  value  and  number  of 
shares  determine  that  an  agent  shall  be  elected,  the  said  meeting  shall 
thereupon  proceed  to  elect  an  agent,  voting  by  ballot  in  person  or  by 
proxy,  each  share  of  stock  entitling  the  holder  to  one  vote,  and  the  per- 
son who  shall  receive  votes  representing  at  least  a  majority  in  value  and 
number,  shall  be  declared  the  agent  for  the  purposes  hereinafter  pro- 
vided, and  whenever  any  of  the  shareholders  of  the  association  shall, 
after  the  election  of  such  agent,  have  executed  and  filed  a  bond  to  the 
satisfaction  of  the  Comptroller  of  the  Currency,  conditioned  for  the  pay- 
ment and  discharge  in  full  of  any  and  every  claim  that  may  thereafter 
be  approved  and  allowed  by  and  before  a  competent  court,  and  for  the 
faithful  performance  of  all  and  singular  the  duties  of  such  agent,  the 
Comptroller  and  the  receiver  shall  thereupon  transfer  and  deliver  to 
such  agent  all  the  undivided  or  uncollected  or  other  assets  of  such  asso- 
ciation then  remaining  in  the  hands  or  subject  to  the  order  and  control 
of  said  Comptroller  and  said  receiver,  or  either  of  them;  and  for  this 
purpose  said  Comptroller  and  said  receiver  are  hereby  severally  empow- 
ered and  directed  to  execute  any  deed,  assignment,  transfer,  or  other 
instrument  in  writing  that  may  be  necessary  and  proper,  and  upon  the 
execution  and  delivery  of  such  instrument  to  the  said  agent,  the  said 
Comptroller  and  the  said  receiver  shall,  by  virtue  of  this  act,  be  dis- 


APPENDIX. 

charged  from  any  and  all  liabilities  of  such  association,  as  to  each  and 
all  the  creditors  and  shareholders  thereof.  Upon  receiving  such  deed, 
assignment,  transfer,  or  other  instrument,  the  person  elected  such  agent 
shall  hold,  control,  and  dispose  of  the  assets  and  property  of  such  asso- 
ciation which  he  may  receive  under  the  terms  hereof,  for  the  benefit  of 
the  shareholders  of  such  association,  and  he  may  in  his  own  name  or  in 
the  name  of  such  association  sue  and  be  sued,  and  do  all  other  lawful 
acts  and  things  necessary  to  finally  settle  and  distribute  the  assets  and 
property  in  his  hands,  and  may  sell,  compromise,  or  compound  the  debts 
due  to  such  association,  with  the  consent  and  approval  of  the  circuit  or 
district  court  of  the  United  States  for  the  district  where  the  business 
of  such  association  was  carried  on,  and  shall,  at  the  conclusion  of  his 
trust,  render  such  district  or  circuit  court  a  full  account  of  all  his  pro- 
ceedings, receipts,  and  expenditures  as  such  agent,  which  court  shall 
upon  due  notice,  settle  and  adjust  such  accounts  and  discharge  said 
agent  and  the  sureties  upon  said  bond.  At  such  meeting,  held  as  here- 
inbefore provided,  administrators  or  executors  of  deceased  shareholder* 
may  act  and  do  as  the  decedent  might  have  done  if  living,  and  guard- 
ians of  minors,  and  trustees  of  other  persons  may  so  act  and  sign  for 
their  ward  or  cestui  que  trust.  The  proceeds  of  the  assets  or  property 
of  any  such  association  which  may  be  undistributed  at  the  time  of  such 
meeting  or  may  be  subsequently  received,  shall  be  distributed  as  follows: 

First.  To  pay  the  expenses  of  the  trust  to  the  date  of  such  payment. 

Second.  To  repay  any  amount  or  amounts  which  have  been  paid  in 
by  any  shareholder  or  shareholders  to  such  association  upon  and  by  rea- 
son of  any  and  all  assessments  made  upon  the  stock  of  such  association 
by  the  order  of  the  Comptroller  of  the  Currency,  in  accordance  with  the 
provisions  of  the  statutes  of  the  United  States;  and 

Third.  The  balance  ratably  among  such'  stockholders  in  proportion  to 
the  number  of  shares  held  and  owned  by  each.  Such  distribution  shall 
be  made  from  time  to  time,  as  the  proceeds  shall  be  received  and  as 
shall  be  deemed  advisable  by  the  said  Comptroller  or  said  agent. 

Section  three  of  the  Act  of  June  80,  1876,  and  of  the  Act  of  August  3, 
1892,  was,  by  Act  of  March  2,  1897,  amended  as  follows: 

§  3.  After  the  words  "  discharge  said  agent  and  the  sureties  upon  said 
bond,"  the  following  was  inserted :  And  in  case  any  such  agent  so  elected 
shall  refuse  to  serve,  or  die,  resign,  or  be  removed,  any  shareholder  may 
call  a  meeting  of  the  shareholders  of  such  association  in  the  town,  city, 
or  village  where  the  business  of  said  association  was  carried  on.  by  giv- 
ing notice  thereof  for  thirty  days  in  a  newspaper  published  in  said  town, 
city  or  village,  or  if  no  newspaper  is  there  published,  in  the  newspaper 
published  nearest  thereto,  at  which  meeting  the  shareholders  shall  elect 
an  agent,  voting  by  ballot,  in  person  or  by  proxy,  each  share  of  stock 
entitling  the  holder  to  one  vote,  and  when  such  agent  shall  have  received 
votes  representing  at  least  a  majority  of  the  stock  in  value  and  number 
of  shares,  and  shall  have  executed  a  bond  to  the  shareholders  conditioned 


700  BANKS   AND   BANKING. 

for  the  faithful  performance  of  his  duties,  in  the  penalty  fixed  by  the 
shareholders  at  said  meeting,  with  two  sureties,  to  be  approved  by  the 
judge  of  a  court  of  record,  and  file  said  bond  in  the  office  of  the  clerk 
of  the  court  of  record  in  the  county  where  the  business  of  said  associa- 
tion was  carried  on,  he  shall  have  all  the  rights,  powers  and  duties  of 
the  agent  first  elected  as  hereinbefore  provided. 

SEC.  5235.  NOTICE  TO  PRESENT  CLAIMS. —  The  Comptroller  shall,  upon 
appointing  a  receiver,  cause  notice  to  be  given,  by  advertisement  in  such 
newspapers  as  he  may  direct,  for  three  consecutive  months,  calling  on 
all  persons  who  may  have  claims  against  such  association  to  present  the 
same,  and  to  make  legal  proof  thereof. 

SEC.  5236.  DIVIDENDS. —  From  time  to  time,  after  full  provision  has 
been  first  made  for  refunding  to  the  United  States  any  deficiency  in 
redeeming  the  notes  of  such  association,  the  Comptroller  shall  make  a 
ratable  dividend  of  the  money  so  paid  over  to  him  by  such  receiver  on 
all  such  claims  as  may  have  been  proved  to  his  satisfaction  or  adjudi- 
cated in  a  court  of  competent  jurisdiction,  and,  as  the  proceeds  of  the 
assets  of  such  association  are  paid  over  to  him,  shall  make  further  divi- 
dends on  all  claims  previously  proved  or  adjudicated;  and  the  remain- 
der of  the  proceeds,  if  any,  shall  be  paid  over  to  the  shareholders  of  such 
association,  or  their  legal  representatives,  in  proportion  to  the  stock  by 
them  respectively  held. 

SEC.  5237.  INJUNCTION  AGAINST  COMPTROLLER.—  Whenever  an  asso- 
ciation against  which  proceedings  have  been  instituted,  on  account  of 
any  alleged  refusal  to  redeem  its  circulating  notes  as  aforesaid,  denies 
having  failed  to  do  so,  it  may,  at  any  time  within  ten  days  after  it  has 
been  notified  of  the  appointment  of  an  agent,  as  provided  in  section 
fifty-two  hundred  and  twenty-seven,  apply  to  the  nearest  circuit,  or  dis- 
trict, or  territorial  court  of  the  United  States  to  enjoin  further  proceed- 
ings in  the  premises;  and  such  court,  after  citing  the  Comptroller  of 
the  Currency  to  show  cause  why  further  proceedings  should  not  be  en- 
joined, and  after  the  decision  of  the  court  or  finding  of  a  jury  that  such 
association  has  not'refused  to  redeem  its  circulating  notes,  when  legally 
presented,  in  the  lawful  money  of  the  United  States,  shall  make  an 
order  enjoining  the  Comptroller,  and  any  receiver  acting  under  his  di- 
rection, from  all  further  proceedings  on  account  of  such  alleged  refusal. 

Act  of  March  29,  1886,  24  Stat.  8,  provides  that  whenever  the 
receiver  of  any  national  bank  duly  appointed  by  the  Comptroller  of  the 
Currency,  and  who  shall  have  duly  qualified  and  entered  upon  the  dis- 
charge of  his  trust,  shall  find  it.  in  his  opinion  necessary,  in  order  to 
fully  complete  and  execute  his  said  trust,  to  the  extent  of  any  and  all 
equities  that  such  trust  may  have  in  any  property,  real  or  personal,  by 
reason  of  any  bond,  mortgage,  assignment,  or  other  legal  claim  attached 
thereto,  and  which  said  property  is  to  be  sold  under  an  execution,  de- 
cree of  foreclosure,  or  proper  order  of  any  court  of  jurisdiction,  he  may 
certify  the  facts  in  the  case,  together  with  his  opinion  as  to  the  value 


APPENDIX.  701 

of  the  property  to  be  sold,  and  the  value  of  the  equity  his  said  trust  may 
have  in  the  same,  to  the  Comptroller  of  the  Currency,  together  with  a 
request  for  the  right  and  authority  to  use  and  employ  so  much  of  the 
money  of  said  trust  as  may  be  necessary  to  purchase  such  property  at 
such  sale. 

§  2.  That  such  request,  if  approved  by  the  Comptroller  of  the  Cur- 
rency, shall  be,  together  with  the  certificate  of  facts  in  the  case,  and 
his  recommendation  as  to  the  amount  of  money  which,  in  his  judgment, 
shall  be  so  used  and  employed,  submitted  to  the  Secretary  of  the  Treas- 
ury, and  if  the  same  shall  likewise  be  approved  by  him,  the  request 
shall  be  by  the  Comptroller  of  the  Currency  allowed,  and  notice  thereof, 
with  copies  of  the  request,  certificate  of  facts,  and  endorsement  of  ap- 
provals, shall  be  filed  with  the  Treasurer  of  the  United  States. 

§  3.  That  whenever  any  such  request  shall  be  allowed  as  hereinbefore 
provided,  the  said  Comptroller  of  the  Currency  shall  be,  and  is,  empow- 
ered to  draw  upon  and  from  such  amount  of  any  such  trust  as  may  be 
deposited  with  the  Treasurer  of  the  United  States  for  the  benefit  of  the 
bank  in  interest,  to  the  amount  as  may  be  recommended  and  allowed 
and  for  the  purpose  for  which  such  allowance  was  made;  provided,  how- 
ever, that  all  payments  to  be  made  for  or  on  account  of  the  purchase  of 
any  such  property  or  under  any  such  allowance  shall  be  made  by  the 
Comptroller  of  the  Currency  direct,  with  the  approval  of  the  Secretary 
of  the  Treasury,  for  such  purpose  only  and  in  such  manner  as  he  may 
determine  and  order. 

Act  of  March  3,  1887,  24  Stat.  554,  corrected  by  25  Stat., 
provides  that  whenever  in  any  cause,  pending  in  any  court  of  the 
United  States,  there  shall  be  a  receiver  or  manager  in  possession  of  any 
property,  such  receiver  or  manager  shall  manage  and  operate  such  prop- 
erty according  to  the  requirements  of  the  valid  laws  of  the  State  in  which 
such  property  shall  be  situated  in  the  same  manner  as  the  owner  or  pos- 
sessor thereof  would  be  bound  to  do  if  in  possession  thereof.  Any  re- 
ceiver or  manager  who  shall  wilfully  violate  the  provisions  of  this  section, 
shall  be  deemed  guilty  of  a  misdemeanor,  and  shall,  on  conviction  thereof, 
be  punished  by  a  fine  not  exceeding  three  thousand  dollars,  or  by  im- 
prisonment not  exceeding  one  year,  or  by  both  said  punishments,  in  the 
discretion  of  the  court. 

§  3.  That  every  receiver  or  manager  of  any  property,  appointed  by  any 
court  of  the  United  States,  may  be  sued  in  respect  of  any  act  or  trans- 
action of  his  in  carrying  on  the  business  connected  with  such  property, 
without  the  previous  leave  of  the  court  in  which  such  receiver  or  man- 
ager was  appointed;  but  such  suit  shall  be  subject  to  the  general  equity 
jurisdiction  of  the  court  in  which  such  receiver  or  manager  was  ap- 
pointed, so  far  as  the  same  shall  be  necessary  to  the  ends  of  justice. 

SEC.  5238.  FEES  AND  EXPENSES.—  All  fees  for  protesting  the  notas  issued 
by  any  national  banking  association  shall  be  paid  by  the  person  procur- 
ing the  protest  to  be  made,  and  such  association  shall  be  liable  therefor; 


702  BANKS   AND   BANKING. 

but  no  part  of  the  bonds  deposited  by  such  association  shall  be  applied 
to  the  payment  of  such  fees.  All  expenses  of  any  preliminary  or  other 
examinations  into  the  condition  of  any  association  shall  be  paid  by  such 
association.  All  expenses  of  any  receivership  shall  be  paid  out  of  the 
assets  of  such  association  before  distribution  of  the  proceeds  thereof. 

SEC.  5239.  PENALTY  FOR  VIOLATION.— If  the  directors  of  any  national 
banking  association  shall  knowingly  violate,  or  knowingly  permit  any 
of  the  officers,  agents,  or  servants  of  the  association  to  violate  any  of  the 
provisions  of  this  title,  all  the  rights,  privileges  and  franchises  of  the  as- 
sociation shall  be  thereby  forfeited.  Such  violation  shall,  however,  be 
determined  and  adjudged  by  a  proper  circuit,  district,  or  territorial 
court  of  the  United  States,  in  a  suit  brought  for  that  purpose  by  the 
Comptroller  of  the  Currency,  in  his  own  name,  before  the  association 
shall  be  declared  dissolved.  And  in  cases  of  such  violation,  every  di- 
rector who  participated  in  or  assented  to  the  same  shall  be  held  liable 
in  his  personal  and  individual  capacity,  for  all  damages  which  the  asso- 
ciation, its  shareholders,  or  any  other  person,  shall  have  sustained  in 
consequence  of  such  violation. 

SEC.  5240.  APPOINTMENT  OF  EXAMINERS. — The  Comptroller  of  the  Cur- 
rency, with  the  approval  of  the  Secretary  of  the  Treasury,  shall,  as  often 
as  shall  be  deemed  necessary  or  proper,  appoint  a  suitable  person  or  per- 
sons to  make  an  examination  of  the  affairs  of  every  banking  association, 
who  shall  have  power  to  make  a  thorough  examination  into  all  the  af- 
fairs of  the  association,  and,  in  doing  so,  to  examine  any  of  the  officers 
and  agents  thereof  on  oath ;  and  shall  make  a  full  and  detailed  report 
of  the  condition  of  the  association  to  the  Comptroller.  That  all  persons 
appointed  to  be  examiners  of  national  banks  not  located  in  the  redemp- 
tion cities  specified  in  section  fifty-one  hundred  and  ninety-two,  of  the 
Revised  Statutes  of  the  United  States,  or  in  any  one  of  the  States  of 
Oregon,  California  and  Nevada,  or  in  the  Territories,  shall  receive  com- 
pensation for  such  examination  as  follows:  For  examining  national 
banks  having  a  capital  less  than  one  hundred  thousand  dollars,  twenty 
dollars;  those  having  a  capital  of  one  hundred  thousand  dollars,  and 
less  than  three  hundred  thousand  dollars,  twenty-five  dollars;  those 
having  a  capital  of  three  hundred  thousand  dollars  and  less  than  four 
hundred  thousand  dollars,  thirty-five  dollars;  those  having  a  capital  of 
four  hundred  thousand  dollars  and  less  than  five  hundred  thousand  dol- 
lars, forty  dollars;  those  having  a  capital  of  five  hundred  thousand  dol- 
lars and  less  than  six  hundred  thousand  dollars,  fifty  dollars;  those 
iiaving  a  capital  of  six  hundred  thousand  dollars  and  over,  seventy-five 
dollars,  which  amounts  shall  be  assessed  by  the  Comptroller  of  the  Cur- 
rency upon,  and  paid  by,  the  respective  associations  so  examined;  and 
shall  be  in  lieu  of  the  compensation  and  mileage  heretofore  allowed  for 
making  said  examinations,  and  persons  appointed  to  make  examination 
of  national  banks  in  the  cities  named  in  section  fifty-one  hundred  and 
ninety-two  of  the  Revised  Statutes  of  the  United  States,  or  in  any  one  of 


APPENDIX.  703 

the  States  of  Oregon,  California,  and  Nevada,  or  in  the  Territories,  shall 
receive  such  compensation  as  may  be  fixed  by  the  Secretary  of  the  Treas- 
ury upon  the  recommendation  of  the  Comptroller  of  the  Currency;  and 
the  same  shall  be  assessed  and  paid  in  the  manner  hereinbefore  pro- 
vided. 

SEC.  5241.  VISITOPJAL  POWERS. —  No  association  shall  be  subject  to 
any  visitorial  powers  other  than  such  as  are  authorized  by  this  title,  or 
are  vested  in  the  courts  of  justice. 

SEC.  5242.  FRAUDULENT  TRANSFERS  AND  PREFERENCES. —  All  transfers 
of  notes,  bonds,  bills  of  exchange,  or  other  evidences  of  debt  owing  to 
any  national  banking  association,  or  of  deposits  to  its  credit;  all  assign- 
ments of  mortgages,  sureties  on  real  estate,  or  of  judgments  or  decrees 
in  its  favor;  all  deposits  of  money,  bullion  or  other  valuable  thing  for 
its  use,  or  for  the  use  of  any  of  its  shareholders  or  creditors;  and  all 
payments  of  money  to  either,  made  after  the  commission  of  an  act  of 
insolvency,  or  in  contemplation  thereof,  made  with  a  view  to  prevent 
the  application  of  its  assets  in  the  manner  prescribed  by  this  chapter, 
or  with  a  view  to  the  preference  of  one  creditor  to  another,  except  in 
payment  of  its  circulating  notes,  shall  be  utterly  null  and  void;  and  no 
attachment,  injunction  or  execution,  shall  be  issued  against  such  asso- 
ciation or  its  property  before  final  judgment  in  any  suit,  action,  or  pro- 
ceeding, in  any  State,  county,  or  municipal  court. 

SEC.  5243.  THE  TERM  "NATIONAL." — All  banks  not  organized  and 
transacting  business  under  the  national  currency  laws,  or  under  this 
title,  and  all  persons  or  corporations  doing  the  business  of  bankers, 
brokers,  or  savings  institutions,  except  savings  banks  authorized  by 
Congress  to  use  the  word  "  national  "  as  a  portion  of  the  name  or  title 
of  such  bank,  corporation,  firm  or  partnership,  are  prohibited  frc\m  using 
the  word  "  national  "  as  a  portion  of  the  name  or  title  of  such  bank,  cor- 
poration, firm  or  partnership;  and  any  violation  of  this  prohibition  com- 
mitted after  the  third  day  of  September,  eighteen  hundred  and  seventy- 
three,  shall  subject  the  party  chargeable  therewith  to  a  penalty  of  fifty 
dollars  for  each  day  during  which  it  is  committed  or  repeated. 

Act  of  March  3,  1883,  repealed  the  taxes  levied  by  the  United 
States  on  the  capital  and  deposits  of  banks,  bankers  and  national  bank- 
ing associations,  and  the  stamp  tax  on  bank  checks  and  drafts. 

Act  of  June  13,  1898,  imposed  special  tax  annually  as  follows: 
Bankers  using  or  employing  a  capital  not  exceeding  the  sum  of  twenty- 
five  thousand  dollars  shall  pay  fifty  dollars;  when  using  or  employing 
a  capital  exceeding  twenty-five  thousand  dollars,  for  every  additional 
thousand  dollars  in  excess  of  twenty-five  thousand  dollars,  two  dollars, 
and  in  estimating  capital  surplus  shall  be  included.  The  amount  of 
such  annual  tax  shall,  in  all  cases,  be  computed  on  the  basis  of  the  cap- 
ital and  surplus  for  the  preceding  fiscal  year.  Every  person,  firm,  or 
company,  and  every  incorporated  or  other  bank,  having  a  place  of  busi- 
ness where  credits  are  obtained  by  the  deposit  or  collection  of  money 


704:  BANKS   AND   BANKING. 

or  currency,  subject  to  be  paid  or  remitted  upon  draft,  check  or  order, 
or  where  money  is  advanced  or  loaned,  on  stocks,  bonds,  bullion,  bills 
of  exchange,  or  promissory  notes,  or  where  stocks,  bonds,  bullion,  bills 
of  exchange,  or  promissory  notes  are  received  for  discount  or  sale,  shall 
be  a  banker  under  this  act:  Provided,  that  any  savings  bank  having  no- 
capital  stock  and  whose  business  is  confined  to  receiving  deposits  and 
loaning  or  investing  the  same  for  the  benefit  of  its  depositors,  and  which 
does  not  do  other  business  of  banking,  shall  not  be  subject  to  this  tax. 
By  the  same  act  the  following  stamp  duties  were  imposed:   Bank 
check,  draft,  or  certificate  of  deposit  not  drawing  interest,  or  order  for 
the  payment  of  any  sum  of  money,  drawn  upon  or  issued  by  any  bank, 
trust  company,  or  any  person  or  persons,  companies  or  corporations,  at 
sight  or  on  demand,  two  cents.    Bills  of  exchange  (inland),  draft,  cer- 
tificate of  deposit  drawing  interest,  or  order  for  the  payment  of  any  sum 
of  money,  otherwise  than  at  sight  or  on  demand,  or  any  promissory  note 
except  bank  notes  issued  for  circulation,  and  for  each  renewal  of  the 
same,  for  a  sum  not  exceeding  one  hundred  dollars,  two  cents;  and  for 
each  additional  one  hundred  dollars  or  fractional  part  thereof,  in  excess 
of  one  hundred  dollars,  two  cents.    And  from  and  after  the  first  day  of 
July,  1898,  the  provisions  of  this  paragraph  shall  apply  as  well  to  orig- 
inal domestic  notes  ordinarily  issued  by  the  Government  of  the  United 
States,  and  the  price  of  such  money  orders  shall  be  increased  by  a  sum 
equal  to  the  value  of  the  stamps  herein  provided  for.    Bills  of  exchange 
(foreign),  or  letters  of  credit  (including  orders  by  telegraph  or  other- 
wise, for  the  payment  of  money  issued  by  express  or  other  companies, 
or  any  person  or  persons),  drawn  in  but  payable  out  of  the  United  States, 
if  drawn  singly  or  otherwise  than  in  a  set  of  three  or  more,  according 
to  the  custom  of  merchants  and  bankers,  shall  pay  for  a  sum  not  ex- 
ceeding one  hundred  dollars,  four  cents,  and  for  each  one  hundred  dol- 
lars or  fractional  part  thereof  in  excess  of  one  hundred  dollars,  fom 
cents.    If  drawn  in  sets  of  two  or  more:  For  every  bill  of  each  set, 
where  the  sum  made  payable  shall  not  exceed  one  hundred  dollars,  01 
the  equivalent  thereof,  in  any  foreign  currency  in  which  such  bill  may 
be  expressed,  according  to  the  standard  of  the  value  fixed  by  the  United 
States,  two  cents;  and  for  each  one  hundred  dollars  or  fractional  part 
thereof  in  excess  of  one  hundred  dollars,  two  cents.    Bills  of  lading  or 
receipt  (other  than  charter  party)  for  any  goods,  merchandise,  or  effects 
to  be  exported  from  a  port  or  place  in  the  United  States  to  any  foreign 
port  or  place,  ten  cents. 


ADDENDUM. 


Bills  of  Lading. —  The  statement  made  on  page  299  in  regard  to  the 
duty  of  a  bank  in  collecting  a  draft  attached  to  or  accompanied  by  a 
bill  of  lading,  while  technically  correct,  may  seem  to  be  misleading,  and 
therefore  needs  amplifying.  The  question  may  present  itself  in  differ- 
ent ways.  Thus  the  draft  may  be  an  ordinary  sight  draft,  a  draft  pay- 
able at  sight  without  grace,  a  draft  payable  so  many  days  after  date  or 
at  a  fixed  date,  or  upon  demand  or  so  many  days  after  demand.  The 
rule  is  reasonably  well  settled  that,  if  the  accompanying  draft  is  a  time 
draft,  and  by  this  term  the  courts  mean  sight  drafts  with  grace,1  drafts 
payable  so  many  days  after  sight 2  or  after  demand,  and  drafts  payable 
at  a  fixed  day.3  the  bank  may  deliver  the  bill  of  lading  upon  acceptance 
of  the  draft.  The  reason  for  the  rule  is  said  to  be  that  such  a  draft  im- 
ports a  sale  upon  credit.  This  reason  is  wholly  inadequate  as  to  drafts 
payable  at  a  fixed  day,  i.  e.,  so  many  days  after  date  or  upon  a  day  named, 
for  the  reason  that  those  drafts  need  no  presentation  for  acceptance,4 
and  the  drawer  may  very  well  consider  that  the  bank  collecting  will  not 
present  such  a  draft  for  acceptance,  and  the  transmitting  bank  which 
has  discounted  the  draft,  with  the  bill  of  lading  as  collateral  security, 
may  reasonably  assume  the  same  thing.  It  is  true  that  such  a  draft 
may  be  presented  for  acceptance,5  and  if  acceptance  be  refused  notice 
must  be  given,6  and  the  draft,  if  dishonored,  needs  no  presentation  for 
payment,  according  to  the  authorities.7  But  the  collecting  bank  upon 
receiving  such  a  draft  for  collection  may  hold  it  until  maturity  and  then 

1  National    Bank   v.   Merchants'  2  National    Bank    v.   Merchants' 

Bank,  91  U.  S.  92  (here  one  of  the  Bank,  91 U.  S.  92;  Commercial  Bank 

drafts  was  a  sight  draft);  Marine  v.  Railway  Co.,  160  111.  401;  Moore 

Bank  v.  Wright,  48  N.  Y.  1  (here  the  v.  Louisiana  Nat.  Bank,  44  La.  Ann. 

draft  was  a  sight  draft).    Second  90  (draft  at  one  day's  sight). 

Nat.  Bank  v.  Cummings,  89  Tenn.  3  Woolen  v.  New  York  Bank,  12 

609  is  contra  as  to  a  sight  draft.  Blatchf.  359. 

The  court  in  this  last  case  cited  4  See  p.  349,  ante. 

National  Bank  v.  Merchants'  Bank,  »  See  pp.  389,  390,  ante, 

supra,  but  had    not   read  it    far  6  See  pp.  389,  390,  ante. 

enough  to  see  that  sight  drafts  with  7  See  pp.  374,  389,  466,  ante. 
grace  are  treated  as  time  drafts. 
45 


706  ADDENDUM. 

present  for  payment;  and  necessarily  the  bill  of  lading  would  be  held 
until  payment.  Yet  the  rule  is  held  that  such  a  time  draft  imports  a 
sale  upon  credit.  The  drawer  of  the  draft  or  the  transmitting  bank,  if 
it  desires  the  bill  of  lading  to  be  held  until  payment,  and  wishes  the 
draft  to  be  a  time  draft,  should  draw  tfie  draft  payable  at  a  day  certain, 
and  give  instructions  to  the  collecting  bank  to  present  the  draft  for  pay- 
ment but  not  for  acceptance,  or  the  drawer  should  draw  a  demand  draft, 
upon  which  the  bill  of  lading  cannot  be  delivered  except  upon  payment.8 
If  a  draft  is  a  sight  draft  without  grace,  it  is  a  demand  draft,  and  the 
bill  of  lading  cannot  be  delivered  except  upon  payment.  But,  as  it  will 
appear  a  little  further  along,  instructions  to  the  collecting  bank  are  not 
necessarily  a  full  protection. 

How  far  a  bank  is  safe  in  taking  a  bill  of  la'ding  as  collateral  security 
depends  upon  various  consideration's.  It  is  reasonably  well  agreed  that 
the  bill  of  lading  is  a  symbol  of  property,  and  when  delivered  trans- 
fers the  property  as  against  every  subsequent  purchaser  or  claimant 
under  the  transferror  of  the  bill  of  lading.9  But  the  bill  of  lading  is 
only  guem'-negotiable,  and  delivered  as  a  bill  of  sale  transfers  merely  the 
transferror's  title.10  If  he  had  no  title,  the  transferee  of  the  bill  of  lad- 
ing gets  none.  A  bank  should  not  assume  that  a  bill  of  lading  is  neces- 
sarily a  good  security,  unless  it  knows  that  the  apparent  owner  of  the 
goods  is  the  real  owner.  The  liability  of  the  bank  upon  the  bill  of  lad- 
ing to  the  consignee,  or  the  person  to  whom  the  bill  of  lading  is  de- 
livered, is  nothing.  For  although  the  bill  of  lading  indorsed  or  delivered 
unindorsed11  transfers  the  legal  title  to  the  bank,  yet  it  is  the  legal  title 
only  for  the  purposes  of  the  lien ;  and  when  the  bill  of  lading  is  deliv- 
ered, it  is  delivered  as  and  for  the  consignor  of  the  goods  or  drawer  of 
the  draft.  The  bank  may  make,  it  seems,  representations  as  to  the  goods, 
and  yet  not  be  held,  because  such  representations  would  not  be  bind- 
ing.12 The  propriety  of  such  a  rule  seems  open  to  grave  objections. 

8  All  the  cases  hereinbefore  cited  converted  his  cash  sale  into  a  sale 
admit  that  a  draft  payable  instantly  upon  credit.    The  statute,  too,  may 
does  not  import  a  credit,  but  a  cash  have  seemed  to  have  some  effect 
sale.  The  bank's  lien  was  held  superior  to 

9  Shaw  v.  Railroad  Co.,  101  U.  S.  the  title  of  the  original  vendor. 
557.  »  Morse  v.  Chicago,  etc.  R  R  Co., 

10Sbawv.RailroadCo.,SMpro.  But  73  Iowa,  220. 

one  case  seems  contra,  Morse  v.  Chi-  w  Littleton  v.  People's  Bank,  63 

cago,  etc.  R  R  Co.,  73  Iowa,  226;  N.  W.  R.  666.    The  representation 

but  this  case  may  be  justified  upon  was:    "Mr.  R  has  drawn  on  you 

the  ground  that  the  deli  very  of  pos-  to-day  $2,230.    Will  ship  you  next 

session  by  the  vendor  to  the  vendee  Monday  night  or  Tuesday  morning 

of  goods,  who  shipped  them  and  one  car  of  hogs  and  one  of  cattle. 

took  out  bills  of  lading  which  he  Cattle  are  good."    Signed  by  the 

delivered  unindorsed  to  the  bank,  name  of  the  cashier  as  cashier.  The 


ADDENDUM.  707 

A  further  question  presents  itself  and  maybe  stated  in  this  way: 
What  is  the  effect  of  an  acceptance  of  the  draft  upon  the  title  to  the 
property  which  is  covered  by  the  bill  of  lading  ?  It  will  not  be  disputed 
that  if  the  draft  be  a  demand  draft  or  a  sight  draft  without  grace,  the 
acceptance  of  the  draft  will  not  in  itself  convey  title  to  the  goods,  be- 
cause the  transaction  imported  is  a  sale  for  cash.  Even  though  the  bill 
of  lading  be  delivered  upon  an  acceptance  of  such  a  draft,  the  transferee 
knows  that  the  bank  had  no  authority  to  deliver  the  bill  of  lading  ex- 
cept upon  payment,  unless  he  had  a  contract  with  the  assignor  for  a 
sale  upon  credit,  which  would  no£  affect  the  bank's  lien.  Instructions 
to  the  collecting  bank  not  to  deliver  are  not  necessary.  By  such  a  de- 
livery the  collecting  bank  itself  would  become  liable  for  the  loss  result- 
ing. But  third  parties,  the  railroad  company  or  the  carrier,  and  those 
claiming  under  the  transferee  of  the  bill  of  lading,  having  no  notice  of 
the  wrongful  delivery  of  the  bill  of  lading,  may  treat  with  the  transferee 
as  owner.  Suppose,  however,  the  drawer  of  the  draft  or  the  transmit- 
ting bank  notifies  the  railroad  company  before  its  delivery  of  the  goods 
to  the  transferee,  or  makes  a  common-law  sale  of  the  goods  to  some  one 
else,  who  notifies  the  railroad  company  before  its  delivery,  what  would 
be  the  result  ?  If  the  transferee  and  acceptor  should  pay  the  draft,  his 
title  would  be  perfect,  of  course.  If  he  should  not  pay  the  draft,  the 
consignor  or  his  vendee  would  have  title,  and  the  carrier  would  be  held 
accordingly.  Taking  the  case,  now,  of  a  time  draft,  i.  e.,  a  draft  payable 
at  sight  with  grace,  a  draft  payable  so  many  days  after  sight  or  after 
demand,  or  payable  at  a  day  certain,  two  cases  would  present  them- 
selves: (1)  Where  instructions  had  been  given  the  collecting  bank  not 
to  deliver  the  bills  of  lading  except  upon  payment;  (2)  where  no  instruc- 
tions had  been  given.  If  the  bank,  in  violation  of  its  instructions,  should 
deliver  the  bills  of  lading,  the  condition  would  not  be  different  than  if 
it  had  wrongly  delivered  upon  a  demand  draft  or  sight  draft  without 
grace,  except  that  the  transferee  would  have  no  notice  of  the  lack  of 
power  in  the  collecting  bank  to  deliver,  unless  his  contract  with  the  con- 
signor was  for  a  cash  sale.  But  this  very  fact  of  delivery  would  deter- 
mine that  title  passed  to  the  transferee  without  notice,  because  if  with- 
out notice  he  would  assume,  and  would  have  the  right  to  assume,  that 
he  would  obtain  title  by  the  delivery,  and  the  other  party,  having  in- 
vested his  collecting  agent  with  the  apparent  right  to  deliver,  would  be 

court  decides  that  this  representa-  pear  that  the  representation  as  to 
tion  was  ultra  vires.  It  should  have  the  cattle  was  false.  The  court, 
held  that  there  was  nothing  to  with  a  plain  ground  of  correct  de- 
show  any  representation.  The  state-  cision,  put  its  ruling  upon  a  most  uu- 
ment  was  not  one  of  fact,  but  a  satisfactory  ground.  It  could  also 
promise  if  any  thing.  There  was  no  have  said  that  no  sensible  person 
representation  as  to  the  quantity  would  rely  on  the  telegram  as  any 
of  cattle  or  hogs.  It  did  not  ap-  statement  of  the  number  shipped. 


708  "  ADDENDUM. 

estopped  to  dispute  the  authority.  But  if  the  transferee  of  the  bill  of 
lading  had  notice  of  the  instructions  or  knew  that  his  contract  was  not 
for  a  sale  upon  credit,  he  would  get  no  more  title  than  if  the  draft  had 
been  a  demand  draft  or  one  at  sight  without  grace.  Where  no  instruc- 
tions have  been  given  to  the  collecting  bank,  that  bank  on  delivery  of 
the  bill  of  lading  incurs  no  liability,  and  the  transferee  of  the  bill  of 
lading  gets  a  good  title,  if  he  had  no  notice  that  the  sale  was  for  cash, 
and  had  no  notice  of  the  instructions  to  the  bank.  Third  parties,  even 
if  the  transferee  had  notice,  may  treat  the  holder  of  the  bill  of  lading 
as  owner,  until  notice  of  a  contrary  state  of  facts.  But  the  question  goes 
further  than  thia  Does  the  acceptance,  of  itself,  without  a  delivery  of 
the  bHll  of  lading,  give  title  to  the  goods  when  the  draft  is  a  time  draft, 
as  above  explained  ?  The  transferee,  where  the  bill  of  lading  is  not  de- 
livered, must  know  that  the  bill  of  lading  is  being  held  until  payment, 
and  as  a  security  for  payment.  Third  parties  are  presumed  to  know 
this  fact  because  the  transferee  has  not  the  bill  of  lading,  the  symbol  of 
ownership.  Therefore  it  would  seem  upon  reason  that  the  title  in  the 
goods  did  not  pass  merely  by  reason  of  acceptance;  yet  plain  as  this  con- 
clusion seems,  it  has  been  held  in  a  case  that  is  erroneous,  both  in  what 
it  affirms  and  in  what  it  denies,  that  if  the  bill  of  lading  is  not  delivered 
title  passes  upon  acceptance  of  a  time  draft,  and  the  carrier  may  safely 
deliver  to  the  acceptor  of  the  bill  of  lading,  provided  no  instructions 
have  been  given  not  to  deliver  the  bill  of  lading.18  This  case  is  wrong 
because  it  confuses  the  matter  of  the  liability  of  the  collecting  bank 
with  the  matter  of  title  to  the  goods  covered  by  the  bill  of  lading.  It 
may  very  well  be  that  the  collecting  bank  would  not  be  liable  for  deliv- 
ering the  draft  upon  acceptance,  and  might  assume  that  the  sale  was 
upon  credit;  but  it  does  not  follow  that  where  it  does  not  deliver,  and  does 
not  assume  the  sale  to  be  upon  credit,  the  sale  is  necessarily  one  upon 

13  Commercial  Bank  T.  Railway  what  it  argues)  may  be  correct,  be- 
Co.,  160  111.  401.  This  decision  is  cause  the  facts  showed  that  the 
one  of  those  per  curiam  offspring  sale  was  upon  credit  and  was  so 
which  each  judge  refuses  to  father,  understood  between  the  parties. 
It  holds  that  title  in  the  goods  cov-  The  court's  statement  about  in- 
ered  by  the  bill  of  lading  passes  structions  given  preventing  the 
upon  acceptance,  if  no  instructions  title  passing  is  mere  dictum  and  is 
were  given  not  to  deliver,  even  wrong,  because  the  instructions 
though  the  bill  of  lading  was  not  would  be  material  as  to  the  trans- 
delivered.  But  it  ought  to  have  feree's  title,  if  he  had  notice,  but 
been  plain  that  the  non-delivery  of  not  otherwise.  His  title  depended 
the  bill  of  lading  was  notice  that  upon  the  contract  as  made,  or  if 
the  sale  was  not  upon  credit.  The  there  was  no  contract  express  or 
proof  that  seems  to  have  been  implied,  as  a  fact,  what  was  done 
offered  was  not  satisfactory,  but  at  the  time  would  govern, 
the  decision  as  a  judgment  (not  in 


ADDENDUM.  709 

credit.  That  must  depend  upon  the  contract  between  the  parties,  to  be 
gathered  from  all  the  means  of  information,  including  the  course  of 
dealing  between  the  parties  and  customs  of  the  business. 

Clearing-house  Indorsements. — The  rule  has  been  made  in  one 
clearing  house  and  extensively  adopted,  that  no  draft  or  check  will  be 
passed  through  the  clearing-house  unless  it  be  a  check  or  draft  whose 
indorsements  show  full  ownership  in  the  bank  transmitting  the  paper 
for  collection.  This  rule  has  been  drawn  forth  by  a  decision  to  the 
effect l  that  where  the  collecting  bank  acts  as  agent  in  collecting  and 
has  wrongly  received  payment  upon  a  check  or  draft,  but  has  trans- 
mitted the  proceeds  to  its  principal,  it  is  not  liable  to  the  party  from 
whom  it  wrongly  collected  where  that  party  had  notice  of  the  agency, 
as  it  would  have  by  indorsements  for  collection,  for  collection  and  credit, 
for  account,  and  perhaps  for  credit.2  This  rule  is  made  by  the  banks  for 
their  own  protection.  It  will  obviate  many  troublesome  questions  as  to 
the  ownership  of  the  proceeds  of  a  collection  and  as  to  mutual  credits 
between  banks  upon  insolvency.3 

1  See  p.  300,  ante,  note  1,  for  the       2  See  pp.  208,  297,  816,  ante. 
decisions  upon  the  point.  'See  pp.  297,  298. 


TABLE  OF  CASES. 


References  ore  to  pages. 


Abbott  v.  Agricultural  Bank  (11 

Smedes  &  M.  405),  343. 
Aberdeen  Bank  v.  Chehalis  Co.  (166 

U.  S.  440).  52. 
Aborn  v.  Bosworth  (1  R.  L  401),  407, 

426. 
Abramowitz  v.  Citizens'  Sav.  Bank 

(40  N.  Y.  Supp.  385),  646,  649. 
Ackenhausen  v.  People's  Sav.  Bank 

(110  Mich,  175),  640,  645. 
Ackerman  v.  Halsey  (37  N.  J.  Eq. 

356),  124,  133. 

Adams  v.  Boyd  (33  Ark.  33),  350, 
392,  404. 

v.  Darby  (28  Mo.  162),  377. 

v.  Gordon  (22  La.  Ann.  41),  403. 

v.  Leland  (30  N.  Y.  309),  447, 450. 

v.  National  Bank  (113  N.  C.  332), 
231. 

v.  Orange  Co.  Bank  (17  Wend. 
514),  291. 

v.  Otterback  (15  How.  539),  222, 
438,  454,  516,  520. 

v.  Spokane  Drug  Co.  (57  Fed.  R. 
888),  587. 

v.  Torbert  (6  Ala.  865),  458. 

v.  Wright  (14  Wis.  408],  477, 481, 

549,  552,  553. 

Adkins  v.  Thornton  (19  Ga.  325),  108. 
Adoue  v.  Fox  (30  Mo.  App.  98),  364. 
JEtna.  Bank  v.  Fourth  Nat.  Bank 

(46  N.  Y.  82),  204,  235,  248. 
JE&na,  Ins.  Co.  v.  Alton  City  Bank 

(25  111.  243),  305,  307. 
Agan  v.  McManus  (11  Johns.  180), 

521. 
Agawam  Bank  v.  Steever  (18  N.  Y. 

502),  328. 

Agnel  v.  Ellis  (1  McGloin,  57),  849. 
Agnew  v.  Bank  of  Gettysburg  (3 
Har.  &  G.  478),  50,  412. 

v.  United  States  (165  U.  S.  36), 

144. 

Agricultural  Bank  v.  Commercial 
Bank  (15  Miss.  592),  30a 

v.  Wilson  (24  Me.  273),  85. 


Aherns  v.  State  Bank  (3  S.  C.  401), 

565,  572. 

Ahl  v.  Rhodes  (84  Pa.  319),  126,  195. 
Aiken  v.  Cathcart  (2  Spears,  642), 

546. 
v.  Marine  Bank  (16  Wis.  679), 

479. 

Aken  v.  Jones  (93  Tenn.  353),  317. 
Akers  v.  Ray  Co.  Bank  (63  Mo.  App. 

316),  167^ 
Albers  v.  Commercial  Bank  (85  Ma 

173),  261,  291. 

Albert  v.  Bank  (2  Md.  159),  56. 
v.  State  (65  Md.  413),  49,  93. 
Aides  v.  Johnson  (1  Vt.  136),  398. 
Aldine  Mfg.  Co.  v.  Warner  (96  Ga, 

370).  490. 

Aldrich,  In  re  (16  Fed.  R.  369).  557. 
Alexander  v.  Brumnett  (42  S.  W.  R. 

63),  194 

v.  Dennis  (9  Port  174),  457. 

v.  Parsons  (3  Lans.  333),  427. 

Alexandria  Sav.  Inst  v.  McVeigh 

(84  Va.  41),  497. 

Allain  v.  Lazarus  (14  La.  327),  388. 
v.  Whittaker  (5  Mart.,  N.  S.,  511), 

546. 
Allegheny  City  v.  McClurken  (14 

Pa.  81),  555. 
Allen  v.  Avery  (47  Me.  287),  421, 442, 

514. 

v.  Brown  (39  Iowa,  330),  233, 533. 
v.  Brown  (124  Mass.  77),  402. 
v.  Carter  (119  Pa.  192),  75. 
v.  Erie  City  Bank  (57  Pa.  129), 

319. 
v.  Fourth  Nat  Bank  (59  N.  Y. 

12).  271. 
v.  Freedmen's    Bank   (14   Fla. 

418),  66. 

v.  King  (4  McLean.  128).  525. 
v.  Kramer  (2  Bradw.  205),  389, 

432,  433. 
v.  Merchants'  Bank  (22  Wend. 

215),  184,  411. 
v.  Pegrarn  (16  Iowa,  163),  69. 


712 


TABLE   OF   CASES. 


References  are  to  pages. 


Allen  v.  St.  Louis  Nat  Bank  (120 

U.  S.  20),  184. 
v.  Smith  (4  Har.  234),  459. 
v.  State  Bank  (21  N.  C.  1, 1  Dev. 

&  B.  Eq.  3),  558,  559. 
v.  Walsh  (25  Minn.  543),  100, 106. 
v.  WilliamsburghSav.Bank(69 

N.  Y.  314),  640,  045,  646. 
Allen  Co.  Bank  v.  Carter  (88  Tenn. 

287),  258. 
Allentown  Bank  v.  Kirmes  (4  Wkly. 

Notes  Cas.  401),  365. 
v.  Williams  (100  Pa.  123),  207. 
Allis  v.  United  States  (155  U.  S.  117), 

142. 
Almy  v.  Winslow  (126  Mass.  342), 

352. 
Alpena  Nat.  Bank  v.  Green  baum  (80 

Mich.  1),  153. 

Alshausen  v.  Lewis  (1  Biss.  419),  511. 
Alton  v.  Robinson  (2  Humph.  341), 

441,  518. 

Alvord  v.  Baker  (9  Wend.  323),  377. 
Amer  v.  Armstrong  (3  Pa.  Co.  Ct. 

R  392),  98,  99,  114. 
American  Exchange  Nat.  Bank  v. 
Chicago  Nat.  Bank  (27  111. 
App.  538),  252. 
v.  First  Nat.  Bank  (82  Fed.  R 

961),  118.  149. 
v.  Gregg  (138  III  596),  209,  243, 

275. 

v.  Gregg  (37  111.  App.  425),  243. 
v.  Loretta  Mfg.  Co.  (163  111.  103), 

282. 
American  Bank  v.  Cooper  (54  Me. 

438),  565,  573. 
v.  Wall  (56  Me.  167),  591. 
American  Express  Co.  v.  Parsons 

(44  111.  312).  311,  313. 
v.  Pinckney  (29  111.  392),  302, 

310. 
American  Life  Ins.  Co.  v.  Emerson 

(4  Smedes  &  M.  177),  514. 
American  Nat.  Bank  v.  Junk  Bros. 
Co.  (94  Tenn.  624),  415,  479, 
485. 
v.  Nat.  Wall  Paper  Co.  (77  Fed. 

R  85),  67. 
American  Savings  Ass'n  v.  Bank 

(05  Minn.  139),  582. 
American  Surety  Co.  v.  Pauly  (72 

Fed.  R  470),  178. 
American  Trust  Bank   v.  Gueder 

Mfg.  Co.  (150  111.  336),  614. 
American  Trust  &  Sav.  Bank  v. 
Austin   (55  N.   Y.  Supp.   561), 
328. 


American  Trust  &  Sav.  Bank  v. 
Manufacturing  Co.  (150  III  336), 
128,  211. 
American  Trust  Co.  v.  Boone  (29  S. 

E.  R  182),  602. 
Ames  v.  York  Nat.  Bank  (103  Mass. 

326),  244 
Amoskeag  Bank  v.  Moore  (37  N.  EL 

5o9),  537. 
Anderson  v.  Alexander  (7  Am.  Law 

Reg.  17G).  37. 
v.  Anderson  (4  Dana,  352),  376, 

385. 
v.  First  Nat.  Bank  (67  N.  W.  R 

821),  63. 

v.  Gill  (79  Md.  312),  434,  435. 
v.  Kissam  (35  Fed.  R.  699),  120, 

165,  166. 

v.  Leverich  (70  Iowa,  741),  291. 
v.  Line  (14  Fed.  R  405),  77. 
v.  Market  Nat.  Bank  (1  N.  Y. 

Supp.  136),  213,  220,  230. 
v.  Pacific  Bank  (11  CaL  598), 

283,  603.  609. 
v.  Phila.  Warehouse  Co.  (Ill 

U.  S.  479).  81. 

v.  Rogers  (53  Kan.  542),  434. 
v.  Seymour  (73  N.  W.  R  171), 

103,  108. 
v.  Walker  (49    S.  W.  R  937), 

217. 
Andressen  v.  First  Nat.   Bank  (2 

Fed.  R  122),  358,  370. 
Andrew  v.  Blachley  (11  Ohio  St.  89), 

349. 
Andrews   v.    Artisans'    Bank    (26 

N.  Y.  298),  232. 
v.  Boyd  (3  Met.  434),  538. 
v.  Branch  Bank  (10  Ala.  375), 

619. 

v.  Simms  (33  Ark.  771),  531,  532. 
v.  Suffolk  Bank  (12  Gray,  461), 

300. 
Angaletos  v.  Meridian  Nat.  Bank 

(4  Ind.  App.  573),  424,  425. 
Angle  v.  N.  W.  Mut.  Life  Ins.  Co. 

(92  U.  S.  330),  407. 

Anheuser-Busch  Ass'n  v.  Clayton 
(56  Fed.  R  759),  301,  319, 
322,  323,  610. 
v.  Morris  (36  Neb.  31),  209,  210, 

603,  610. 
Anjaville  Nat.  Bank  v.  Kettering 

(106  Pa.  531),  532. 

Apperson  v.  Bynum  (5  Cold.  341), 
430,  443,  445,  448,  449.  524 
v.   Union  Bank   (4  Cold.   445), 
524 


TABLE   OF   CASES. 


713 


References  are  to  pages. 


Appleby  v.  Erie  Co.  Sav.  Bank  (62 

N.  Y.  12),  639,  640,  645. 
Applegarth  v.  Aybott  (64  CaL  459), 

553,  553. 

Argus  Co..  In  re  (138  N.  Y.  557),  92. 
Armat  v.  Union  Bank  (2  Cranch, 

C.  C.  180),  558. 

Armor  v.  Lewis  (16  La.  331),  417. 
Armstrong,  In  re  (41  Fed.  R.  381), 

316.  322,  324,  364,  581. 
Armstrong  v.  American  Ex.  Nat. 

Bank  (133  U.  S.  433).  279. 
v.  Brolaski  (46  Fed.  R.  903),  460. 
v.  Cache  Valley  Co.  (48  Pac.  R. 

690),  160. 
v.  Chadwick    (127  Mass.   156), 

538. 
v.  Chemical  Nat.  Bank  (41  Fed. 

R  234),  329,  581. 
v.  Ettelsohn  (36    Fed.  R.  209), 

624. 
v.  National  Bank  (90  Ky.  431), 

212,  297.  316.  323. 
v.  Pomeroy  Nat.  Bank  (46  Ohio 

St.  512),  260,  267. 
v.  Scott  (36  Fed.  R.  63),  240. 
v.  Thruston(ll  Md.  148), 415, 468. 
v.  Warner  (49  Ohio  St.  376),  234, 

235,  586. 
Arnold  v.  Dresser  (90  Mass.  435), 

413,  417,  418.  447,  541. 
v.  Kinloch  (50  Barb.  44),  468. 
v.  Macungie  Sav.  Bank  (71  Pa. 

287),  291. 

v.  Nies  (36  Leg.  Int.  437),  586. 
v.  Seifert  (76  111.  A  pp.  666),  649. 
v.  Sprague  (34  Vt.  402),  358, 383. 
v.  Weimer  (40  Neb.  216),  584. 
Arpin  v.  Owens  (140  Mass.  144),  379. 
Arthur    v.    Commercial    Bank    (9 

Smedes  &  M.  394),  577. 
Artisans'  Bank  v.  Backus  (36  N.  Y. 

100).  469. 
Asher  v.  National  Bank  (7  Alb.  L. 

J.  43),  208. 

v.  Sutton  (31  Kan.  286),  150, 153. 
Ashland  Banking  Co.  v.  Centralia 

Mut.  Ass'n  (1  Kulp,  38),  351. 
Ashley  v.  Frame  (45  Pac.  R.  927), 

126,  129. 

v.  Gunton  (15  Ark.  415),  480. 
Ashton  v.  Dull  (31  Leg.  Int.  61),  420, 

422,  447. 

v.  Reeves  (3  Phila.  339),  376, 384. 
Aspinwall  v.  Butler  (133  U.  S.  595), 

78. 

Atchafalaya  Bank  v.  Dawson  (13 
La.  497),  569,  570,  572. 


Atkinson  v.  Davidson  (2  Pin.  48), 

584. 

v.  Rochester  Printing  Co.  (114 

N.  Y.  168),  147.  577, 584, 614 

Atlanta  Nat.  Bank  v.  Burke  (81  Ga. 

597),  267,  274. 
v.  Davis  (96  Ga.  334),  242. 
T.  Fertilizing  Co.  (83  Ga.  356), 

364. 
Atlantic  Bank  v.  Merchants'  Bank 

(10  Gray,  532),  120,  169. 
Atlantic  Cotton  Mills  v.  Indian  Or- 
chard Mills  (147  Mass.  268),  177, 
179,  180. 
Atlantic  Nat.  Bank  v.  Harris  (118 

Mass.  147),  48,  566. 
Atlantic  State  Bank  v.  Savery  (82 
N.  Y.  291),  172,  176, 182, 197, 332, 
334. 
Atlas  Bank  v.  Nahant  Bank  (3  Met 

581),  556,  582. 
Atlas  Nat.  Bank  v.  Savery  (127  Mass. 

75),  66. 
Atterbury  v.  Knox  (4  B.  Mon.  90). 

46,  51. 
Attle  borough  Nat.  Bank  v.  Rogers 

(125  Mass.  339),  68. 
Attorney-General  v.  Bank  of  Che- 
nango  (Hopk.  Ch.  596),  571. 
v.  Bank  of  Niagara  (1  Hopk.  Ch. 

403),  36. 
v.  Bank  of  Niagara  (1  Hopk.  Ch. 

354),  571,  572. 
v.  Columbian  Bank  (1  Paige, 

511),  582. 
v.  Insurance  Co.  (2  Johns.  Ch. 

371),  36. 

v.  Life  Ins.  Co.  (9  Paige,  470),  60. 
v.  Oakland  Co.  Bank  ( Walk.  Ch. 

90),  570. 
v.  Railway  Co.  (5  App.  Gas.  473), 

66. 
v.  Utica  Ins.  Co.  (15  Johns.  358), 

34,  572. 
Attwater  v.  Stromberg  (77  N.  W.  R. 

963),  189. 
Attwood  v.  Bank  of  Chillicothe  (10 

Ohio,  526),  560,  562,  597. 
Attwood  v.  Haseldon  (2  Bailey,  457), 

431,  527. 
Atwater  v.  Streets  (1  Doug.  455), 

467. 

Atwood  v.  Caldwell  (12  111.  96),  572. 
Auburn  Sav.  Bank  v.  Brinkerhoof 

(44  Hun,  142),  635. 
v.  Hayes  (61  Fail.  R.  911),  623. 
August  v.  Fourth  Nat.  Bank  (1  N.  Y. 
Supp.  139),  288,  291. 


TABLE   OF   CASES. 


References  are  to  pages. 


Aull  Sav.  Bank  v.  City  of  Lexing- 
ton (74  Mo.  104),  635. 
Aurianne   v.    Eschbacker   (28  La. 

Ann.  48),  4?a 
Austin  v.  Daniels  (4  Denio,  299),  115, 

119. 
v.  Latham  (19  La,  88),  478,  502, 

549. 

v.  Miller  (5  McLean,  153),  546. 
v.  Rodman  (8  N.  C.  194),  349, 

472. 

AT.  Wilson  (24  Vt.  630),  548. 
Averell  v.  Second    Nat.   Bank  (6 

Mackey,  358).  168. 
Aymer  v.  Biers  (7  Cow.  705).  356. 

v.  Sheldon  (12  Wend.  439),  386. 
Ayrault  v.  Pacific  Bank  (47  N.  Y. 

570),  308,  545. 
Ayres  v.  Dorsey  Co.  (70  N.  W.  R 

111-),  63. 

v.  Farmers'  Bank  (79  Mo.  431), 
322. 


B. 

Babcock,  In  re  (3  Story,  393),  376, 

384. 
Bachellor  v.  Priest  (12  Pick.  399), 

355. 
Backus  v.  Shepherd  (11  Wend.  629), 

530. 
Backwill  v.  Bridgeport  Wood  Co. 

(62  111.  App.  663),  433. 
Bacon  v.  Bates  (53  Vt  30),  376. 

v.  Hanna  (137- N.  Y.  379),  503, 
507. 

v.  Robertson  (18  How.  480),  598. 

v.  United  States  (97  Fed.  R  35), 

139,  140, 141,  142,  276.     . 
Bailey  v.  Dozier  (6  How.  23),  546. 

v.  Mosher  (63  Fed.  R  488),  593. 

v.  Southwestern  R   Bank  (11 

Fla.  266),  352. 
Baird  v.  Bank  of  Washington  (11 

S.  &  R  411),  116,  119,  148,  194, 

195. 
Baker  v.  Ashe  (80  Tex.  356),  129. 

v.  Atlas  Bank  (9  Met  182),  98, 
101, 114 

v.  Beach  (85  Fed;  R  836).  84. 

v.  Clark  (20  Me.  156),  500, 501. 

v.  Kelly  (41  Miss.  696),  400. 

v.  Montgomery  (4  Mart,  O.  S., 
90),  351. 

v.  Morris  (25  Barb.  138),  481. 

v.  National  Bank  (86  Fed.  R 
1006),  81,  8a 


Baker  v.  Northwestern  Loan  Co.  (36 
Minn.  185),  68. 

v.  Old  Nat.  Bank  (86  Fed.  R 
1006),  81,  83. 

v.  Scott  (29  Kan.  136),  530. 
Balbach  v.  Frelinghuysen  (15  Fed. 

R  675),  211. 

Balch  y.  Wilson  (25  Minn.  299),  594 
Baldwin  v.  Farnsworth  (10  Me.  414), 
446. 

v.  State  Bank  (1  La  Ann.  13). 

309. 

Ball  v.  Allen  (15  Mass.  433),  35& 
Ballard  v.  Burton  (64  Vt.  387).  415. 

v.  Fuller  (32  Barb.  68),  369. 

v.  Greenbush  (24  Ma  336),  563. 
Ballston  Spa  Bank  v.  Marine  Bank 
(16  Wis.  125).  76.  152. 

v.  Marine  Bank  (18  Wis.  490), 

621. 
Baltimore,  etc.  Ry.  Co.  v.  Wheeler 

(18  Md.  372),  329. 
Bamberger  v.  Bank  of  Tupelo  (15 

Ky.  Law  R  361).  312. 
Bands  v.  Poiteaux  (3  Rand.  136),  194. 
Bangor  Sav.  Bank  v.  Wallace  (87 

Me.  28),  155,  637. 
Bank  v.  Blake  (60  Fed.  R  78),  164 

v.  Boisseux  (4  Hughes,  387),  122. 

v.  Bur,khardt  (100  U.  S.  686),  209. 

v.  Burns  (12  Colo.  539),  307. 

v.  Collector  (3  Wall.  495),  28. 

v.  Downer  (28  Vt  635),  72,  252. 

v.  Fairbanks  (52  CaL  196).  30. 

v.  Goddard  (5  Mason,  366),  51. 

v.  Haug  (47  N.  W.  R  33),  588. 

v.  Kendrick  (92  Tenn.  437),  589. 

v.  Laird  (2  Wheat.  390),  87. 

v.  Lane  (10  N.  C.  453),  493. 

v.  Lanier  (11  Wall.  369),  89. 190. 

v.  Latimer  (67  Fed.  R  27),  605, 
609,  612,  616. 

v.  Lea  (7  Rob.,  La..  75),  459. 

v.  Matthews  (98  U.  S.  621).  62. 

v.  Merrill  (2  Hill,  29.1),  279. 

v.  Nolting  (94  Va.  263),  267. 

v.  Norwood  (1  Har.  &  J.  423), 
467. 

v.  Ralston  (3  Phila.  328),  340. 

v.  Reynolds  (2  Grat  171),  492. 

v.  Richards  (74  Mo.  77),  87. 

v.  Robinson  (24  Me.  274),  66. 

v.  Smith  (33  Mo.  364),  51. 

v.  Waddell  (100  N.  C.  338),  213. 

v.  Warren  (7  Hill.  91),  153. 

v.  Woods  (28  N.  Y.  561),  468. 
Bank    of    Alabama    v.     Gibson's 

Adm'rs  (6  Ala,  814),  622. 


TABLE   OF   CASES. 


715 


References  are  to  pages. 


Bank  of  Albion  v.  Smith  (27  Barb. 

489),  401,  533. 

Bank  of  Alexandria  v.  Deneale  (2 
Cranch,  C.  C.  488),  184, 186, 
187,  455. 
v.  Mandeville  (1  Cranch,  C.  C. 

552),  380,  333. 

v.  Swann  (9  Pet.  33),  470,  513. 
v.  Wilson  (2  Cranch,  C.  C.  5), 

410,  551. 
v.  Young  (1  Cranch,  C.  C.  458), 

619. 
Bank  of  America   v.   McNeil  (10 

Bush,  54),  91,  172.  175. 
v.  Shaw  (142  Mass.  290),  485. 
Bank  of  Antigo  v.  Union  Trust  Co. 

(145  [11.  343),  225,  226,  303. 
v.  Union  Trust  Co.  (50  111  App. 

434),  339. 
Bank  of  Attica,  In  re  (12  N.  Y. 

Supp.  648),  46. 
Bank  of  Attica  v.  Manuf.  Bank  (20 

N.  Y.  501),  85,  91. 
Bank  of  Auburn  v.  Putnam  (1  Abb. 

Dec.  80),  483. 
Bank  of  Augusta  v.  Earle  (13  Pet 

519),  33.  35,  51. 
Bank  of  Bennington  v.  Booth  (16 

Vt  360),  343. 

Bank  of  British  North  America  v. 
Alaska  Imp.  Co.  (97  CaL 
28),  73,  620. 

v.  Bowling  (46  Fed.  R.  357),  352. 
v.  Madison  (99  Cal.  125).  73. 
v.  Merchants'  Bank   (91  N.  Y. 

106),  259,  267,  287. 
Bank  of  Carlisle  v.  Fleming  (44  S. 

W.  R.  961),  160. 

Bank  of  Chambersburg  v.  Common- 
wealth (2  Grant  Gas.  384),  557. 
Bank  of  Charleston  v.  State  Bank 

(13  Rich.  Law,  291),  120,  169. 
Bank   of   Chenango  v.   Curtis  (19 

Johns.  326).  332. 
Bank  of  Circleville  v.  Iglehart  (6 

McLean,  568),  569. 
Bank  of  Clarke  Co.  v.  Oilman  (81 
Hun,  486,  152  N.  Y.  634),  297, 
322. 
Bank  of  Columbiav.King(2  Cranch, 

C.  C.  570),  517,  518. 
v.  Lawrence  (1  Pet  578),  208, 

474,  475,  477,  491,  508. 
v.  Mackall  (2  Cranch,  C.  C.  631), 

520. 
v.  Magruder  (6  Har.  &  J.  172), 

493. 
v.  Sweeney  (2  Pet  671),  619. 


Bank  of  Commerce  v.  Goos  (39  Neb. 

437),  242. 
v.  Grocers'  Bank  (2  Daly,  289), 

271. 

v.  Hart  (37  Neb.  197),  153,  190. 
v.  Union  Bank  (3  N.  Y.  230', 

378. 
Bank  of  Commonwealth  v.  Clark 

(4  Mo.  59),  555,  556. 
v.  Mudgett  (45  Barb.  463),  47a 
Bank  of  Cooperstown  v.  Woods  (28 

N.  Y.  561),  470. 
Bank  of  East  Tennessee  v.  Hook  (1 

Cold.  156),  166. 
Bank  of  Genessee  v.  Patchen  Bank 

(19  N.  Y.  312),  152. 
Bank  of  Greensboro  v.  Clapp  (76  N. 

Y.  482),  218. 
Bank  of  Guntersville  v.  Webb  (108 

Ala.  132),  208. 
Bank  of  Hanover  v.  Kenan  (76  N. 

C.  340).  304. 
Bank  of  Holly  Springs  v.  Pinson 

(58  Miss.  421),  91. 

Bank  of  Illinois  v.  Taylor  (7  T.  R 
Mon.  576;  see  Taylor  v.  Bank 
of  Illinois),  491,  506. 
Bank  of  Kentucky  v.  Bonnie  (43  & 

W.  R.  407),  90. 

v.  Duncan  (4  Bush,  294),  480. 
v.  Floyd  (4  Met.,  Ky.,  159),  384, 
v.  Gary  (6  B.  Mon.  626),  410. 
v.  Hie  key  (4  Litt  225),  563. 
v.  Pursley  (3  T.  R  Mon.  238), 

409.  546. 
v.  Schuylkill  Bank  (1  Pars.  Eq. 

Cas.  180),  77. 
v.  Thornberry  (3  B.  Mon.  519), 

557 
v.  Wister  (2  Pet  324),  201,  204, 

342. 
Bank  of  Leroy  v.  Harding  (1  Kan. 

App.  389),  282. 
Bank  of  Lindsborg  v.  Ober  (31  Kan. 

599),  304,  307. 
Bank  of  Louisiana  v.  Corl  (3  La. 

Ann.  273).  493. 
v.  Fowler  (10  Rob.,  La.,  196),  560, 

597. 

v.  Green  (20  La.  Ann.  214),  572. 
v.  Lawless  (3  La.  Ann.  129),  410. 
v.  Satterfield  (14  La.  Ann.  80), 

549. 

v.  Smith  (4  Rob.,  La.,  276),  518. 
v.  Stansbury  (8  La.  257),  330. 
Bank  of  Louisville  v.  Bank  (8  B;ixt 

101),  307,  308,  309. 
v.  Ellery  (34  Barb.  630),  344, 


716 


TABLE   OF   CASES. 


References  are  to  pages. 


Bank  of  Louisville  v.  Summers  (14 

B.  Mon.  247),  558. 
Bank  of  Lyons  v.  Dinsmore  (Hill  & 

D.  Supp.  398),  584. 
Bank  of  Madison,  In  re  (5  Biss.  515), 

301. 

Bank  of  Manchester  v.  Allen  (11  Vt. 
302),  50. 

v.  Slason  (13  Vt.  334),  491. 
Bank   of    Marietta   v.   Pindall    (2 

Rand.  463),  75. 
Bank  of  Martinez  v.  Hemme  Co. 

(105  Cal.  376),  326. 
Bank  of  Maryland  v.  Ruff  (7  Gill 

&  J.  448),  119. 
Bank    of   Memphis    v.    White    (2 

Sneed,  482),  563. 

Bank  of  Metropolis  v.  Brent  (2 
Cranch.  C.  C.  530),  443. 

v.  Jones  (8  Pet  12),  158. 

v.  New  England  Bank  (1  How. 
234,  6  How.  212),  297,  298, 
315,  329. 

Bank  of  Michigan  v.  Niles  (1  Doug. 
401),  194. 

v.  Williams  (5  Wend.  480),  45. 
Bank  of  Middlebury  v.  Bingham  (33 

Vt.  621),  66. 
Bank  of  Minneapolis  v.  Griffin  (168 

I1L  314),  150. 
Bank  of  Minnesota,  In  re  (73  N.  W. 

R.  1096),  588. 
Bank  of  Mississippi  v.  Duncan  (56 

Miss.  166),  573. 

Bank  of  Missouri  v.  Benoist  (10  Mo. 
519),  288. 

v.  Bredow  (31  Mo.  523),  570. 
Bank  of  Mobile  v.  Huggins  (3  Ala. 
206),  304,  311. 

v.  Meagher.  See  Mobile  Bank 
v.  Meagher. 

v.  Williams  (13  Ala.  544),  558. 
Bank  of  Montgomery  v.  Walker  (9 

S.  &  R.  220),  399. 

Bank  of  Montreal  v.  Fidelity  Nat. 
Bank  (1  N.  Y.  Supp.  352. 11 
N.  Y.  667),  573,  574, 595,  596, 
629 

v.  White  (154  U.  S.  600),  329. 
Bank  of  Newberry  v.  Stegall  (41 

Miss.  142),  76. 
Bank  of  New  London  v.  Ketcham 

(64  Wis.  7),  167. 
Bank    of   Niagara  v.  Johnson    (8 

Wend.  645),  125. 
Bank  of  North  America  v.  Tamblyn 

(7  Mo.  App.  570),  192. 
Bank  of  North  Liberties  v.  Cresson 

(12  S.  &  R  306),  117. 


Bank  of  Old  Dominion  v.  McVeigh 

(29  Grat.  546),  523. 
Bank  of  Orange  Co.  v.  Colby  (12 

N.  H.  520).  386. 
Bank  of  Orleans  v.  Curtis  (11  Met. 

359),  332. 

v.  Smith  (3  Hill,  560),  321. 
v.  Whittemore  (12  Gray,  469), 

511. 
Bank  of  Pennsylvania  v.  Reed  (1 

Watts  &  S.  101),  167. 
v.  Spangler  (32  Pa.  474),   230, 

343. 
Bank  of  Peru  v.  Farnsworth  (18  III 

565),  279. 
Bank  of  Pittsburg  v.  Whitehead(10 

Watts,  397),  176. 
Bank  of  Port  Jervis  v.  Darling  (91 

Hun,  326),  59. 
Bank  of  Portland  v.  Brown  (22  Me. 

295),  419. 
Bank  of  Red  Oak  v.  Orvis  (40  Iowa, 

332).  413,  448,  449. 
Bank  of  Republic  v.  Baxter  (31  Vt 

101).  257. 
Bank  of  St.  Al  bans  v.  Farmers'  Bank 

(10  Vt.  141),  264. 
Bank  of  St.   Mary's  v.  Calder  (3 

Strobh.  403).  121. 
v.  St.  Johns  (25  Ala.  566),  95,  559, 

579. 
Bank  of  South  Carolina  v.  Myers  (1 

Bailey,  412),  538. 
Bank  of  State  v.  Bank  of  Cape  Fear 

(13  Ired.  75),  443. 
Bank  of  Syracuse  v.  Wisconsin  Ins. 

Co.  (12  N.  Y.  Supp.  952),  316. 
Bank  of  United  States  v.  Bank  of 
Georgia  (10    Wheat.  333), 
264,  274,  559. 
v.  Barry  (2  Cranch,  C.  C.  307), 

470. 
v.  Brent  (2  Cranch,  C.  C.  696), 

117. 

v.  Carneale  (2  Pet.  543),  443, 494, 
v.  Corcoran  (2  Pet.  121),  503. 
v.  Dandridge  (12  Wheat,  64),  117. 
v.  Davis  (2  Hill,  452),  173. 
v.  Davis  (4  Cranch,  C.  C.  533), 

621. 

v.  Dunn  (6  Pet.  51),  158. 
v.  Goddard  (5  Mason,  366),  487. 
v.  Hatch  (6  Pet.  250),  480,  496. 
v.  Leathers  (8  B.  Mon.  127).  574 
v.  McDonald  (4  Cranch,  C.  C. 

624),  478. 
v.  McLaughlin  (2  Cranch,  C.  C. 

20),  566.  573. 
v.  Magill  (12  Wheat  511),  116. 


TABLE    OF   CASES. 


TIT 


References  are  to  pages. 


Bank  of  United  States  v.  Merle  (2 

Rob.,  La.,  1117),  478,  480. 
v.  Norwood  (1  Har.  &  J.  423), 

187. 
v.  O'Neale  (2  Cranch,  C.  C.  466), 

443. 

v.  Osborn  (2  Pet.  527),  59. 
v.  Owens  (2  Pet  528),  330,  331, 

835 

v.  Waggoner  (9  Pet.  378),  331. 
v.  Watterson  (4  Cranch,  C.  C. 

445),  469. 
v.  Wilson  (3  Cranch,  C.  C.  213), 

277 
Bank  of  Ut'ica  v.  Bender  (21  Wend. 

643),  495. 

v.  Davidson  (5  Wend.  587),  495. 
v.  Johnson  (18  Johns.  230),  412. 
v.  McKinster  (11  Wend.  473), 

309. 

v.  Magher  (18  Johns.  341),  563. 
v.  Phillips  (3  Wend.  408),  451, 

453,  502. 

v.  Smith  (18  Johns.  230),  421. 
Bank  of  Vergennes  v.  Cameron  (7 

Barb.  143),  418. 
Bank  of  Virginia  v.  Craig  (6  Leigh. 

399),  85. 

v.  Robinson  (5  Grat.   174),  116. 
v.  Ward  (6  Munf.  166),  558. 
Bank  of  Washington  v.  Pierson  (2 

Cranch,  C.  C.  685),  519. 
v.  Reynolds  (2   Cranch,  C.   C. 

289),  440. 
v.  Triplett  (1  Pet.  25),  184.  302, 

310,  349,  355,  453. 
v.  Way  (2  Cranch,  C.  C.  149), 

393,  399. 
Bank  of  Wilmington  v.  Cooper  (1 

Har.  10),  548. 
Banking  Co.,  In  re  (12  Phila.  214, 

469),  575. 
Banking  Co.,  Ex  parte  (34  Leg.  Int. 

204,  230),  575. 
Bank  Commissioners  v.   Bank  of 

Brest  (1  Har.  106),  575. 
v.  Buffalo  Bank  (6  Paige,  497), 

569.  571.  572. 
v.  Central  Bank  (5  R.  L  12),  570, 

572 
v.  Franklin  Sav.  Inst.  (11  R  I. 

557),  583. 
Banks  v.  Bessler  (56  Ga.  199),  456. 

v.  Darden  (18  Ga.  318),  125. 
Banning  v.  Loving  (82  Ky.  370).  131. 
Barbaroux  v.  Waters  (3  Met.,  Ky., 

304),  393,  421,  549. 
Barber  v.  Ketchum  (7  Hill,  444),  550. 


Barbons  v.  Nat.  Ex.  Bank  (45  Ohio 

St  133),  338. 
Barclay  v.  Weaver  (19  Pa.  396),  531, 

532. 

Barden  v.  Johnson  (107  U.  S.  251),  80. 
Barings  v.  Dabney  (19  Wall.  1),  590. 
Barkalow  v.  Johnson  (16  N.  J.  Law, 

397),  545. 

Barker  v.  Clark  (20  Me.  156),  502. 
v.  Fullerton  (11  La.  Ann.  25), 

443. 

v.  Hall  (8  Tenn.  183),  507. 
v.  Parker  (6  Pick.  80),  430,  438. 
v.  Weston  (10  Iowa,  593).  509. 
v.  Whitney  (18  La.  575),  515. 
Barling  v.  Bank  of  British  North 
America  (50  Fed.R.  260),  73, 620. 
Barlow  v.  Coggan  (1  Wash.  Ter.  257), 

414. 
•   v.  Planters'  Bank  (7  How.,  Miss., 

129).  516. 
Barnard  v.  Galin  (23  Minn.  192),  401, 

533. 
Barnes  v.  Arnold  (51  N.  Y.  Supp. 

1109),  48,  101,  114. 
v.  Ontario  Bank  (19  N.  Y.  152), 

152,  185,  187,  198, 279. 
v.  Pogue  (29  Wkly.  Law  Bui. 

•  382),  130,  593. 
v.  Reynolds  (4  How.,  Miss.,  114), 

518. 
v.  Vaughan  (6  R.  I.  259),  419, 

443.  447,  449,  454. 
Barnet  v.  National  Bank  (98  U.  S. 

555),  337. 
v.  Smith  (30  N.  H.  256),  243,  258, 

358. 
Barnett  v.  Boone  Lumber  Co.   (43 

W.  Va.  441),  365,  367. 
v.  National  Bank  (Fed.  Gas.  No. 

1026),  338. 

v.  State  (54  Ala.  579),  556. 
Barnewell  v.  Mitchell  (3  Conn.  101), 

501. 
Barney  v.  Newcomb  (9  Cush.  46), 

355,  365,  620. 
v.  Worthington  (32  N.  Y.  12), 

368. 
Barnstable  Sav.  Bank  v.  Snow  (128 

Mass.  512),  652. 

Barr  v.  Marsh  (9  Yerg.  253),  504. 
Barrett  v.  Charleston  Bank  (2  Mc- 

Mul.  191),  538. 
v.  Evans  (28  Mo.  331),  474. 
v.  Henrietta  Nat.  Bank  (78  Tex. 

222),  595. 

Barrow  v.  Bank  of  Louisiana  (2  La*. 
Ann.  453),  63. 


718 


TABLE    OF   CASES. 


References  are  to  pages. 


Barrows  v.  Downs  C9  R-  I-  446),  57. 

Barry  v.  Friend  (87  Ark.  437).  893. 

v.  Merch.  Ex.  Co.  (1  Sandf.  Ch. 

280),  32. 

v.  Morse  (3  N.  H.  132),  401,  533. 
Barstow  v.  Hiriat  (6  La.  Ann.  98), 

546. 
Bartholomew  v.  Bentley  (1  Ohio 

St.  37),  59,  116. 
Bartlett  v.  Isbell  (31  Conn.  296),  451, 

488.  505. 

v.  Leathers  (84  Me.  241),  438. 
v.  Remington  (59  N.  H.  364),  642. 
v.  Robinson   (9  Bosw.   305,    39 

N.  Y.  387),  492. 
v.  Woodbine  Bank  (57  III  App. 

425),  172. 
Bartley  v.  Hayden  (74  Fed.  R.  913), 

624.    ' 

v.  State  (73  N.  W.  R.  744),  209. 
Barton  v.  Baker  (1  S.  &  R.  334),  458, 

538,  559. 
Baskerville  v.  Harris  (41  Miss.  535), 

535. 
Bassenhorst  v.  Wilby  (45  Ohio  St. 

333),  427,  431. 
Batchelor  v.  Planters'  Nat.  Bank 

(78  Ky.  435),  122. 
v.  United  States  (156  U.  S.  426), 

144. 
Bates,  In  Matter  of  (118  III  524), 

588,  589. 
Bates  v.  First  Nat.  Bank  (89  N.  Y. 

286),  216,  219. 
v.  First  Nat.  Bank  (23  Hun, 420), 

219. 
v.  Lewis  (3  Ohio  St.  459),  95, 

105,  107. 
v.  State  Bank  (2  Ala.  451),  95, 

105,  107. 

Bateson  v.  Clark  (37  Mo.  31),  447. 
Bath  Sav.  Inst.  v.  Sagadahoc  Nat. 

Bank  (36  Atl.  R.  996),  89. 
Batty  v.  Scuddy  (10  La.  Ann.  404), 

240. 
Baumgardner  v.  Reeves  (35  Pa.  250), 

417,  447,  448,  551. 
Baxter  v.  Couglan  (72  N.  W.  R  797), 

129. 
Bayerque  v.  City  of  San  Francisco 

(Fed.  Cas.  No.  1137),  350. 
Bayley  v.   Chubb  (16    Grat.   284), 

498. 

v.  Hazard  (3  Yerg.  487),  400. 
Bayor  v.  American  Trust  &  Sav. 
Bank  (157  III  62),  600,  609. 
v.  Shatfner  (51   III  App.  180), 
282,  600. 


Beal  v.  City  of  Somerville  (50  Fed 
R  647),  211,  212,  293,  315, 
322,  610,  611,  613.  614 
v.  Nat.  Ex.  Bank  (55  Fed.  R. 

81)4),  315,  322. 

Beale  v.  Parrish  (20  N.  Y.  407),  486. 
v.  Parrish  (24  Barb.  243),  506. 
v.  Peck  (12  Barb.  245),  470, 517. 
Bean  v.  Briggs  (1  Iowa,  148),  405. 
Beard  v.  School  Dist.  (88  Fed.  R. 

375i.  603,  616. 
v.  Westermann  (32  Ohio  St.  29), 

538. 
Beardsley  v.  Webber  (104  Mich.  88), 

279,  406. 
Beatty  v.  McLeod  (11  La.  Ann.  76), 

218. 
Beckha.n   v.   Shackelford   (8  Tex. 

Civ.  App.  660),  587. 
Beckley  v.  Commercial  Bank  (39 

S.  C.  281),  207. 
v.  Commercial  Bank  (43  S.  C. 

528),  638. 
Beckwith  v.  Angell  (6  Conn.  315), 

401. 

v.  Smith  (22  Me.  125],  492,  513. 
v.  Union  Bank  (9  N.  Y.  211),  215, 

232. 
Bedford  Bank  v.  Acoam  (125  Ind. 

584),  235. 

Beebe  v.  Brooks  (12  Cal.  308),  431. 
Beeding  v.  Thornton  (3  Cranch,  C. 

C.  698).  445. 

Beeler  v.  Frost  (70  Mo.  185),  401, 533. 
Beers  v.  Hussey  (1  Bailey,  Eq.  168), 

586. 

Beier  v.  Strauss  (54  Md.  278),  503. 
Belcher  v.  Wilcox  (40  Ga.  391),  562, 

590,  591. 

Belford  v.  Bangs  (15  Bradw.  76),  386. 
Belknap    v.    National    Bank    (100 

Mass.  376),  272. 
Bell  v.  First  Nat.  Bank  (115  U.  S. 

373),  427. 
v.  Hagerstown  Bank  (7  Gill, 

216),  184,  510. 
v.  Hall  (2  Duv.  288),  523. 
v.  Lunt  (24  Wend.  230),  552. 
v.  Moss  (5  Whart.  189),  362. 
v.  State  Bank  (7  Blackf.  456), 

474. 
Bellows     v.    Hallowell    Bank    (3 

Mason,  31),  568. 

v.  Norton  (12  Heisk.  319),  296. 
Bellows  Falls  Bank  v.  Rutland  Co. 

Bank  (40  Vt.  377 1,  28a 
Bellmire  v.  United  States  Bank  (4 
Whart.  109),  306,  309. 


TABLE   OF   CASES. 


719 


References  are  to  pages. 


Bendey  v.  Townsend  (109  U.  S.  665), 

395. 
Benedict  v.  Gaffe  (5  Duer,  226),  448. 

v.  Rose  (16  S.  C.  629),  476. 

v.  Sckwerg  (13  Wash.  476),  413. 
Bennett  v.  Knapp  (9  N.  Y.  Supp. 

766).  284. 

Benoist  v.  Creditors  (18  La.  522),  540. 

Benton  v.  German  Am.  Bank  (122 

Mo.  332),  164,  182. 

v.  Gibson  (1  Hill,  S.  C.,  56),  468. 

v.  Martin  (31  N.  Y.  332),  407, 426. 

v.  Martin  (40  N.  Y.  345),  525. 
Berckhead  v.  Brown  (5  Hill,  634), 

363,  365. 

Berg  v.  Abbott  (83  Pa.  177),  417. 
Berkshire  v.  Evans  (4  Leigh,  223), 

50. 
Berkshire  Bank  v.  Jones  (6  Mass. 

524),  530. 
Bernard  v.  Barry  (1  G.  Greene,  388), 

548. 
Berney  Nat.  Bank  v.  Pinckard  (87 

Ala.  577),  87. 
Berry  v.  Southern  Bank  (2   Duv. 

379),  465. 

Best  v.  Thiel  (79  N.  Y.  15),  633. 
Bettis  v.  Schruber  (31  Minn.  329), 

551. 
Bibb  v.  McQueen  (42  Ala.  408),  475. 

v.  Peyton  (11  Smedes  &  M.  275), 

542. 
Bickford  v.  First  Nat.  Bank  (42  111. 

238),  226,  252. 
Bidwell  v.  Madison  (10  Minn.  13), 

115,  121. 
Biebinger  v.  Continental  Bank  (99 

U.  S.  143),  329. 
Big  Sandy  Bank  v.  Chilton  (40  W. 

Va.  491),  487. 
Bigelow  v.  Keller  (6  La.  Ann.  59), 

450. 
Billgerry  v.  Branch  (19  Grat.  393), 

523 

Billingsley  v.  Pollock  (69  Miss.  659), 
317. 

v.  State  Bank  (3  Md.  375),  330. 
Birch  v.  Fisher  (51  Mich.  36),  279. 
Bird  v.  Cockrem  (2  Woods.  32),  624. 

v.  Doyal  (20  La.  Ann.  541),  517, 
519. 

v.  Louisiana    State  Bank  (93 
U.  S.  96),  304 

v.  McCalop  (2  La.  Ann.  351),  474 

v.  McElvine  (10  Ind.  40).  358. 
Birmingham  Nat.  Bank  v.  Bradley 
(103  Ala.  109),  300. 

v.  Mayer  (104  Ala.  634),  620. 


Biscoe  v.  Tucker  (11  Ark  145),  326. 
Bishop  v.  Dexter  (2  Conn.  419),  456. 
Bisseli  v.  First  Nat.  Bank  (69  Pa. 
415),  152,  158. 

v.  Heath  (98  Mich.  472),  93,  588. 
Black  Hills  Nat.  Bank  v.  Kellogg 

(4  S.  Dak.  312),  179. 
Blackmore  v.  Woodward  (71  Fed. 

R.  321),  84. 
Blaffer  v.  Herman  (7  La.  Ann.  659), 

536. 
Blaffner  v.  Louisiana  Nat.  Bank  (35 

La.  Ann.  251),  656. 
Elaine  v.  Bourne  (11  R.  I.  119),  315. 
Blair  v.  Allen  (3  Dill.  101),  231. 

v.  Bank     of     Tennessee    (11 
Humph.  84),  375,  388. 

v.  First  Nat.  Bank  (2  Flip.  Ill), 
166. 

v.  Perpetual  ins.   Co.   (10  Mo. 

5j9),  68. 

Blake  v.  McMillen  (22  Iowa,  358), 
413,  440. 

v.  State  Bank  (12  Wash.  619), 

588,  615. 

Blaketey  v.  Grant  (6  Mass.  386),  503. 
Blaker  v.  Hood  (53  Kan.  499),  71. 
Blakeslee  v.  Hewitt  (76  Wis.  341), 

295,  412,  487. 
Blanc  v.  Mut.  Nat.    Bank  (28  La. 

Ann.  921),  537. 

Blanchard  v.  Boom  Co.  (40  Mich. 
566),  392. 

v.  Commercial  Bank  (75  Fed.  R. 
249),  168. 

v.  Hilliard  (11  Mass.  85),  453. 

v.  Wood  (26  Me.  358),  400. 
Blankenship  v.  Rogers  (10  Ind.  333), 

460. 

Blasdell  v.  Locke  (52  N.  H.  238),  642. 
Blenderman  v.  Price  (50  N.  J.  Law, 

296).  399. 
Bliss  v.  Burnes  (McCahon,  91),  353. 

v.  Cutler  (19  Barb.  9),  300. 

v.  Nichols  (94  Mass.  443;,  484, 

485,  503. 
Block  v.  Wilkerson  (42  Ark.  253), 

357. 

Blodgett  v.  Durgin  (32  Vt.  361),  508. 
Blood  v.  Northrup  (1  Kan.  28),  405. 
Bloom  v.  Warder  (13  Neb.  476),  403. 
Blue  v.  Cap.  Nat  Bank  (145  Ind. 

518),  117.  118. 
Ely  v.  Second  Nat  Bank  (79  Pa. 

453),  338. 

Boardman  v.  Hayne  (29  Iowa,  839), 
350. 

v.  Steele  (13  Conn.  547),  392.  525. 


720 


TABLE    OF   CASES. 


References  are  to  pages. 


Boatmen's  Sav.  Inst.  v.  State  Bank 

(33  Mo.  497),  560. 
Bobo  v.  People's  Nat.  Bank  (92Tenn. 

444),  335. 
Bodley    v.   Scarborough  (5  How., 

Miss.,  729),  548. 
Boettcher  v.  Colorado  Nat.  Bank 

(15  Colo.  16),  220,  231. 
Bogart  v.  McClung  (11  Heisk.  105), 

544. 

Bogg  v.  Keil  (1  Mo.  743),  392,  399. 
Boisregard  v.  N.  Y.  Banking  Co.  (2 

Sandf.  Ch.  23),  73. 
Boit  vi  Carr  (54  Ala.  112),  442. 
Boker,  In  re  (7  Phila.  479),  119. 
Boiling  v.  Mackenzie  (89  Ala.  470), 

542. 
Bolton  v.  Harrod  (9  Mart.,  O.  S.,  326), 

424. 
Bond  v.  Appleton  (8  Mass.  472),  104. 

v.  Central  Bank  (2  Kelly,  92),  66, 

327. 
Bondurant  v.  Everett  (1  Met.,  Ky., 

660),  474. 
Bonnell  v.  Prince  (32  S.  W.  R.  855), 

385. 
Booker  v.  Young  (12    Grat.   303). 

116. 
Boone  v.  Citizens'  Sav.  Bank  (84  N. 

Y.  83),  642,  643. 

Booth  v.  Wills  (42  Fed.  R.  11),  600. 
Born  v.  First  Nat.  Bank  (123  Ind. 

78),  244,  256. 
Borup  v.  Nininger  (5  Minn.  523),  311, 

312. 
Bosler  v.  Exchange  Bank  (4  Pa.  32), 

232. 
Boston  Bank  v.  Hodges  (9  Pick.  420), 

520. 
Bostwick  v.  American  Finance  Co. 

(43  Fed.  R.  897),  625. 
Boteler  v.  Dexter  (20  D.  C.  26),  486. 
Bowden    v.     Farmers'     Bank    (1 
Hughes,  207),  81. 

v.  Johnson  (107  U.  S.  251),  112, 
114. 

v.  Santos  (1  Hughes,  158,  Fed. 
Gas.  No.  83),  83. 

v.  Third  Nat.  Bank  (12  Wkly. 

Law  Bui.  184),  272. 
Bowen  v.  Needles  Nat.   Bank  (87 
Fed.  R.  430),  258. 

v.  Newell  (8  N.  Y.  190),  184,  454. 

v.  Stoddard  (10  Met.  375),   380. 
Bower  v.  Hoffman  (23  Md.  263),  405. 

v.  State  (5  Ark.  234),  61. 
Bowers  v.  Evans  (71  Wis.  133),  605, 

612,  614,  615. 


Bowie  v.  Blacklock  (2  Cranch,  C.  C. 

265),  478. 

Bowker  v.  Hill  (60  Me.  172),  319. 
Bowling  v.  Arthur  (34  Miss.  41),  488. 
v.  Harrison  (6  How.  248;,  473, 

487,  495. 
Bowman  v.  Cecil  Bank  (3  Grant 

Cas.  33),  51. 
v.  First  Nat.  Bank  (9  Wash.  614), 

317,  601. 
Boyce  v.  Edwards  (4  Pet.  Ill),  362, 

363. 
Boyd  v.  Bank  of  Toledo  (32  Ohio 

St.  526),  457. 
v.  City  Sav.  Bank  (15  Grat.  501), 

518,  519. 
v.  Cleveland  (4  Pick.  525),  528, 

537. 

v.  Orton  (16  Wis.  495),  484. 
Boyden  v.  Bank  of  Cape  Fear  (65 

N.  C.  13),  205. 
Boyer  Ind.  Dist.  v.  King  (80  Iowa, 

497),  603. 
Boykin  v.  Bank  of  Fayetteville(118 

N.  C.  566),  324 
Boylston  Nat.  Bank  v.  Richardson 

(101  Mass.  287).  274. 
Brabazon  v.  Seymour    (42    Conn. 

551),  381. 
Brabrook  v.  Five  Cent  Sav.  Bank 

(92  Pa.  134),  641. 
Braden,  In  re  (165  Pa.  184),  52. 
Bradford  v.  Cooper  (1  La.  Ann.  325), 

546. 

v.  Fox  (39  Barb.  203),  413. 
v.  Hubbard   (8  Pick.  155),  376, 

379,  384. 

v.  Jenks  (2  McLean,  130).  584. 
Bradlee  v.  Warren  Sav.  Bank  (127 

Mass.  107),  637. 
Bradley  v.  Davis  (26  Me.  45),  480, 

491. 

v.  Mason  (6  Bush,  302),  352. 
v.  McClellan  (3  Yerg.  301),  377. 
v.  Northern  Bank  (60  Ala.  252), 

437,  547. 

v.  Phelps  (2  Root,  325),  403. 
Bradstreet  v.  Bank  of  Royalton  (42 

Vt  128),115. 

v.  Everson  (72  Pa.  124),  306. 
Brady  v.  Evans  (78  Fed.  R  558),  129. 
v.  Little  Miami  R.  Co.  (34  Barb. 

249),  425. 

Brahm  v.  Adkins  (77  111.  263),  287. 
Brailsford  v.  Williams  (15  Md.  150), 

i*9. 

Braley  v.  Buchanan  (21  Kan.  274)r 
392,  399. 


TABLE   OF   CASES. 


721 


References  are  to  pages. 


Branch  v.  Baker  (53  Ga.  502),  562. 

v.  Dawson  (36  Minn.  193),  208, 
214,  290. 

v.  U.  S.  Nat.  Bank  (17  N.  W.  R. 

34),  322. 

Branch  Bank  v.  Knox  (1  Ala.  148), 
309. 

v.  Pierce  (3  Ala.  321),  506. 

v.  Poe  (1  Ala.  396),  154. 

v.  Rhew  (37  Miss.  110),  51. 

v.  Steele  (10  Ala.  915),  172. 

v.  Strothers  (15  Ala.  51),  322. 
Branch  of  State  Bank  v.  Harrison 

(2  Port.  240),  619. 
Brander  v.  Phillips  (16  Pet.  121), 

379. 

Brandon  v.  Loftus  (4  How.  127),  551. 
Brandt  v.  Mickle  (28  Md.  436),  539. 
Brannin  v.  Henderson  (12  B.  Mon. 

61),  357. 
Braun  v.  Kimberlin  (9  Am.  Law 

Rec.  405).  434. 
Brazelton  v.  McMurray  (44  Ala.  323), 

352. 
Breed  v.  Hillhouse  (7  Conn.  523), 

541. 
Breen  v.  Buttorf  (3  Tenn.  Ch.  285), 

541. 
Bremer  Co.  Bank  v.  Mores  (73  Iowa, 

289),  261. 

Brennan  v.  Manuf.  Nat.  Bank  (62 
Mich.  343),  224,  262. 

v.  Vogt  (97  Ala.  647),  437, 474 
Brent  v.  Bank  of  Washington  (2 
Cranch,  C.  C.  517),  90,  92, 
114,  519. 

v.  Bank  of  Washington  (10  Pet. 

596),  90. 
Breyfogle  v.  Walsh  (71  Fed.  R  898), 

"166. 
Brickett  v.  Spaulding  (33  Vt.  107), 

442. 
Bridgeford  v.  Simon  (18  La.  Ann. 

121),  425. 

Bridgeport  Bank  v.  Dyer  (19  Conn. 
136).  187,  453,  455. 

v.  New  York,  etc.  R  Co.  (30 

Conn.  270),  190. 
Bridgewater  Sav.   Bank   v.  Soule 

(129  Mass.  528),  652. 
Briggs  v.  Central  Bank  (89  N.  Y. 
182),  301,  305. 

v.  Parsons  (39  Mich.  400),  404 

v.  Sizer  (30  N.  Y.  647),  359. 

v.  Spaulding  (141  U.  S.  132),  119, 

122 
Bright  v.  Carpenter  (9  Ohio,  139), 

402,  533. 

46 


Bright  v.  Judson  (47  Barb.  29),  354 
Brighton  v.  White  (128  Ind.  320), 

577. 
Brighton  Market  Bank  v.  Philbrick 

(40  N.  H.  506),  503.  506. 
Brill  v.  Tuttle  (81  N.  Y.  457),  371. 
Brinckerhoff  v.  Bostwick  (99  N.  Y. 

185),  124 
Brinckerhoof  v.  Bostwick  (88  N.  Y. 

52).  593.  624 
Brinkerhoof-Farris    Co.    v.    Home 

Lumber  Co.  (118  Mo.  447),  92. 
Brinkman  v.  Hunter  (73  Mo.  172), 

367. 
Briscoe  v.  Bank  of  Commonwealth 

(11  Pet,  257),  42,  43. 
Bristol  v.  Parker  (Anth.  N.  P.  235), 
32 

v.  Parker  (14  Johns.  204),  32. 
Bristol  Knife  Co.  v.  Bank  (41  Conn. 

421),  216,  272. 
Bristol  Sav.   Bank  v.  Keavy  (128 

Mass.  298),  155. 
British  Mortgage  Co.  v.  Tibballs  (63 

Iowa,  468),  298,  303. 
Britt  v.  Lawson  (15  Hun,  123),  414 
Britton    v.    Doylestown    Bank    (5 
Watts  &  S.  87),  443. 

v.  Nichols  (104  U.  S.  757),  308. 
Brixen    v.   Deseret   Nat.   Bank  (5 

Utah,  504),  266,  267. 
Broadway  Bank  v.  McElrath  (13 

N.  J.  Eq.  24),  87. 
Brobstpn  v.  Penniman  (97  Ga.  527), 

164 
Brockmeyer   v.   Washington  Nat. 

Bank  (40  Kan.  744).  220. 
Broddie    v.  Searcy  (7  Tenn.  183), 

437. 
Brodeneck  v.  Waltham  Sav.  Inst. 

(109  Mass.  149),  214 
Bronson's  Ex'r  v.  Chappell  (12  Wall. 

681),  159. 
Brooke  v.  Tradesmen's  Bank  (69 

Hun,  202),  242. 

Brooks,  In  re  (5  Dem.  Sur.  326),  64L 
Brooks  v.  Day  (11  Iowa,  76),  551. 

v.  Higby  (11  Hun,  235),  388,549. 
Brothers  v.  Bank  (84  Wis.  381),  335. 
Brower  v.  Haight  (18  Wis.  103),  335. 

v.  Jones  (3  Johns.  230),  425. 
Brown,  In  the  Matter  of  (2  Story, 

502,  519),  255,  348,  389,  392,  432. 
Brown  v.  Abingdon  Sav.  Inst  (119 
Mass.  69),  649. 

v.  Bank  of  Abtugdon  (85  Va.  95)>. 
473. 

v.  Barry  (3  DalL  365),  411. 


722 


TABLE   OF   OASES. 


References  are  to  pages. 


Brown  v.  Bradford  (103  Iowa,  378), 

149,  194. 

v.  Brown  (23  Barb.  565),  219, 643. 
v.  Cronise  (21  Cal.  387).  392. 
v.  Farmers'  Bank  (88  Tex.  265), 

120. 
v.  Ferguson  (4  Leigh,  37),  490, 

528. 

v.  Folsom  (62  N.  H.  527),  634. 
v.  Hitchcock  (36  Ohio  St.  667), 

104. 

v.  Hogg  (14  111.  219\  194. 
v.  Jackson  (1  Wash.  C.  0.  512), 

373 

v.  Jones  (125  Ind.  375),  385,  469. 
v.  Jones  (113  Ind.  46),  253. 
v.  Johnston  (12  N.  C.  293).  429. 
v.  Killian  (11  Ind.  449),  56,  61. 
v.  Kinsley  Ex.  Bank  (51  Kan. 

359),  213. 
v.  Leckie  (43  III  497),  226,  252, 

256,  259. 

v.  Lusk  (4  Yerg.  210),  349. 
v.  McElroy  (52  Ind.  404),  288. 
v.  Penobscot  Bank  (8  Mass.  445), 

557. 

v.  Pike  (34  La.  Ann.  576),  290. 
v.  State  (11  Ohio,  276),  70. 
v.  Teague  (52  N.  C.  573),  404, 

540. 

v.Turner  (11  Ala.  752),  511. 
v.  Turner  (15  Ala.  832),  416. 
v.  Williams  (4  Wend.  360),  385. 
Browning  v.  Merritt  (61  Ind.  425), 

402. 
Brownlee  v.  Madison  Co.  Comm'rs 

(81  Ind.  186),  350. 

Bruce  v.  Hawley  (31  Vt.  643),  341. 
v.  Lord  (1  Hilt.  247),  383. 
v.  Lytle  (13  Barb.  163).  457. 
Brudenbecker  v.  Lowell  (32  Barb. 

9),  152. 
Bruramagen  v.  Tallent  (29  Cal.  503), 

279,  290,  405. 
Bruner  v.  First  Nat.  Bank  (97  Tenn, 

540).  615. 
v.  Nisbet  (31  III  App.  517),  359. 

Brunson   v.  Napier  (1  Yerg.    199), 

P"'  *Q 

L»<>O. 

Bryant  v.  Damariscotta  Bank  (18 
Me.  240),  557,  563. 
v.  Lord  (19  Minn.  396),  411,  529. 
v.  Merchants'  Bank  (8  Bush,  43), 

529. 

v.  Wilcox  (49  Cal.  47),  536. 
Buchanan  v.  Drovers'  Bank  (55  Fed. 

R  223),  330. 
v.  Marshall  (22  Vt.  561),  530. 


Buchanan  v.  Meisser  (105  111.  638), 

105,  107,  108. 

Buchanan  Farm  Oil  Co.  v.  Wood- 
man (1  Hun,  639),  204. 
Buck  v.  Cotton  (2  Conn.  126),  392, 

399. 

Buckley  v.  Bentley  (42  Barb.  646), 
529,  530,  532,  543. 

v.  Seymour  (30  La.  Ann.  1341), 

552. 
Buckner  v.  Finley  (2  Pet.  586),  408. 

v.  Liebig  (38  Mo.  188),  403. 
Budweiser  Brewing  Co.  v.  Cappa- 

relli  (38  N.  Y.  Supp.  972),  398. 
Buehler  v.  Gait  (35  111.  App.  225), 

259. 
Buell  v.  Warner  (33  Vt  570),  121, 

124. 
Buffalo  Bank  v.  Codd  (25  N.  Y.  163), 

56.  61,  556. 

Bull  v.  First  Nat.  Bank  (14  Fed.  R. 
612),  425,  433. 

v.  Hoge  (2  Hilt.  81>,  468. 

v.  Kasson  Bank  (123  U.  S.  105), 
348,  433,  436. 

v.  Simms  (23  N.  Y.  570),  350. 
Bullard  v.  Bank  (18  Wall.  589),  49, 
85,  89. 

v.  Bell  (1  Mason,  243).  126,  563. 

v.  Randall  (1  Gray,  605),  255. 
Bundy  v.  Jackson  (24  Fed.  R  628), 
83,  189. 

v.  Monticello  (84  Ind.  119),  216. 
Bung  v.  Armstrong  (34  Fed.  R.  94), 

240. 
Bunnell  v.  Collinsville  Sav.  Soc.  (38 

Conn.  203).  650. 
Bunting  v.  Mick  (5  Ind.  App.  289), 

352. 
Burbank  v.  Beach  (15  Barb.  326), 

489. 
Burcli  v.  Newberry  (10  N.  Y.  374), 

413. 
Burckmeyer  v.  Whiteford  (6  Gill, 

9),  516. 
Burgess  v.  Vreeland  (24  N.  J.  Law, 

711,470,512. 
Burk  v.  Shreve  (39  N.  J.  Law,  214), 

551. 

Burke  v.  McKay  (2  How.  66),  411, 
456.  489. 

v.  Slattery  (31  N.  Y.  Supp.  825), 
641. 

T.  Utah  Nat.  Bank  (47  Neb.  247), 
362,  363. 

v.  Ward  (32  S.  W.  R  1047),  530. 
Burkham  v.  Trow  bridge  (9  Mich. 

209),  467,  471. 


TABLE   OF   CASES. 


723 


Eeferences  are  to  pages. 


Burkhardt  v.  Fourth  Nat.  Bank  (6 

Wkly.  Law  Bui.  138),  496. 
Burkett  v.  Lanata  (15  La.  Ann.  377), 

70. 
Burnheisel  v.  Field  (17   Ind.  609), 

351. 
Burlingame  v.   Foster   (128  Mass. 

125),  491. 
Burnap  v.  Harkins  Engine  Co.  (127 

Mass.  586),  105,  107,  108. 
Burnes  v.  Kowland  (40  Barb.  368), 

365. 
Burnet  Sav.   Co.  v.  German  Nat. 

Bank  (4  Ohio  Dee.  290),  260, 

267. 
Burnham  v.  Webster  (19  Me.  232). 

487. 

Burrill  v.  Dollar  Sav.  Bank  (92  Pa. 
134),  639. 

v.  Smith  (7  Pick.  291),  440. 
Burroughs  v.  Tradesmen's  Bank  (87 

Hun,  6),  242. 

Burrows  v.  Hannegan  (1  McLean, 
309),  447.  452,  538. 

v.  Niblack  (84  Fed.  R.  Ill),  68, 

160. 
Burt  v.  Bailey  (73  Fed.  R.  693),  83. 

v.  Parish  (9  Ala.  311),  400. 
Burthe  v.  Donaldson  (15  La.  382), 

384. 
Burtnett  v.  First    Nat.   Bank  (38 

Mich.  630),  220.  231. 
Bury  v.  Woods  (17  Mo.  App.  245), 

324. 
Bush  v.  Foote  (58  Miss.  5),  245,  371, 

372. 

Bushnell  v.  Chatauqua  Co.  Nat. 
Bank  (74  N.  Y.  290),  193, 
205. 

v.  Leland  (164  U.  S.  684).  591. 
Bussard  v.  Levering  (6  Wheat.  102), 

509,  516. 
Bussey  v.  Branch  Bank  (15  Ala.  216), 

621. 
Butchers'    Bank    v.   Hubbell   (117 

N.  Y.  384),  208,  209,  210. 
Butler  v.  Duvall  (4  Yerg.  265),  487. 
Buttervvorth  v.  O'Brien  (39  Barb. 
192),  125. 

v.  Peck  (5  Bosw.  341),  238. 
Bynum  v.  Apperson  (9  Heisk.  632), 

523. 

Byrd  v.  Bertrand  (7  Ark.  321),  377. 
Byrne  v.  Schwing  (6  B.  Mou.  199), 
377. 

v.  Union   Bank  (9  Robt.   433), 

77,  85. 
Byron  v.  Carter  (22  La,  Ann.  98),  91. 


0. 


Cabot  Bank  v.  Morton  (4  Gray,  156), 

340. 

v.  Russell  (4  Gray,  167),  505. 
y.  Warner  (92  Mass.  522),  473. 
Cadillon  v.  Rodriguez  (25  La.  Ann. 

79).  502,  508. 
Cadiz  Bank  v.  Slemmons  (34  Ohio 

St.  142),  337,  338. 
Cadle  v.  Baker  (20  Wall.  650),  592, 

593. 
v.  Tracy  (11  Blatchf.  101),  596, 

624.  628. 
Cady  v.  Bradshaw  (116  N.  Y.  188), 

537. 
v.  Shepherd  (12  Wis.  639),  402, 

533. 
v.  South  Omaha  Bank  (49  Neb. 

125).  218,  231. 
Cake  v.  Lebanon  Nat.  Bank  (86  Pa. 

303),  335,  338. 
Caldwell  v.  Evans  (5  Bush,  380), 

295. 
v.  Nat.  Mohawk  Val.  Bank  (64 

Barb.  333),  161. 
v.  Porter  (17  N.  H.  27),  542. 
Calhoun  v.  Manuf.  Bank  (36  Ga.  410), 

373. 
California  Bank  v.  Ginty  (108  Cal. 

148),  334. 
v.  Kennedy  (167  U.  S.  362),  69, 

160,  190. 
v.  Western  Union  Tel.  Co.  (58 

Cal.  280).  214. 
Callahan  v.  Bank  of  Kentucky  (82 

Ky.  231),  485. 
Calton  v. Savings  Bank  (7  Conn. 487), 

206. 
Camden   Bank  v.  Rogers  (4  How. 

Pr.  63),  620. 
Cameron  v.  First  Nat.  Bank  (34  S. 

W.  R.  178).  63. 

Camp  v.  Scott  (14  Vt.  387),  428. 
Campbell  v.  First  Nat.   Bank  (23 

Colo.  177),  176. 
v.  Mississippi  Bank  (6   How., 

Miss.,  625),  554. 
v.  Pettingi  11  (7  Me.  126),  382. 
v.  Varney  (12  Iowa,  43),  541. 
Canadian  Bank  v.  Caumbe  (47  Mich. 

358),  155,  376. 
Canfield  v.  State  Nat.  Bank  (Fed. 

Cas.  No.  2382),  191. 
Canonge  v.  Cauchoix  (1 1  Mart.,  0.  S., 

452),  516. 

v.    Louisiana    State    Bank   (7 
Mart.,  N.  S.,  583),  50a 


724: 


TABLE    OF   CASES. 


References  are  to  pages. 


Canterbury  v.  Bank  of  Sparta  (91 

Wis.  53),  321. 
Capital  City  Ins.  Co.  v.  Quinn  (73 

Ala.  558),  375. 
Capital  State  Bank  v.  Lane  (52  Miss. 

677),  301,  303. 
Cardwell  v.  Allen  (33  Gratt  160), 

535. 
Carey  v.  Giles  (10  Ga.  9),  584 

v.  Greene  (7  Ga.  79),  563. 
Carley  v.  Potters'  Bank  (46  S.  W.  R 

'628),  274. 
Carlisle  v.  Hill  (16  Ala.  398),  539. 

v.  Hooks  (58  Tex.  420),  382. 
Carlisle  Bank  v.  Graham  (100  U.  S. 

699),  285.  287. 
Carman  v.  Franklin  Bank  (61  Md. 

467),  216. 

Carmena  v.  Bank  of  Louisiana  (1 
La.  Ann.  369),  495. 

v.  Doherty  (1  La.  Ann.  369),  488. 

v.  Mix  (15  La.  165).  530. 
Carrnichael  v.  Pennsylvania  Bank 

(4  How.,  Miss.,  567),  355,  374, 

419.  472. 
Carnegie  v.  Morrison  (2  Met.  381), 

363. 
Carolina  Bank  v.  Parrot  (30  S.  C. 

61),  332. 
Carolina  Na,t.  Bank  v.  Wallace  (13 

S.  C.  347).  474,  517,  520. 
Carpenter  v.  McLaughlin  (12  R.  L 
270),  403. 

v.  National  Bank  (50  N.  J.  Law, 
6),  337. 

v.  Reynolds  (42  Miss.  807),  530. 
Carpey  v.  Dowcll  (115    CaL  677), 

160. 
Carr  v.  State  (104  Ala.  4),  136,  139, 

283. 
Carroll  v.  Cone  (40  Barb.  220),  288. 

v.  Exchange  Bank  (30  W.  Va. 
518),  316. 

v.  Green  (92  U.  S.  509),  106,  114. 

v.  Sweet  (30  N.  Y.  Supp.  204), 
392,  434. 

v.  Upton  (3  N.  Y.  272),  502. 
Carrolton  Bank  v.  Tayleur  (16  La. 

490),  362,  364,  370. 

Carruth  v.  Walker  (8  Wis.  252),  54& 
Carson  v.  State  Bank  (4  Ala.  148), 

474. 
Carter  v.  Bradley  (19  Ma  62),  468. 

v.  Burley  (9  N.  H.  558),  514, 544, 
545,  548. 

v.  Smith  (9  Cush.  321),  397,  444 

v.  Union  Bank  (7  Humph.  548), 
410,  553. 


Caruthers  v.  Harbert  (5  Cold.  362), 

553. 
Casco  Bank  v.  Mussey  (19  Ma  20), 

Casco  Nat.  Bank  v.  Shaw  (79  Me. 

376),  476,  485. 

Case  v.  Berwin  (23  La.  Ann.  321), 
593. 

v.  Burt  (15  Mich.  82),_389. 

v.  Citizens'  Bank  (100  U.  S.  446), 
152. 

v.  Citizens'  Bank  (2  Woods,  23), 
577,  580. 

v.  Getchell  (21  Pa.  503).  551. 

v.  Hawkins  (53  Miss.  702),  151. 

v.  Henderson  (23  La.  Ann.  49), 
246. 

v.  Morris  (31  Pa.  100),  435,  460. 

v.  Small  (10  Fed.  R.  722),  82. 
Casey  v.  Adams  (102  U.  S.  66),  628. 

v.  Carver  (42  111.  225),  278. 

v.  Cavaroc  (96  U.  S.  467),  584. 

v.  Credit    Mobilier   (2  Woods, 
77),  581.  584. 

v.  Galli  (94  U.  S.  673),  47, 49, 112. 

v.  McDonald  (7  Ga.  84),  148. 
Cassel  v.  Dows  (1  Blatchf.  335),  362. 
Cassidy    v.    First    Nat.   Bank    (30 
Minn.  86),  280. 

v.  Kreamer  (13  Atl.  R  744),  514 

v.  Uhlman  (50  N.  Y.  Supp.  318), 

129. 
Castle  v.  Corn  Exchange  Bank  (148 

N.  Y.  122),  306,  322. 
Cate   v.  Patterson  (25   Mich.  191), 

280,  405. 

Catlin  v.  Eagle  Bank  (6  Conn.  233), 
574,  577. 

v.  Jones  (1  Pin.  130),  401,  531. 
Catskill  Bank  v.  Stall  (15  Wend. 

364),  481. 

Catts  v.  Phalen  (2  Hpw.  376),  55. 
Cawein  v.  Browinski  (6  Bush,  457), 

433. 

Cayuga    Co.   Bank  v.    Bennett  (5 
Hill,  236),  517. 

v.  Hunt  (2  Hill,  635),  420,  422, 
549. 

v.  Warden  (1  Comst.  413),  469. 

v.  Warden  (6  N.  Y.  19),  483. 
Cecil  Bank  v.  Farmers'  Bank  (22 

Md.  148).  315. 
Cecil  Nat  Bank  v.  Holt  (7  Pa.  Co. 

Ct  R.  485),  442. 
Cedar  Falls  Co.  v.  Wallace  (83  N.  a 

225).  45a 
Central  Bank  v.  Allen  (16  Me.  41), 

444,450. 


TABLE   OF   CASES. 


725 


References  are  to  pages. 


Central  Bank  v.  Connecticut  Mut- 
ual Life  Ins.  Co.  (104  U.  S. 
54^,  565,  572,  603. 
v.  Davis  (19  Pick.  373),  520,  529. 
v.  Empire  Stone  Co.  (26  Barb. 

23).  560. 
v.  St.  John  (17  Wis.  157),  833, 

472. 

v.  Whitefield  (1  Ga»  593),  456. 
Central  Georgia  Bank  v.  Cleveland 
Nat.   Bank  (59    Ga.   677),  294, 
302. 
Central  Nat.  Bank  v.  Insurance  Co. 

0104  U.  S.  54),  219,  230. 
v.  Levin  (6  Mo.  App.  543),  175, 

488. 

v.  Pratt  (115  Mass,  539),  336. 
v.  Richland  Nat.  Bank  (52  How. 

Pr.  136),  596. 
Central  Sav.  Bank  v.  Richards  (109 

Mass.  413),  369. 

Central  Transportation  Co.  v.  Pull- 
man's  Car   Co.  (139  U.  S.  24), 
61,  62,  69. 
Central  Trust  Co.  v.  Cook  Co.  Nat. 

Bank  (15  Fed.  R  885),  166. 
Chadbourne  v.  Stockton  Sav.  Soc. 

(30  Pac.  R.  127),  151. 
Chaddock  v.  Vanness  (35  N.  J.  Law, 

517),  402,  533. 
Chadwick  v.  Jeffers  (1  Rich.  Law, 

397),  468. 
Chafin  v.    Lincoln   Sav.   Bank  (7 

Heisk.  499),  335. 

Chambers  v.  Hill  (26  Tex.  472),  423. 
v.  Northern  Bank  (5  Ky.  Law 

R.  123),  229,  254. 
Chambliss  v.    Robertson  (23  Miss. 

302),  333. 

Chandler  v.  Mason  (2  Vt.  193),  407. 
v.   Monmouth  Bank  (13  N.  J. 

Law,  255),  117. 
Chanoine  v.  Fowler  (3  Wend.  173), 

374,  547. 
Chanute  Nat.  Bank  v.  Crowell  (6 

Kan.  App.  533),  244. 
Chapin  v.  Merchants'  Nat.  Bank  (14 

N.  Y.  St.  R  272).  68. 
Chapman  v.  McCrea  (63  Ind.  360), 

304. 
v.  New  Orleans  Gas  Co.  (4  La. 

Ann.  153),  88. 
v.  Union  Bank  (32  How.  Pr.  95), 

303. 
Charles  River  Nat.  Bank  v.  Davis 

(100  Mass.  413),  262. 
Charleston  v.  People's  Nat  Bank  (5 
S.  C.  103),  78. 


Charleston  Banking  Ass'n  v.  Zorn 

(14  S.  C.  444),  39& 
Chase  v.  Evoy  (49  CaL  467),  419. 
v.  Hathorn  (61  Me.  505),  637. 
v.  Petroleum  Bank  (66  Pa.  169), 

586. 
Chatam  Bank  v.  Allison  (15  Iowa, 

357),  386,  546. 

v.  Brobston  (99  Ga.  801),  80,  81. 
Chatauqua  Co.  Bank  v.  Risley  (19 

N.  Y.  369),  195. 
Chattahoochie  Nat.  Bank  v.  Schley 

(58  Ga.  369),  286,  287. 
Chemical  Nat.  Bank  v.  Armstrong 

(56  Fed.  R.  392),  153. 
v.  Armstrong  (59  Fed.  R.  372, 50 

Fed.  R  798),  588,  595. 
v.  Armstrong  (76  Fed.  R  339), 

178. 
v.  Bailey  (12  Blatchf.  480),  587, 

597. 
v.   Hartford  Deposit  Co.   (161 

U.  S.  1),  573.  595. 
v.  Kohner  (85  N.  Y.  189),  151. 
v.  World's  Columbian  Exp.  (170 

111.  82),  594. 
Chenowith  v.  Chamberlin  (6  B.  Mon. 

60),  410. 
Chesapeake  Bank  v.  Swain  (29  Md. 

483),  238, 282. 
Cheshire  v.  Taylor  (29  Iowa,  492), 

540. 
Chesin  v.  First  Nat.  Bank  (96  Tenn. 

641),  345. 
Chester  v.  Halliard  (34  N.  J.  Eq.  341), 

124,  132,  633. 
Chetwood,  Ex  parte  (165  U.  S.  443), 

110,  133,  134,  593,  597. 

Chew  v.  Bank  of  Baltimore  (14  Md. 

299),  85. 

v.  Ellingwood  (86  Mo.  260),  574 
v.  Read  (11  Smedes  &  M.  182), 

410,  545. 

Chicago  v.  Hall  (103111. 342),  105, 107. 
Chicago  Co.  v.  Park  Nat.  Bank  (44 

•    111.  App.  150),  582,  592. 
Chicago  Ins.  Co.  v.  Stanford  (28  111. 

168),  251. 
Chicago  Marine  Co.  v.  Carpenter  (27 

111.  525),  238. 

Chick  v.  Pillsbury  (24  Me,  458),  513. 
Chicopee  Bank  v.'  Eager  (9  Met  583), 

474,  476,  520. 
v.  Philadelphia  Bank  (8  Wall 

641),  311,  444. 
Child  v.  Eureka  Powder  Works  (44 

N.  H.  354),  376. 
v.  Moore  (6  N.  H.  33),  461. 


726 


TABLE   OF   CASES. 


References  are  to  pages. 


Chipman  v.  McClennan  (159  Mass. 

863),  75. 
Chosen  Freeholders  v.  Jersey  City 

Bank  (48  N.  J.  Eq.  51),  288. 
Choteau    v.   Webster    (6    Met    1), 

499. 
Christensen  v.  Eno  (106  N.  Y.  97), 

100,  104. 
Christie  v.  Foster  (61  Fed.  R.  551), 

165. 
Christmas  v.  Flisker  (7  Rob.,  La., 

13),  519. 
Church  v.  Barlow  (9  Pick.  547),  412, 

487. 

v.  Clark  (21  Pick  310),  420. 
Citizens'  Bank  v.  Alexander  (120 
Pa.  476),  213,  231,  237,  238. 
v.  Bank  of  Greenville  (71  Miss. 

271),  600. 

v.  Berry  (53  Kan.  696),  150. 
v.  Brown  (45  Ohio  St.  39),  275, 

279,  405. 
v.  Brown  (11  Wkly.  Law  BuL 

220),  272. 

v.  Gay  (47  La.  Ann.  551),  73. 
v.  Graffin  (31  Md.  507),  185,  187, 

455. 

v.  Grand  (33  La.  Ann.  976),  273. 
v.  Harrison  (127  ind.  128),  216, 

219,  237. 
v.  Houston  (98  Ky.   139),  299, 

303. 

v.  Howell  (8  Md.  530),  307. 
v.  Keim  (1  Wkly.  Notes  Cas. 

263),  150. 

v.  Kendrick  (92  Tenn.  437),  232. 
v.  Nicolas  (3  La.  Ann.  112),  326. 
v.  Pugh  (19  La.  Ann.  43),  465, 

523. 
v.  Weigand,  5  Wkly.  Notes  Cas. 

12).  121. 
Citizens'   Nat  Bank  v.  Cade   (73 

Mich.  449),  520. 
v.  Carson  (32  Mo.  191),  234. 
v.  Importers'  &  Traders'  Nat 
Bank  (119  N.  Y.  195),  243, 
267,  345. 
v.  Third  Nat  Bank  (49  N.  R  R. 

171),  312. 
Citizens'  Sav.  Bank  v.  Blakeley  (43 

Ohio  St.  645),  279. 
v.  Ingham  (98  Mich.  173),  589. 
City  Bank  v.  Barnard  (1  Hall,  80), 

182. 

v.  Beach  (1  Blatchf.  425),  75. 
v.  Blackmore  (75  Fed.  R.  771), 

604,  616. 
v.  Crossland  (65  Ga,  734),  589. 


City  Bank  v.  Cutler  (3  Pick.  414), 

187,  438,  453. 
v.  Farmers'  Bank  (Fed.  Cas.  No. 

2738),  557. 
v.  First  Nat  Bank  (43  Tex.  203), 

264. 
v.  Girard  Bank  (10  La.  562),  380, 

388. 

v.  Kent  (57  Ga.  283),  216. 
v.  Perkins  (4  Bosw.  420),  55. 
v.  Phillips  (86  N.  Y.  484),  567. 
v.  Weiss  (67  Tex.  331),  315. 
City  Ins.  Co.  v.  Commercial  Bank 

(68  111.  348),  572. 
City  Nat.  Bank  v.  Burns  (68  Ala. 

267).  209. 
v.  Clinton  Co.  Nat  Bank  (49 

Ohio  St.  351),  515. 
v.  Mastin  (70  Tex.  643),  156, 157. 
v.  Nat  Park  Bank  (32  Hun,  105), 

160. 

v.  Stout  (61  Tex.  567).  346. 
v.  Thomas  (46  Neb.  861),  150. 
City  of  Nashville  v.  First  Nat  Bank 

(1  Baxt.  402),  397. 

City  of  New  Orleans  v.  New  Or- 
leans Banking  Co.  (32  La. 

Ann.  104),  71. 
v.  New  Orleans  Sav.  Inst  (32  La. 

Ann.  527),  71. 
City  of  New  York  v.  Tenth  Nat 

Bank  (111  N.  Y.  446),  17a 
City  of  St.  Louis  v.  Johnson  (5  Dill. 

241),  204. 
Claasen  v.  United  States  (142  U.  S. 

140),  144. 
v.  Farmers'  Bank  (25  N.  Y.  293), 

181.  258. 
v.  Farmers'  Bank  (54  Barb.  228), 

566. 

v.  Griffin  (8  Bosw.  689),  375. 

v.  Reese  (54  Iowa,  544),  403. 

Claghorn  v.   Cullen   (13    Pa.   133), 

48. 
Clark  v.  City  of   Des  Moines  (19 

Iowa,  199),  350. 
v.  Clark  (108  Mass.  522),  642. 
v.  Eldridge  (13  Met  96),  468, 470. 
v.  German  Security  Bank  (61 

Miss.  611),  87. 
v.  Lake  Ave.  Ass'n  (20  N.  Y. 

Supp.  363),  351. 
v.  Metropolitan  Bank  (3  Duer, 

241).  148,  156. 
v.  Nat   Metropolitan   Bank  (2 

Mac  A.  249),  511. 
v.  Northampton  Bank  (160  Mass. 

26),  232. 


TABLE   OF    CASES. 


727 


References  are  to  pages. 


Clark  v.  Saugerties  Bank  (62  Hun, 

346),  645. 

v.  State  (1  Cold.  306),  73. 
v.  Tryon  (23  N.  Y.  Supp.  780), 

542. 
Clarke  v.  Brooklyn  Bank  (1  Edw. 

Ch.  361),  80. 

v.  Hawkins  (5  R.  L  219),  590, 591. 
v.  Russell  (3  Dall.  415),  411. 
v.  Ward  (4  Duer,  206),  488. 
Clarke  Nat.  Bank  v.  Albion  Bank 

(52  Barb.  592),  157,  165,  166. 
Clay  v.  Edgerton  (19  Ohio  St.  549), 

403. 
v.  Oakley  (5  Mart,  N.  S.,  137), 

474. 
Clement    v.  Erie  (130  Mass.   585), 

359. 

Clements  v.  Yates  (69  Mo.  623),  360. 
Clemmer  v.  Drovers'  Nat.  Bank  (157 

111.  206),  217,  230. 
Clerks'  Sav.  Bank  v.  Thomas  (2  Mo. 

App.  367),  173. 
Cleveland  v.  Burnhain  (55  Wis.  598), 

103. 
Clews  v.  Bardon  (36  Fed.  R.  617), 

122. 
v.  New  York  Bkg.  Ass'n  (89 

N.  Y.  418),  156,  259. 
v.  New  York  Bkg.  Ass'n  (105 

N.  Y.  398),  156. 
v.    New  York  Bkg.  Ass'n  (114 

N.  Y.  70),  156. 
Clinton  Co.  v.  Kernan  (10  Rob.,  La., 

176),  151. 
Clots  v.  Bentley  (5  Alb.  L.  J.  286), 

587. 

v.  Dickson  (5  Alb.  L.  J.  286),  282. 
Clough  v.  Holden  (115  Mo.  336),  420. 
Clute  v.  Warner  (8  App.  Div.  40), 

240. 

Coates  v.  Doran  (83  Mo.  337),  246. 
v.  First  Nat.  Bank  (91  N.  Y.  26), 

245,  576,  617. 
v.  Preston  (105  III  470),  227,  235, 

245,  255. 
Coats  v.   Donnell  (94  N.  Y.   168), 

380. 
Cocheco  Nat.  Bank  v.  Harkel  (51 

N.  H.  116),  154 
Cochituate  Bank  v.  Colt  (1  Gray, 

382),  590. 
Cochran  v.  United  States  (157  U.  S. 

286),  140. 
Cockburn  v.  Union  Bank  (13  La. 

Ann.  289),  93. 

Cocke  v.  Jennor  (Hob.  66,  pL  69), 
135. 


Cockrill  v.  Abeles  (86  Fed.  R.  505), 

135. 

v.  Cooper  (86  Fed.  R.  7),  135. 
v.  Joyce  (62  Ark.  216),  297,  329. 
v.  Lowenstine  (9  Heisk.  206), 

551,  552. 
Coddington  v.  Davis  (3  Denio,  16,  1 

N.  Y.  186),  538,  539. 
Codman    v.   Vermont    R.    Co.   (17 

Blatchf.  1),  418. 
Cody  v.  City  Nat.  Bank  (55  Mich. 

379),  209,  316. 
Coffin  v.  Anderson  (4  Blackf.  395), 

286. 

v.  Henshaw  (16  Ind.  277),  215. 
Coffman  v.  Bank  of  Kentucky  (41 

Miss.  212),  479. 
v.  Campbell  (87  111.  98),  380. 
v.  Clarinda  Bank  (33  111.  App. 

641),  367. 

Coggswell    v.    Rockingham    Sav. 
Bank  (59  N.   H.  43),  636,  651, 
652. 
Coghlan  v.  Densmore  (9  Bosw.  453), 

311,  538. 
v.  South  Carolina  R.  Co.  (142  U. 

S.  101),  355. 
Cohea  v.  Hunt  (2  Smedes  &  M.  227), 

421. 
Cohn  v.  St.  Louis  Ins.  Co.  (11  Mo. 

374),  274 

Cole  v.  Butler  (43  Me.  401),  105.  107. 
Coleman  v.  Dunlap  (18  S.  C.   592), 

430. 
v.  First  Nat.  Bank  (53  N.  Y.  388), 

207. 

v.  Smith  (26  Pa.  255),  552. 
v.  Spencer  (5  Blackf.  195),  92. 
v.  White  (14  Wis.  762),  101, 102, 

108. 
Colgin  v.  State  Bank  (11  Ala.  222), 

621. 

Collier  v.  Budd  (17  Mo.  485),  406. 
Collins  v.  Bank  (4  Baxt.  422),  546. 
v.  Briarfleld  Coal  Co.  (150  U.  S. 

371),  132. 
v.  Central  Bank  (1  Kelly,  435), 

560. 
Colms  v.  Bank  of  Tennessee  (4  Baxt. 

422),  516. 
Colorado  Nat.  Bank  v.  Boettcher  (5 

Colo.  185),  243,  371. 
Colt  v.  Bernard  (18  Pick.  260),  391, 

431,  458. 

v.  Brown  (12  Gray,  233),  586. 
v.  Noble  (5  Mass.  167),  487. 
Columbian  Bank,  In  re  (147  Pa.  422), 
589. 


728 


TABLE   OF    CASES. 


References  are  to  pages. 


Commercial  Bank,  In  re  (2  Ohio 

Dec.  304).  282,  609. 
Commercial  Bank,  In  re  (4  Ohio 

Dec.  108),  241. 
Commercial   Bank   v.    Armstrong 

(148  U.S.  50),  600,  601,  611. 
v.  Atherton    (1  Smedes  &  M. 

641),  343. 
v.  Barksdale  (36  Mo.  563),  386, 

409,  410,  546. 

v.  Benedict  (18  B.  Mon.  307),  559. 
v.  Burgwyn  (110  N.  C.  267).  182. 
v.  Cartwright  (22  Wend.  348), 

85. 
v.  Chambers  (14  Ma  152),  573, 

574. 
v.  Chambers  (8  Smedes  &  M.  9), 

499. 
v.  Chicago,  etc.  Ry.  Co.  (160  III 

401),  299. 

v.  Clark  (28  Vt.  325),  545. 
v.  Cunningham  (24  Pick.  270), 

183. 

v.  Gove  (15  La.  113),  478. 
v.  Hamer  (7  How.,  Miss.,  448), 

421. 

v.  Hughes  (17  Wend.  94),  231. 
v.  Jones  (18  Tex.  811),  218,  275. 
v.  King  (3  Rob.,  La.,  243),  513. 
v.  Marine  Bank  (3  Keyes,  337), 

316. 
v.Nolan  (7  How.,  Miss.,   508), 

191,  328. 

v.  Perry  (10  Rob..  La.,  61).  349. 
v.  Pfeiffer(108  N.  Y.  252),  328. 
v.  Rodney  (5  Smedes  &  M.  439), 

571. 
v.  State  (6  Smedes  &  M.  599), 

568,  569. 

v.  Strong  (28  Vt.  316),  480. 
v.  Ten  Eyck  (48  N.  Y.  305),  121. 
v.  Thompson  (7  Smedes  &  M. 

443),  341,  590. 

v.  Varnum  (49  N.  Y.  269),  408. 
v.  Villavoso  (6  La.  Ann.  542), 

565. 
v.  Union  Bank  (11  N.  Y.  203), 

298. 
v.  Union  Bank  (19  Barb.  391), 

512. 

Commercial    Exchange    Bank    v. 

Nassau  Bank  (91  N.  Y.  74),  186. 

Commercial  Exchange  Nat.  Bank 

v.  Solicitors'  Trust  Co.  (188  Pa. 

3:  0).  614,  615. 

Commercial  Nat.  Bank  v.  Arm- 
strong (148  U.  S.  50),  208,  209, 
210,  212,  298,  319,  322. 


Commercial  Nat.  Bank  v.  Farmers' 

Bank  (82  Iowa,  192),  87. 
v.  First  Nat.  Bank  (118  N.  C. 

783),  244. 
v.  First  Nat  Bank  (30  Md.  11), 

270,  571. 
v.  Henninger  (105  Pa,  496),  233, 

234. 
v.  Lincoln  Fuel  Co.  (67  III  App. 

106),  249. 

v.  Pirie  (82  Fed.  R.  799),  199. 
v.  Simmons  (1  Flip.  449),  622. 
Commissioners  v.  Walker  (6  How. 

143),  72. 
Commonwealth  v.  Bank  of  Mutual 

Redemption   (86  Mass.   1), 

198,  555,  571. 

v.  Bassford  (6  Hill,  526),  58. 
v.  Commercial    Bank  (28    Pa. 

391),  197,  570. 
v.  Dunham  (Thacher  Grim.  Gas. 

519),  137.  141. 
v.  Farmers'  Bank  (21  Pick.  542), 

74. 

v.  Jenkins  (170  Pa.  194),  137. 
v.  Phoenix  Bank  (11  Met  129), 

586. 
v.  Reading  Sav.  Bank  (129  Mass. 

73),  631. 
v.  Reading  Sav.  Bank  (133  Mass. 

16  >,  638. 
v.  Reading  Sav.  Bank  (137  Mass. 

431),  638. 
v.  Soholl  (12  Pa.  Co.  Ct  R.  209), 

137. 
v.  Schwartz  (18  S.  W.  R.  359), 

136. 
v.  Schwartz  (19  S.  W.  R.  189), 

136. 
v.  Scituate  Sav.  Bank  (139  Mass. 

301),  644. 

v.  Scott  (4  Rand.  143),  70. 
v.  Seeberg  (94  Pa.  85),  75. 
v.  Sponsler  (16  Pa.  Co.  Ct  R. 

116),  29,  70,  137. 
v.  Sponsler  (170  Pa.  194),  136, 

137. 
Comptroller  v.  Carlisle  Bank  (49  Pa. 

409),  158. 
Conant  v.  Bank  (1  Ohio  St  298), 

131. 

v.  Reed  (1  Ohio  St.  298),  90. 
Connecticut  Mut  Life  Ins.  Go.  v. 

Albert  (39  Mo.  181),  76. 
Connerly  v.  Planters'  Ins.  Co.  (66 

Ala,  432),  399. 

Consolidated  Bank  v.  State  (5  La. 
Ann.  44),  80. 


TABLE   OF    CASES. 


729 


References  are  to  pages. 


Constant  v.  University  (111  N.  Y. 

604),  176,  178. 
Continental  Life  Ins.  Co.  v.  Barber 

(50  Conn.  567),  530. 
Continental  Nat.  Bank  v.  Eliot  Nat. 

Bank  (17  Fed.  R,  369),  87. 
v.  McGeoch  (92  Wis.  286),  176. 
v.  Weems  (69  Tex.  489),  209,  319, 

821,  324,  325,  610. 

Conway,  Ex  parte  (4  Ark.  302),  575. 
Conway  v.  Halsey  (44  N.  J.  Law, 

462),  123. 
v.  Schall  (42  Wkly.  Notes  Cas. 

328),  596. 
Con  well  v.  Patteson  (28  Ind.  509), 

574. 
Conyngham,  Appeal  of  (55  Pa.  474), 

329 

Cook  v.  Baldwin  (120  Mass.  317).  357. 
v.  Litchfield  (9  N.  Y.  279),  470. 
v.  Miltenberger  (23  La.  Ann. 

377),  366. 

v.  Renick  (19  111.  598),  478. 
v.  Satterlee  (6  Cow.  108),  350. 
Cook  Co.  Nat.  Bank  v.  United  States 

(107  U.  S.  445),  73. 
Cooke  v.  Pomeroy  (65  Conn.  466), 

530. 
v.  State  Nat  Bank  (52  N.  Y.  96), 

627. 
v.  United  States  (91  U.  S.  389), 

267. 
Cookenderfer  v.  Preston   (6  How. 

317),  188. 
Cooley  v.  Shannon  (20  La.  Ann.  548), 

507. 
Coolidge  v.  Payson  (2  Wheat  66), 

362. 
Cooper  v.  Curtis  (30  Me.  488),  116, 

565. 

v.  Hill  (94  Fed.  R.  582),  134. 
v.  Jones  (79  Ga.  379),  378. 
v.  Townsend  (13  N.   Y.   Supp. 

760).  275. 

Coote  v.   United    States    Bank  (3 

Cranch,  C.  C.  50),  217,  218,  230. 

Copp  v.  McDougall  (9  Mass.  1),  457. 

Corbet  v.  Bank  of  Smyrna  (2  Har., 

Del.,  235),  205. 

Corbett  v.  Clark  (45  Wis.  403),  350. 
Corbin  v.  Planters'  Bank  (87  Va. 

661),  548. 
Corcoran  v.  Bachelder  (127  Mass. 

541),  67. 
v.  Snow  Cattle  Co.  (151  Mass. 

74),  163,  179,  182. 

Cordell  v.  First  Nat  Bank  (64  Mo. 
600),  274,  281. 


Corn  Exchange  Bank  v.  Farmers' 
Nat  Bank  (118  N.  Y.  443), 
301. 
v.  Nassau  Bank  (91  N.  Y.  74), 

266,  271. 
v.  Nat.  Bank  of  Republic  (78 

Pa.  22',  271. 
Corp  v.  McComh  (1  Johns.  Cas.  328), 

509. 
Corwin  v.  Insurance  Co.  (14  Ohio, 

6),  29,  33. 
Corwith  v.  Morrison  (1  Pin.  489), 

431. 
Coster  v.  Thomason  (19  Ala.  717), 

479,  484,  550. 
Cothran  v.  City  of  Rome  (77  Ga. 

582),  555. 
v.   Cunningham    (28  Ga.  177), 

456. 
Cotton  Mills  Co.  v.  Cooper  (93  Iowa. 

654),  222. 

Coulon  v.  Champlin  (15  La.  544),  480. 
Coulter  v.  Richmond  (59  N.  Y.  478), 

402,  533. 

v.  Robertson  (24  Miss.  278),  573. 
Coursen  v.  Leadlie  (31  Pa.  506),  350, 

378. 
Courtelyou  v.  Maben  (22  Neb.  697), 

356. 
Cowan  v.  Hallock  (9  Colo.  572),  375, 

380,  382. 
Cowles  v.  Cromwell  (25  Barb.  413), 

96. 

v.  Harts  (3  Conn.  517),  468. 
Cowlon  v.  Wickersham  (54  Pa.  302), 

375. 
Cowperthwaite  v.Sheffield(l  Sandf. 

416),  360,  372,  467,  515. 
v.  Sheffield  (3  N.  Y.  243),  369. 
Cox  v.  Boone  (8  W.  Va.  500).  434. 
v.  Jones  (2  Cranch,  C.  C.  370), 

392,  431. 
v.  Mechanics'  Bank  (28  Ga.  528), 

394. 

v.  Montague  (78  Fed.  R.  845),  81. 
v.  National  Bank  (100  U.  S.  712), 

375. 

v.  Robinson  (70  Fed.  R.  760),  150. 

v.  Robinson  (82  Fed.  R.  277),  160. 

Craig,  Appeal  of  (92  Pa.  396),  589, 

598. 

Craig  v.  Gregg  (83  Pa.  19),  122. 
.    v.  Libbett  (15  Pa.  238),  365,  368. 
v.  Marx  (65  Tex.  649),  365. 
v.  Missouri  (4  Pet  410),  43,  55. 
v.  Price  (23  Ark.  633),  349. 
Craig  Medicine  Co.  v.  Merchants' 
Bank  (59  Hun,  561),  320. 


730 


TABLE   OF    CASES. 


References  are  to  pages. 


Craigie  v.  Hadley  (99  N.  Y.  131), 

128,  174,  210,  212,  601,  615. 
Grain  v.  First  Nat.  Bank  (114  III 

515),  188. 

v.  Horton  (5  Wash.  479),  267. 
Crane  v.  Clearing-House  (2  Pa.  Dist. 

R  50J),  659. 
v.  Fourth  Street  Bank  (173  Pa. 

556),  611,654,  659. 
v.  Pacific  Bank  (106  Cal.  64), 

584. 
v.  Trudeau  (19   La.  Ann.  307), 

486. 
Crawford,  In  re  (Fed.  Gas.  No.  3364), 

429. 
Crawford  v.  Bank  of  Wilmington 

(62  N.  C.  136),  560,  597. 
v.  Branch  Bank  (7  Ala.  205),  469. 
v.  Milligan  (2  Cranch,  G.  C.  226), 

516. 
v.  Planters'  Bank  (4  Ala.  313), 

619. 

v.  Read  (9  Rob.,  La.,  243),  494. 
v.  West  Side  Bank  (100  N.  Y. 
50),  260,  261,  265,  266,  269, 
270. 

Crawley  v.  Barry  (4  Gill,  194),  548. 
Creamer  v.  Perry  (17  Pick.  332),  539. 
Crease  v.  Babcock  (10  Met.  524),  102, 

561,  562. 
Credit  Co.  v.  Howe  Machine  Co. 

(54  Conn.  357),  379. 
Creighton  v.  Hyde  Park  (6  Bradw. 

272),  227,  228. 
Crews  v.  Farmers'  Bank  (31  Grat. 

348),  479,  582. 
Cribbs  v.  Adams  (13  Gray,  597),  408, 

410. 
Crim  v.  Starkweather  (88  N.  Y.  339), 

429. 
Crippen  v.   American   Nat.   Bank 

(51  Mo.  App.  508),  345. 
Crocker  v.  First  Nat.  Bank  (4  Dill. 

358),  334,  335. 
v.  First  Nat.  Bank  (Fed.   Cas. 

No.  3397),  339. 

v.  Gitchell  (23  Me,  392),  486. 
v.  Marine  Nat.  Bank  (101  Mass. 

240),  628. 

v.  Whitney  (71  N.  Y.  161),  196. 
Crocket  v.  Young  (1  Smedes  &  M. 

241),  198. 

Cromer  v.  Platt  (37  Mich.  132),  471. 
Cronise  v.  Kellogg  (20  111.  11),  376. 
Cross  v.  Rowe  (22  N.  H.  77),  148. 

v.  State  (132  U.  S.  131),  75.  145. 
Crow  v.  Mechanics'  Bank  (12  La. 
Ann.  692),  299. 


Crowell  v.  Van  Bibber  (18  La.  Ann. 

637),  361. 
Crowley  v.  Barry  (4  Gill,  194  >,  414, 

495. 
Crown  Point  Nat.  Bk.  v.  Richmond 

Nat.  Bk.  (76  Ind.  561),  208. 
Cruger  v.  Luedheim  (16  S.  W.  R. 

420),  538. 
Crumb  v.  Phettiplace  (53  III  App. 

337),  363. 
Crystal  Plate  Glass  Co.  v.  First  Nat. 

Bank  (6  Mont.  303),  154. 
Culver  v.  Bank  (64  HI.  528),  102. 

v.  Marks  (122  Ind.  554),  436, 460, 

531. 

Cummings  v.  Hummer  (61  111.  App. 
393),  381. 

v.  Spannhorst  (5  Mo.  App.  21), 
71,  128. 

v.  Winn  (89  Mo.  51),  128. 
Cunningham  v.  Clark  (24  Ind.  7),  573. 

v.  Pell  (5  Paige,  607),  131. 

v.  Wardwell  (12  Me.  466),  352. 
Curran  v.  Bank  of  Arkansas  (15 
How.  317),  44,  95. 

v.  Witter  (68  Wis.  16),  279,  405. 
Curry  v.  Bank  of  Mobile  (8  Port 

360),  509,  550. 

Curtis  v.  Leavitt  (17  Barb.  309),  190, 
279  332 

v.  Leavitt  (15  N.  Y.  9),  29, 33, 40. 

v.  Sprague  (51  Cal.  239),  540. 

v.  State  Bank  (6  Blackf.  312), 

479,  492.  496. 
Curtiss  v.  Harlow  (12  Met.  3),  104 

v.  Martin  (20  111.  557),  542. 
Cushman  v.  Carver  (51  111.  509),  45. 

v.  Harrison  (90  CaL  297),  372. 

v.  Illinois    Starch   Co.   (79  111. 

281).  220,  292. 
Custer  v.  Tompkins  Co.  Bank  (9 

Barr,  27),  176. 

Cutler  v.  Am.  Ex.  Nat.  Bank  (113 
N.  Y.  543),  204,  236. 

v.  Everett  (33  Me.  201),  328. 

v.  Reynolds  (64  111.  321),  349. 
Cutting  v.  Martor  (78  N.  Y.  454),  167. 
Cuykendall  v.  Miles  (10  Fed.  R  342), 

106. 
Cuyler  v.  Stevens  (4  Wend.  566),  467. 

D. 

Dabney  v.  •  Campbell   (9    Humph. 

680).  438.  453. 

v.  State  Bank  (3  S.  C.  124),  80, 
198,  199,  204,  238,  560,  59a 


TABLE   OF   CASES. 


731 


References  are  to  pages. 


Dabney  v.  Stidger  (4  Smedes  &  M. 

•     749),  479,  484. 
Dakin  v.  Graves  (48  N.  H.  45),  547, 

549. 

Dale  v.  Gear  (38  Conn.  15),  402,  533. 
Dalleraand  v.   Odd   Fellows'  Sav. 

Bank  (74  Cal.  598),  567. 
Dallfus  v.  Frosch  (1  Denio,  367),  461. 
Dalon  v.  Davidson  (39  N.  Y.  Supp. 

394),  434. 
Dalton  R  Uo.  v.  McDaniel  (56  Ga. 

191),  97. 
Daly  v.  Butchers'  Bank  (56  Mo.  94), 

306. 
v.  New  York  Chemical  Co.  (2 

Hall,  550),  213. 
Dana  v.  Bank  of  St.  Paul  (4  Minn. 

385),  148. 
v.  Bank   of  United    States   (5 

Watts  &  S.  223),  149,  575. 
v.  Brown  (1  J.  J.  Marsh.  304),  89. 
v.  City  of  San    Francisco  (19 

Cal.  486),  350. 
v.  Nat.  Bank  of  Republic  (132 

Mass.  156).  265,  267. 
v.  Sawyer  (22  Me.  244),  422. 
v.  Third   Nat.  Bank  (95  Mass. 

445  \  237,  255. 
Danahy  v.  National  Bank  (64  Fed. 

R  148),  623,  624. 
Danby  Bank  v.  State  Treasurer  (39 

Vt.  92),  73. 

Dane  v.  Young  (61  Mo.  160),  561, 571. 
Danforth  v.  Nat.  State   Bank  (48 

Fed.  R.  271),  334,  337,  338. 
Daniel  v.  Downing  (26  Ohio  St.  578), 

547. 
Daniels  v.  Empire  City  Bank  (92 

Hun,  450),  152. 
v.  Kyle  (5  Ga.  245),  395. 
Darby  v.  Boatmen's  Sav.  Inst.  (1 

Dill.  141),  335. 
Darden  v.  Banks  (21  Ga,  297),  279, 

555 

Darling  v.  March  (22  Me.  184),  527. 
Darrington  v.  Bank  of  Alabama  (13 

How.  12),  44. 
Davenport  v.  Gilbert  (4  Bosw.  532, 

6  Bosw.  179),  470,  481. 
v.  Savings  Bank  (36  Hun,  303), 

642. 

v.  Stone  (104  Mich.  521),  160. 
v.  Underwood    (13    Am.    Law 

Reg.,  N.  S.,  211).  630. 
Davey  v.  Jones  (42  N.  J.  Law,  28), 

306,  308,  411. 

Davidson  v.  Lanier  (4  Wall.  447),  60. 
Davies  v.  Mann  (10  M.  &  W.  545),  647. 


Davis    v.    Bank   of   Tennessee   (4 

Sneed,  390),  474,  481. 
v.  Beckham  (4  Humph.  53),  476. 
v.  Elmira  Sav.  Bank  (161  U.  S. 

275,  142  N.  Y.  590),  618. 
v.  First  Baptist  Soc.  (Fed.  Cas. 

No.  3633),  83. 

v.  Francisco  (11  Mo.  572).  440. 
v.  Go  wen  (19  Me.  447),  537. 
v.  Hawley  (12  Ark.  645),  514. 
v.  Herrick  (6  Ohio,  55),  427. 
v.  Industrial  Mfg.  Co.  (114  N.  C. 

321),  240. 
v.  Knipp    (92    Hun,  297),   586, 

587. 
v.  Lebanon  Co.  Sav.  Bank  (5$ 

Mich.  163),  289. 
v.  Naper  (91  111.  44),  292. 
v.  Panhandle  Nat.    Bank    (29 

S.  W.  R  926),  213,  231. 
v.  Smith  (29  Minn.  201),  273. 
v.  Stevens  (17  Blatchf.  259).  82. 
v.  Weed  (Fed.   Cas.   No.  3658), 

84. 
Dawson  v.  Real  Estate  Bank  (5  Ark. 

283),  231,  234,  826. 
Dayton  v.  Borst  (7  Bosw.   115),  95, 

583. 
v.  Trull    (23  Wend.   345),  392, 

525. 
Deacon  v.  Oliver  (14   How.  610), 

319. 
Dearborn  v.  Bank  (42  Ohio  St.  617), 

30. 
v.  Union    Nat.   Bank    (58  Me. 

273),  286. 
v.  Washington  Sav.  Bank  (13 

Wash.  345),  283. 
Debesse  v.  Napier  (1  McCord,  106), 

373. 
Deblieux  v.  Bullard  (1  Rob.,  La.,  66), 

516. 
Decatur  Branch  Bank  v.  Hodges 

(17  Ala.  42),  417. 
Dedham    Bank    v.  Chickering    (3 

Pick.  335),  116. 
Dedham  Inst.  v.  Slack  (6  Gush.  408), 

637,  638. 
Dedrick  v.  Bank  of  Commerce  (45 

S.  W.  R  786),  121,  131. 
Deeringv.  Creighton(19  Oreg.  118), 

402,  533. 
De  Feriet  v.  Bank  of  America  (23 

La.  Ann.  310),  267. 
De  Havin  v.  Kensington  Nat  Bank 

(81  Pa.  95),  285. 

De  La  Hunt  v.  Higgins  (9  Abb.  Pr. 
422),  469. 


732 


TABLE   OF   CASES. 


References  are  to  pages. 


De  Land  v.  Dixon  Nat.   Bank  (11 

III  323),  291. 

Delano  v.  Butler  (118  U.  S.  634),  78, 
113. 

v.  Case  (121  IlL  241),  122,  128, 

129. 
De  Liquero  v.  Munson  (11   Heisk. 

15),  357. 
De  Lizardi  v.  Pouverin  (4  Rob.,  La., 

392),  483. 
De  Mayer  v.  State  Nat.   Bank  (8 

Neb.  104).  320. 
Deminds  v.  Kirkman  (1  Srnedes  & 

M.  644),  513. 

Deming  v.  Bull  (10  Conn.  409),  101. 
Demmon  v.  Boylston  Bank  (5  Gush. 

194),  232.    ' 
Demond  v.   Burnhain    (133    Mass. 

339),  447,  448. 
Denegre  v.  Hiriart  (6  La.  Ann.  100), 

468. 
Dennis  v.  Jackson  (108  Mich.  295), 

533. 
Denniston  v.  Imbrie  (3  Wash.  C.  C. 

396),  525. 
Denny  v.  Palmer  (27  N.  C.  610,  5 

Ired.  610),  459,  539. 
Denton  v.  Baker  (79  Fed.  R.  189),  592. 
Depau  v.  Brown  (Harp.  251),  356. 
De  Pauw  v.  Bank  of  Salem  (126 

Ind.  553),  395,  402. 
Deposit  Bank  v.  Fayette  Bank  (10 

Ky.  Law  R  350),  264.  270. 
Deposit  Sav.  Ass'n  v.  Mayer  (Fed. 

Gas.  No.  3813),  557. 
Descombes  v.  Wood  (91  Mo.  196), 

148. 
Deseret  Nat.  Bank  v.  Dinwoodey 

(53  Pac.  R.  215),  328. 
De  Tastett  v.  Crousillat  (2  Wash. 

C.  C.  132),  369. 
Detheridge  v.  Crumbaugh   (8  Ky. 

Law  R  592),  246. 
Detroit  Motor  Go.   v.  Third   Nat. 

Bank  (69  N.  W.  R  726),  164. 
Detroit  Sav.  Bank  v.  Burrows  (34 

Mich.  153).  289. 
De  Vaugh  v.  Haughabook  (73  Ga. 

809),  352. 
Devely  v.  Cedar  Falls  (27  Iowa,  227), 

555. 
Dewey  v.  Bowers  (4  Ired.  528),  340. 

v.  St.  Albans  Trust  Co.  (60  Vt 

1),  652. 
Dewing  v.  Perdicaries  (96  U.  S.  193), 

124,  133. 
De  Wolf  v.  Murray  (2  Sandf.  166), 

468,  549. 


De  Wolf  v.  Sprague  Mfg.  Co.  (11 

R  L  380 »,  582,  592. 
Dexter  v.  McGlynn  (99  CaL  143), 

487,  518. 
Dick  v.  Foraker  (155  U.  S.  404),  626. 

v.  Leverich  (11  La.  573),  377. 

v.  Martin  (7  Humph.  263),  532. 
Dickens  v.  Beal  (10  Pet.  572),  459, 

460,  502.  547. 

Dickenson  v.  Goates  (79  Mo.  250), 
246. 

v.  Marsh  (57  Mo.  App.  566),  359. 
Dickerson  v.  Cass  Co.  Bank  (64  N. 
W.  R  395),  583. 

v.  Derrington  (39  111.  574),  40a 

v.  Turner  (12  Ind.  223),  542, 553. 
Dickey  v.  Harmon  (1  Cranch,  C.  C. 

201),  371. 
Dickinson  v.  Leominster  Sav.  Bank 

(152  Mass.  49),  290,  648. 
Diener  v.  Brown  (1  MacA.  350),  396. 
Dillaway    v.    Northwestern    Nat. 

Bank  (82  111.  App.  71),  257. 
Dime  Savings  Inst.  v.  Allentown 

Bank  (65  Pa.  116),  166. 
Dimpfell  v.  Railroad  Co.  (110  U.  S. 

211),  93. 
Distilled  Spirits,  The  (11  Wall  356), 

176. 
District  Township  v.  Farmers'  Bank 

(88  Iowa,  194),  600. 
Ditch  v.  Western  Nat.  Bank  (79  Md. 

192),  210,  212. 
Diversey  v.  Moor  (22  III  331),  375, 

376,  384. 

Dobbins  v.  Walton  (37  Ga.  614),  590. 
Dobson  v.  Simonton  (78  N.  C.  63). 

583,  589. 
Dockray  v.  Dunn  (37  Me.  442),  397, 

443. 
Dodd  v.  Una  (40  N.  J.  Eq.  672),  630. 

v.  Wilkinson  (41  N.  J.  Eq.  566), 

634. 
Dodge  v.  Bank  (30  Ohio  St.  1),  267. 

v.  Bank  of  Kentucky  (2  A.  K. 
Marsh.  610),  484,  512. 

v.  Mastin  (17  Fed.  R  660),  574. 

v.  National  Ex.  Bank  (20  Ohio 
St.  234),  244, 267. 

v.  Woolsey  (18  How.  331),  93. 
Dodson  v.  Taylor  (56  N.  J.  Law,  11), 

518. 
Doherty  v.  Watson  (29  Wkly.  Notes 

Gas.  32),  433. 
Donald  v.  Central  Bank  (3  Kelly, 

185),  619. 
Donally  v.  Hearndon  (41  W.  Va. 

519),  sea 


TABLE   OF   CASES. 


References  are  to  pages. 


Donegan  v.  Wood  (49  Ala.  242),  410. 
Donlan  v.  Provident  Inst.  (127  Mass. 

183),  645. 

Donley  v.  Camp  (22  Ala.  659),  403. 
Donnell  v.  Lewis  Co.  Sav.  Bank  (80 

Mo.  165),  152,  198,  485. 
Donnelly  v.  Hodgson  (14  Mo.  App. 

548),  113. 
Doppelt  v.  National  Bank  (175  111. 

432),  211,  600. 
Dorchester  Bank  v.  New  England 

Bank  (1  Cush.  177),  299, 304,  305. 
Doremus  v.  Benton  (5  Biss.  57),  437. 
Dorsey  v.  Abratns  (85  Pa,  299),  258. 

v.  Merritt  (6  How.,  Miss.,  390), 

546. 
Doty  v.  Knox  Co.  Bank  (16  Ohio  St. 

133),  556. 

Dougal  v.  Cowles  (5  Day,  511),  351. 
Dougherty  v.  Central  Bank  (93  Pa. 
227),  340. 

v.  Vanderpool  (35  Miss.  165),  283. 

v.  Western  Bank  (13  Ga.  287), 

563. 

Douglas  v.  Bank  of  Commerce  (97 
Tenn.  133),  547. 

v.  First  Nat,  Bank  (17  Minn.  35), 

214,  230. 

Dowd  v.  Aaron  (2  Hill,  S.  C.,  531), 
529. 

v.  City  Bank  (57  N.  H.  391),  589. 

v.  Stephenson  (105  N.  G  467), 

165. 

Dowie  v.  Humphrey  (91  Wis.  98),  605. 
Downer  v.  Remer  (21  Wend.  10,  23 
Wend.  620),  491. 

v.   Zanesville   Bank    (Wright, 

477),  90. 
Downing  v.  Lillyet  (36  S.  W.  R 

890),  609. 
Downs  v.  Planters'  Bank  (1  Smedes 

&  M.  261),  513. 
Dows  v.  United  States  (82  Fed.  R. 

904),  145. 
Draper  v.  Clemens  (4  Mo.  52),  412, 

417,  418,  509. 
Drawn  v.  Pawtucket  Bank  (15  Pick. 

88).  283,  294. 
Dreschied  v.  Exchange  Bank  (28 

W.  Va.  340),  289. 
Dresser  v.  Traders'  Nat.  Bank  (165 

Mass.  120),  192. 
Drexler  v.  McGlynn,  see  Dexter  v. 

McGlynn  (99  Cal.  143),  518. 
Driesbach   v.    Wilkesbarre    Bank 

(104  U.  S.  52),  337. 
Driggs  v.  Driggs  (11  N.  Y.  St.  R. 

25fi),  527. 


Drinkwater  v.  Tibbetts  (17  Mo.  16), 

530. 

Drovers'  Nat  Bank  v.  Anglo-Amer- 
ican Co.  (117  111.  100).  305.    • 

v.  O'Hare  (119  111.  646),  204. 

v.  Packing  Co.  (117  111.  100),  256, 

305. 
Drown  v.  Pawtucket  Bank  (15  Pick. 

88),  283,  294 
Duckert  v.  Von  Lilienthal  (11  Wis. 

56),  548. 
Duckett  v.  Nat.  Mechanics'  Bank 

(86  Mo.  400),  217. 

Duerson  v.  Alsop  (27  Grat  229),  524. 
Duffy  v.   O'Connor  (7  Baxt.  498), 

529. 

Dufaur  v.  Morse  (9  La.  333),  478, 481. 
Duggan  v.  King  (1  Rice,  239),  439. 
Dull  v.  Bricker  (76  Pa.  255),  358. 
Dumont  v.  Pope  (7  Blackf.  367),  423, 

552. 
Dunavan  v/Flynn  (118  Mass.  537), 

359. 
Dunbar  v.  Tyler  (44  Miss.  1),  464, 

598 

Duncan  v.  Berlin  (60  N.  Y.  151),  243, 
356. 

v.  Biscoe  (7  Ark.  175),  89,  106. 

v.  Brennan  (83  N.  Y.  487),  329. 

v.  First  Nat.  Bank  (Fed.  Cas. 
No.  4135).  337. 

v.  Maryland  Sav.  Inst.  (10  Gill 
&  J.  299),  635. 

v.  McCullough  (4  S.  &  R.  480), 
4C3. 

v.  State  Bank  (2  111.  262),  622. 

v.  Young  (1  Mart.,  O.  S.,  32).  475. 
Dunkle  v.  Renick  (6  Ohio  St.'  527), 

334. 
Dunlap  v.  Smith  (12  111.  399),  343, 

591. 
Dunn  v.  Adams  (1  Ala.  527),  54a 

v.  Kyle  (14  Bush,  134),  122. 
Dunnegan  v.  Stevens  (122  I1L  396), 

529. 
Dupee  v.  Swigert  (127  111.  494),  30, 

102. 
Dupre  v.  Richard  (11  Rob.,  La.,  495), 

552. 

Durham  v.  Price  (5  Yerg.  300),  538, 
Durkie  v.  City  Bank  (13  Wis.  216), 

330. 
Durnford  v.  Johnson  (2  Mart,  O.  S., 

183),  430. 

Durr  v.  State  (59  Ala  24),  556. 
Duryee  v.  Denison  (5  Johns.  248), 

542. 
Dustin  v.  Hodgen  (33  III  352),  206. 


734 


TABLE   OF   CASES. 


References  are  to  pages. 


Dutch  v.  Boyd  (81  Ind.  146),  620. 
Dutcher  v.  Importers'  and  Traders' 

Nat.  Bank  (59  N.  Y.  5),  578. 
Dutchess  Co.  Bank  v.  Ibbotson  (5 

Denio,  110),  547. 
Button  v.  Bratt  (11  S.  W.  R.  821), 

537. 
v.  Connecticut  Bank  (13  Conn. 

493),  87. 
v.   Merchants'  Nat   Bank   (16 

Phila.  94),  655. 
Duvall  v.  Farmers'  Bank  (9  Gill  & 

J.  31),  184,  400,  529,  538. 
v.  Farmers'  Bank  (7  Gill  &  J. 

44),  529. 
Dwight  v.  Richardson  (12  Smedes 

&  M.  325),  545. 
v.  Scovil  (2  Conn.  654).  521. 
Dye  v.  Scott  (35  Ohio  St.  194),  530, 

534. 
Dykers  v.  Leather  Manuf.  Bank  (11 

Paige,  612),  254,  261. 
Dykman  v.  Northridge  (153  N.  Y. 

662),  409. 

v.  Northridge  (1  App.  Div.  26), 
409. 

E. 

Eager  v.  Brown  (11  La.  Ann.  625), 

505. 

Eagle  Bank  v.  Chapin  (3  Pick.  180), 
510,  512. 

v.  Hathaway  (5  Met.  212),  487. 
Eagle  Manuf.  Co.   v.   Belcher  (89 

Ga.  218),  213,  647. 
Early  v.  Foster  (7  Blackf.  35),  402. 

v.  McCart  (2  Dana,  414).  350. 
Barnes  v.  Dorius  (102  111.  350),  106. 
Earnest  v.  Taylor  (25  Tex.  Sup.  37), 

505. 
Eason  v.  Isbell  (42  Ala.  456),  409, 

443. 
East  Haddam  Bank  v.  Scovil  (13 

Conn.  303),  307. 

East  River  Bank  v.  Gedney  (4  E.  D. 
Smith.  582),  511. 

v.  Hoyt  (41  Barb.  440),  148,  170. 
East  River  Nat.  Bank  v.  Gove  (57 

N.  Y.  597).  206,  207. 
Eastern  Bank  v.  Brown  (17  Me.  356), 
481. 

v.  Capron  (22  Conn.  639),  590. 
Eastern  Township  Bank  v.  Vernon 

Nat.  Bank  (22  Fed.  R  186),  152. 
Eastman  v.  Coos  Bank  (1  N.  H.  23), 

146. 


Eaves  v.  Exchange  Bank  (79  Ma 
182),  567. 

v.  Savings  Bank  (27  Conn.  229), 

639. 
Ecker  v.  First  Nat.  Bank  (59  Md. 

291).  153. 

Edgar  v.  Greer  (8  Iowa,  394),  427, 428. 
Edgerly  v.  Emerson  (23  N.  H.  555), 

118. 
Edson  v.  Angell  (58  Mich.  336),  282. 

v.  Fuller  (22  N.  H.  183),  359,  374. 

v.  Jacobs  (14  La.  494).  478. 
Edwards  v.  Moses  (2  Nott  &  McC. 
433),  435. 

v.  Shields  (7  Bradw.  70),  401. 

v.  Tandy  (36  N.  H.  540),  532. 

v.  Thomas  (66  Mo.  468),  482. 
Egbert  v.  Payne  (99  Pa.  239).  213. 
Ehrichsen  v.  De  Mill  (75  N.  Y.  370), 

350. 
Eichelberger  v.  Finley  (7  Har.  &  J. 

381),  255. 
Eichnor  v.  Bowery  Bank  (45  N.  Y. 

Soipp.  68),  241. 
Eisenford  v.  Dillenback  (15  Hun, 

23),  431. 

Elder  v.  First  Nat.  Bank  (12  Kan. 
238),  68.  327. 

v.  National  Bank  (55  N.  Y.  Supp. 

576),  261. 
Elgin  City  Bkg.  Co.  v.  Self  (35  S. 

W.  R.  953),  385. 

Ellicott  v.  Barnes  (31  Kan.  170),  282, 
610. 

v.  White  (51  N.^C.  98),  552. 
Elliot  v.  Abbott  (12  N.  H.  549),  152. 

v.  Branch  Bank  (4  Ark.  424),  51. 

v.  Himrod  (108  Pa,  569),  40,  56. 
Ellis  v.  Commercial  Bank  (7  How., 
Miss.,  294),  410,  451,  488. 

v.  First  Nat.  Bank  (11  III  App. 
275),  339. 

v.  Little  (27  Kan.  707),  595. 

v.  Ohio  Life  Ins.  Co.  (4  Ohio  St. 

628),  264.  270,  378. 
Ellison  v.  Tuttle  (26  Tex.  283),  319. 
Ellwood  v.  First  Nat  Bank  (41  Kan. 

475),  592. 

Elmer  v.  Bank  (12  Kan.  238),  67. 
El  Paso  Nat.  Bank  v.  Fuchs  (34  S. 

W.  R.  203),  285. 
Elwood  v.  State  Treasurer  (23  Vt 

701),  73. 

Ely  v.  Sprague  (Clarke  Ch.  359),  114. 
Emory  v.  Joice  (70  Mo.  537),  193. 
Empire  City  Bank,  In  re  (18  N.  Y. 

199,  6  Abb.  Pr.  385),  80,  95,  105, 

107,  108,  574. 


TABLE    OF   CASES. 


735 


References  are  to  pages. 


Empire  Mills  v.  Allston  Grocery  Co. 

(15  S.  W.  R,  505),  60. 
Emporia  Nat.  Bank  v.  Shotwell  (35 

Kan.  360),  345. 

English   v.   Trustees  (6    Ind.   437), 
422. 

v.  Wall  (12  Rob.,  La.,  132),  526. 
Eno,  In  re  (54  Fed.  R.  669),  142. 
Eppright  v.  Nickerson  (78  Mo.  482), 

576. 
Erickson  v.  Inman-Paulson  Co.  (54 

Pac.  R.  949),  357. 
Erie  Bank  v.  Smith  (3  Brewst.  9), 

329 
Erie  Co.  Sav.  Bank  v.  Coit  (104  N. 

Y.  532),  635. 
Erisman  v.  Delaware  Co.  Bank  (37 

Wkly.  Notes  Cas.  578),  216.  218. 
Eschelberger  v.  Pike  (22  La.  Ann. 

142),  312. 
Espy  v.  Bank  (11  Wall.  605),  243, 

266. 
Essex  Co.  Nat.  Bank  v.  Montreal 

Bank  (7  Biss.  193).  298,  363. 
Estes  v.  Tower  (102  Mass.  65),  420, 

429. 
Etheridge  v.   Ladd   (44  Barb.  69), 

421. 

Etting  v.  Commercial  Bank  (7  Rob., 
La.,  459),  147. 

v.  Schuylkill  Bank  (2  Pa.  355), 

509,'  515,  548. 

Evans  v.  Evans  (82  Iowa,  492),  217, 
219. 

v.  Norris  (1  Ala.  511),  393. 

v.  Stuhrberg  (78  Mich.  145),  401. 

v.  United  States  (153  U.  S.  584), 

144. 
Evansville  Bank  v.  German  Am. 

Bank  (155  U.  S.  556),  211,  212, 

293,  297,  301,  315,  316,  317,  322, 

324,  610,  611,  613,  614. 
Evansville  Nat.  Bank  v.  Met.  Nat. 

Bank  (2  Biss.  527),  89. 
Ewing  v.  Robeson  ( 15  Ind.  26),  72. 

v.  Toledo  Sav.  Bank  (43  Ohio  St. 

31),  331. 

Exchange  Bank  v.  Gulick  (24  Kan. 
359),  222. 

v.  Hubbard  (62  Fed.  R.  112),  355, 
361. 

v.  Knox  (19  Grat.  739),  575,  577, 
591,  598. 

v.  Rice  (107  Mass.  37),  359,  372. 

v.  Sutton  Bank  (78  Md.  577),  304, 

348.  432. 
Exchange  Banking  Co.  v.  Mudge  (6 

Rob.,  La.,  387),  574,  591. 


Exchange  Nat.  Bank  v.  Bank  of 
Little  Rock  (58  Fed.  R.  140), 
346.  . 

v.  Third  Nat.  Bank  (112  U.  S. 

276),  200,  212,  294,  305,  306. 

Exchange  &  Banking  Co.  v.  Boyce 

(3  Rob.,  La.,  307).  330. 
Exeter  Bank  v.  Gordon  (8  N.  H.  66), 

389. 
Exeter  Nat.  Bank  v.  Orchard  (39 

Neb.  485).  336. 
Eyerman  v.  Second  Nat.  Bank  (84 

Mo.  408).  214,  216. 
Eyrich  v.   Capital  State  Bank  (67 

Miss.  60),  219,  232. 

F. 

Faberss  v.  Mercantile  Bank  (23  Pick. 

330),  302,  304,  306. 
Fagan  v.   Stillwell  (19  Ark.   282), 

342. 
Fahnestock  v.  Smith  (14  Iowa,  561), 

475. 
Fairchild  v.  Ogdensburgh  Co.  (15 

N.  Y.  337),  351. 

Fairfield  Sav.  Bank  v.  Chase  (72  Me. 
226),  173,  176. 

v.  Small  (90  Me.  546),  643. 
Faivre  v.  Union  Sav.  Inst.  (13  N.  Y. 

Supp.  423),  649. 
Falconer  v.  Campbell  (2  McLean, 

195),  58. 
Fales  v.  Wadsworth  (33  Me.  553), 

553. 

Falk  v.  Rothschild  (61  Ga.  595),  456. 
Falkland  v.  National  Bank  (84  N.  Y. 

145).  231. 

Fall  River  Bank  v.  Sturtevant  (12 
Gush.  372),  172. 

v.  Willard  (5  Met.  220),  388. 
Faneuil    Hall    Bank    v.    Bank    of 

Brighton  (16  Gray,  534),  165, 166. 
Farley  v.  Hewson  (10  La.  Ann.  783), 

450,  456. 

Farmer  v.  Manhattan  Sav.  Inst.  (60 
Hun,  462),  646.  647. 

v.  Rand  (14  Me.  225),  401,  531. 

v.  Sewell  (16  Me.  456),  530. 
Farmers'  Bank,  Appeal  of  (48  Pa. 

57).  231,  232. 
Farmers'  Bank,  In  re  (2  Bland,  394), 

90. 

Farmers'  Bank  v.  Baldwin  (23  Minn. 
198),  197. 

v.  Battle  (4  Humph.  86),  481, 494. 

v.  Burchard(33Vt.346),331,332. 


736 


TABLE    OF    CASES. 


References  are  to  pages. 


Farmers'  Bank  v.  Butchers'  Bank 

(16  N.  Y.  125),  152,  157,  166, 

244.  258,  259,  433. 
v.  Butler  (3  Litt.  498),  511. 
v.  Calk  (14  Ky.  Law  R  617),  51. 
v.  Campbell  (2  McLean,  158),  95. 
v.  Catlin  (13  Vt.  39),  537. 
v.  Champlain   Transp.   Co.   (18 

Vt.  131),  188. 
v.  Bearing  (91  U.  S.  29),  41,  51, 

336. 
v.  Detroit  R  Co.  (17  Wis.  372, 

383),  191,  194,  197. 
v.  Dunbar  (32  Neb.  487),  243, 258. 
v.  Duvall  (7  Gill  &  J.  78),  419, 

449.  459,  513,  520. 
v.  Empire  Stone  Co.  (5  Bosw. 

^7),  379. 

v.  Ewing  (78  Ky.  264),  529. 
v.  Garten  (34  Mo.  119),  333,  572. 
v.  Gunnell  (26  Grat.  131),  523, 

524. 

v.  Hoagland  (7  Fed.  R.  159),  334. 
v.  Inglehart  (6  Gill,  50),  90. 
v.  Jenks  (7  Met*  592),  50,  95. 
v.  Kercheval  (2  Mich.  504),  403. 
v.  Kimball  Milling  Co.  (1  S.  Dak. 

388),  119. 

v.  King  (57  Pa.  202),  213,  217. 
v.  McFerran  (11  Ky.  Law  R 183), 

231 

v.  Newiand  (97  Ky.  464),  311. 
v.  Parker  (37  N.  Y.  148),   333, 

335. 

v.  Payne  (25  Cona  444),  172. 
v.  Planters'  Bank  (10  Gill  &  J. 

422),  288,  290. 
v.  Reynolds  (4  Rand.  186),  558, 

560. 
v.  Slayden  (8  Tex.  Civ.  App.  63), 

209. 

v.  Small  (2  T.  B.  Mon.  88),  39& 
v.  Third  Nat.  Bank  (165  Pa.  500), 

657. 

v.  Turner  (2  Litt  13),  490. 
v.  Troy  Bank  (1  Doug.  459),  147, 

154. 
v.  Van  Meter  (4  Rand.  553),  393, 

459. 

v.  Williamson  (61  Mo.  259),  50. 
v.  Willis  (7  W.  Va.  31),  343,  574, 

590. 
Farmers'    Deposit  Bank  v.  Penn 

Bank  (123  Pa.  283),  586. 
Farmers'  Gold  Bank  v.  Wilson  (58 

Cal.  600),  86. 

Farmers'  Loan  Co.  v.  Fidelity  Trust 
Co.  (86  Fed.  R.  541),  219. 


Farmers'  Nat.  Bank  v.  Backus  (77 

N.  W.  R.  142),  566. 
v.  Mcllhenny  (42  Fed.  R  801), 

625. 

v.  Rogers  (1  N.  Y.  Supp.  757),  625. 
v.  Smith  (77  Fed.  R  129),  191. 
v.  Stover  (60  Cal.  387),  337. 
v.  Templeton  (40  S.  W.  R  412), 

151. 
Farmers'  Trust  Co.  v.  Funk  (49  Neb. 

353),  103. 
Farmington  Savings  Bank  v.  Fall 

(71  Me.  49),  636. 
Farnsworth  v.  Alien  (4  Gray.  453), 

422. 

v.  Mullen  (164  Mass.  112),  446. 
Farnum  v.  Fowle  (12  Mass.  89),  458. 
Farwell  v.  Curtiss  (7  Biss.  160),  392, 

419. 
v.  St.  Paul  Trust  Co.  (45  Minn. 

495),  462,  463,  531,  533. 
Faulkner   v.    Cumberland    Valley 
Bank  (14  Ky.  Law  R  923), 
234. 
v.  Faulkner  (73  Mo.  327),   402, 

445.  546. 
v.  Union  Banking  Co.  (6  Wkly. 

Notes  Cas.  109),  600. 
Featherstone  v.  Hendrick  (59  111. 

App.  499),  402.  533. 
Fell  v.  Dial  (14  S.  C.  247),  544 
Fells  Point  Sav.  Inst.  v.  Werdon  (18 

Md.  320),  280,  290,  405. 
Fennell  v.  Nesbit  (18  B.  Mon.  351), 

586. 

Ferguson  v.  Bank  (25  Kan.  333),  288. 
Fernald  v.  Bush  (131  Mass.  591),  434, 

542. 
Fernandez  v.  Lewis  (1  McCord,  322), 

425. 
Fessenden  v.  Summers  (62  Cal  484), 

395. 
Fidelity  Co.  v.  Merchants'  Bank  (9* 

L.  R  A.  108),  232,  233. 
Fidelity  Ins.  Co.  v.  Wright  (16  Wkly. 

Notes  Cas.  177).  64a 
Field  v.  New  Orleans  Newsp.  Co. 

(21  La.  Ann.  24),  521. 
v.  Nickerson  (13  Mass.  131),  428. 
Fields  v.  Mallett  (10  N.  C.  465',  447. 
Finch  v.  Karste  (97  Mich.  20),  300, 

303,  304,  311. 
Fifth  Nat.  Bank  v.  Armstrong  (40 

Fed,  R  46),  322. 

v.  Ashworth  (123  Pn.  212).  312. 
Fifth  Ward  Sav.  Bank  v.  First  Nat. 
Bank  (48  N.  J.  Law,  513),  840f 
636,  637,  638. 


TABLE   OF   CASES. 


737 


Finn  v.  Brown  (142  U.  S.  56),  82. 
Finnell  v.  Sandford  (17  T.  B.  Mon. 

748),  95. 
First  Commercial  Bank  v.  Talbert 

(103  Mich.  625),  567. 
First  Nat.   Bank  v.   Accain    Nat. 

Bank  (60  N.  Y.  278),  287. 
v.  Alexander  (84  N.  C.  30),  433. 
v.  Allen  (100  Ala.  476),  175,  266. 
v.  Anderson  (172  U.  S.  573),  64, 

190. 

v.  Andrews  (7  Wash.  261),  197. 
v.  Armstrong  (36  Fed.  R.  59), 

301. 

v.  Ayers  (150  U.  S.  660),  52. 
v.  Babbidge  (160  Mass.  563),  179. 
v.  Babcock,  (94  Cal.  96),  403. 
v.  Bache  (71  Pa.  213),  213,  320, 

321. 
v.  Bank  of  Monroe  (33  Fed.  R. 

408),  301,  316. 

v.  Behan  (91  Ky.  560),  320.  321. 
v.  Belt  (29  111.  App.  134),  214. 
v.  Bennett  (33  Mich.  520),  199. 
v.  Bennington  (16  Blatchf/ 53), 

198. 
v.  Bensley  (2  Fed.  R,  609),  365, 

368,  425. 

v.  Blake  (60  Fed.  R.  78),  164, 179. 
v.  Bremer  (7  Ind.  App.  685),  272. 
v.  Brooks  (22  III  App.  238),  206. 
v.  Buckhannon  Bank  (80  Md. 

475).  433,  435. 
v.  Christopher  (40  N.  J.  Law, 

435),  162,  173. 
v.  Citizens'  Bank  (Fed.  Cas.  No. 

4802),  287. 
v.  City  Nat.  Bank  (34  S.  W.  R 

458),  305. 
v.  Clark  (134  N.   Y.   368),  215, 

245,  281,  617. 
v.  Clark  (61  Md.  400),  362,  364, 

•  366,  369. 

v.  Clark  (42  Hun,  16),  279. 
v.  Coates  (8  Fed.  R.  540',  348. 
v.  Commonwealth  (33  S.  W.  R. 

1105),  75. 

v.  Connoway  (4  Houst.  206),  536. 
v.  Davis  (114  N.  C.  343),  324. 
v.  Devenish  (15  Colo.  229).  320. 
v.  Dickson  (6  Dak.  301),  210. 
v.  Drake  (29  Kan.  311),  119. 
v.  Dubuque  R.   Co.  (52    Iowa, 

378),  245,  246,  617. 
v.  Duncan  (Fed.  Cas.  No.  4804), 

75,  334. 
v.  Elevator  Co.  (10  S.  Dak.  167), 

67. 
47 


First  Nat.  Bank  v.  El  more  (52  Iowa, 

541),  67,  196. 

v.  Falkhannan  (94  Cal.  141),  530. 
v.  Farmers'  Bank  (76  N.  W.  R. 

430),  260,  266. 
v.  Farneman  (93  Iowa,  161),  488, 

515. 
v.  First  Nat.  Bank  (Fed.  Cas. 

No.  4810),  811. 
v.  First  Nat.  Bank  (58  Ohio  St. 

207),  270. 
v.  First  Nat.  Bank  (151  Mass. 

280),  270,  271. 
v.  First  Nat.  Bank  (76  Ind.  561), 

297. 
v.  First  Nat.  Bank  (75  N.  W.  R. 

843),  323. 

v.  Fiske  (133  Pa.  241),  364,  367. 
v.  Foote  (12  Utah,  157),  180. 
v.  Fourth  Nat.  Bank  (56  Fed. 

R.  967),  172,  305. 
v.  Fourth  Nat.  Bank  (89  N.  Y. 

412),  656. 
v.  Fourth  Nat.  Bank  (77  N.  Y. 

320),  312,  434,  435. 
v.  Garlinghouse    (22    Ohio  St. 

492),  75,  336. 

v.  Gifford  (47  Iowa,  575),  177. 
v.  Gillilan  (72  Mo.  77),  67. 
v.  Graham  (79  Pa.  106),  149, 161, 

285.  287. 
v.  Greenville  Nat.  Bank  (84  Tex. 

40),  281. 

v.  Gruber  (91  Pa.  377),  337,  339. 
v.  Haire  (36  Iowa,  443',  197. 
v.  Hanover  Nat.  Bank  (66  Fed. 

R.  34),  169. 

v.  Harris  (103  Mass.  514).  198. 
v.  Hartman  (110  Pa.  196),  530. 
v.  Hatch  (78  Mo.  13),  355,  418, 

467. 
v.  Hawkins  (79  Fed.  R  61),  64, 

99. 
v.  Hawkins  (174  U.  S.  364),  64, 

99 

v.  Hooh  (89  Pa.  24),  192. 
v.  Hughes  (46  Pac.  R.  272),  212. 
v.  Johnston  (97  Ala.  655),  579. 
v.  Kidd  (20  Minn.  234),  195. 
v.  Kimberlands  (16  W.  Va.  555), 

146,  149. 

v.  La  Due  (39  Minn.  415),  596. 
v.  Lamb  (57  Barb.  429),  336. 
v.  Lamb  (50  N.  Y.  95),  75. 
v.  Leach  (52  N.  Y.  350),  244. 
v.  Lippell  (9  Colo.  594),  320. 
v.  Loylied  (28  Minn.  396),  163,. 

182. 


738 


TABLE    OF    CASES. 


references  are  to  pages. 


First  Nat.  Bank  v.  Mansfield  Sav. 

Bank  (3  Ohio  Dec.  141).  308. 
v.  Manuf.  Nat.  Bank  (10  Ohio 

Cir.  Ct  R  233),  154. 
v.  Marshall  (26  111.  App.  440), 

567. 

v.  Maxfield  (83  Me.  576),  532. 
v.  McCallister  (33  Neb.  646),  438. 
v.  McMichael  (106  Pa.  460),  243. 
v.  Merchants'  Bank  (9  L.  R  A. 

108),  232,  233. 

v.  Miller  (37  Neb.  500),  432. 
v.  Miltonberger  (33  Neb.  847), 

334. 
v.  Morgan  (132  U.  S.  147),  622, 

627,  628. 

v.  Morse  (26  S.  W.  R  417),  114. 
v.  Moss  (41  La.  Ann.  227;,  377. 
v.  Myers  (83  111.  507),  292. 
v.  Nat.  Exchange  Bank  (92  U.  S. 

122),  190,  191. 

v.  Nelson  (105  Ala.  180),  184, 356. 
v.  New  Milford  (36  Conn.  93), 

161,  168. 
V.  Northw.  Nat.  Bank  (152  I1L 

296),  259,  270. 
v.  Northw.  Nat.  Bank  (40  IM. 

App.  640),  270. 

v.  Ottawa  (43  Kan.  294),  192. 
v.  Owen  (23  Iowa,  185),  417,  476. 
v.  Pahquioque  Bank  (14  Wall. 

383),  573,  592,  593,  594, 
v.  Payne  (42  S.  W.  R  736),  212. 
v.  Pegram  (118  N.  C.  671),  159. 
v.  Peisert  (2  Penny.  277),  174, 

175. 

v.  Peltz  (176  Pa.  513),  234. 
v.  Pierson  (24  Minn.  140),  197. 
v.  Price  (52  Iowa,  570),  309. 
v.  Randall  (1  White  &  W.  Civ. 

Cas.  975),  245. 

v.  Reed  (36  Mich.  263),  120,  122. 
v.  Reno  (73  Iowa,  145),  193. 
v.  Rex  (89  Pa.  308),  285,  286. 
v.  Ricker  (71  III  439),  264,  274, 

377. 
v.  Rush  School  Disk  (32  P.  F. 

Smith,  307),  350. 
v.  Ryerson  (23  Iowa,  508),  399, 

536. 
v.  Sanford  (62  Mo.  App.  394), 

610. 
v.  Schuyler  (39  N.  Y.  Super.  Ct 

440),  379. 
v.  Security  Nat  Bank  (34  Neb. 

71),  280. 
v.  Sherbourne  (14  Bradw.  566), 

198. 


First  Nat.  Bank  v.  Shoemaker  (117 

Pa.  94;,  201,  241. 
v.  Shreiner  (100  Pa.  188),  231, 

234. 

v.  Smith  (6  Fed.  R  215),  625. 
v.  Smith  (132  U.  S.  227),  487. 
v.  Smith  (05  N.  W.  R  437),  63. 
v.  Smith  (8  S.  D.  7),  67. 
v.  Smith  (36  Neb.  199),  337. 
v.  Sprague  (34  Neb.  318),  307. 
v.  State  Bank  (22  Neb.  679),  270. 
v.  Stauffer  (1  Fed.  R  187),  336. 
v.  Stewart  (107  U.  S.  678),"63, 68. 
v.  Stone  (106  Mich.  367),  161. 
v.  Strang  (138  111.  347),  287. 
v.  Strang  (28  111.  App.  325),  288, 

567 

v.  Taliaferro  (72  Md.  164),  184. 
v.  Tappan  (6  Kan.  456),  345. 
v.  Whitman  (94  U.  S.  343),  244 
v.  Williamson  (35  S.  W.  R  573), 

588. 

v.  Wood  (51  Vt  471).  503,  508. 
v.  Zahm  (1  Atl.  R.  190),  520. 
v.  Zent  (39  Ohio  St.  105),  284, 

286,  287. 

First  Presbyterian  Church  v.  Nat. 
State  Bank  (57  N.  J.  Law, 
27),  193. 
v.   Nat.  State  Bank  (58  N.  J. 

Law,  406),  193. 
Fish  v.  Jackman  (19  Me.  467),  474, 

488. 
Fisher  v.  Beckwith  (19  Vt  31),  355, 

359,  375,  418. 
v.  Continental  Nat   Bank  (64 

Fed.  R  707),  328. 
v.  Essex  Bank  (5  Gray,  373),  87. 
v.  State  Bank  (7  Blackf.  610), 

437,  474 
Fishkill  Sav.  Inst.  v.  Bostwick  (80 

N.  Y.  162),  161.  168. 
Fisk  v.  Germam'a  Nat  Bank  (40  La. 

Ann.  820),  286. 
v.  Morse  (16  N.  H.  271),  468. 
Fitch  v.  Citizens'  Nat.  Bank  (97  Ind. 

211),  530. 
Fitchburg  Bank  v.  Perley  (84  Mas-. 

433),  487. 

Fitler  v.  Morris  (6  Whart.  406),  492. 
Fitzhugh  v.  Bank  (3  T.  B.  Mon.  126), 

91. 

Flack  v.  Green  (3  Gill  &  J.  474),  515. 
Flagg  v.  Munger(9  N.  Y.  483),  72. 
Flanagan  v.  Mitchell  (16  Daly,  223), 

382. 

v.  Nash  (185  Pa.  41),  642. 
Flash  v.  Conn  (109  U.  S.  371),  100. 


TABLE   OF   OASES. 


739 


References  are  to  pages. 


Flato  v.  Mulhall  (72  Mo.  522),  356. 
Fleckner  v.  Bank  of  United  States 

(8  Wheat.  338),  152. 
Fleischer  v.  Rentschler  (17  Bradw. 

402;,  98,  114. 

Fleming  v.  Fulton  (6  How.,  Miss., 
473),  549. 

v.  McClure  (1  Brev.  428),  512. 

v.  Northampton     Bank     (Fed. 

Gas.  No.  4862a),  329. 
Fletcher  v.  Pierson  (69  Ind.   281), 
436,  460. 

v.  Sharpe  (108  Ind.  276),  600. 
Flint  v.  Rogers  (15  Me.  67),  421. 
Flint  Road  Cart  Co.  v.  Stephens  (32 

Mo.  App.  341),  594. 
Florence  Mining  Co.  v.  Brown  (124 

U.  S.  385),  245. 
Flour  Co.  v.  Merchants'  Bank  (90 

Ky.  225),  232. 
Flournoy  v.  National  Bank  (79  Ga. 

810),  234,  375. 
Floyd  Co.  Conam'rs  v.  Day  (19  Ind. 

450),  350. 

Foard  y.  Womack  (2  Ala.  368),  461. 
Fogarties  v.  State  Bank  (12  Rich. 

Law,  518),  245. 

Foland  v.  Boyd  (23  Pa.  476),  521. 
Folger  v.  Chase  (18  Pick.  63),  444, 

573. 
Follain  v.  Dupre  (11  Rob.,  La.,  454), 

413.  494,  495. 

Fonner  v.  Smith  (31  Neb.  107),  245. 
Foote  v.  Brown  (2  McLean,  369), 

392,  525. 
Forbes  v.  Omaha  Nat.  Bank  (10  Neb. 

338),  474,  493,  494. 
Ford  v.  Angebrodt  (37  Mo.  50),  381. 

v.  McClung  (5  W.  Va.  156),  464 

v.  Mitchell  (15  Wis.  304),  404. 

v.  Thornton  (3  Leigh,  753),  232. 
Fordred  v.    Seamen's    Sav.    Bank 

(10  Abb.  Pr.,  N.  S.,  425),  224. 
Foreman   v.   Walker  (4  La.  Ann. 

409),  365,  368. 

Forrest  v.  Rawlings  C35  Tex.  626), 
349. 

v.  Stewart  (14  Ohio  St.  246).  403. 
Fort  v.  Bank  of  Cape  Fear  (61  N.  C. 
417),  238,  342. 

v.  McCulley  (59  Barb.  87),  240. 
Fort  Dearborn  Nat.  Bank  v.  Blum- 
ens  weig  (46  III  App.  297), 
253. 

v.  Carter.  Rice  &  Co.  (152  Mass. 
34),  370,  379. 

v.  Seymour  (73  N.  W.  R.  724), 
162. 


Fort  Madison  Co.  v.  Batavian  Bank 

(71  Iowa,  270),  87. 
Fortier  v.  New  Orleans  Nat.  Bank 

(112  U.  S.  439),  196. 
Fortin  v.  Field  (17  La.  587),  552. 
Foss  v.  First  Nat.  Bank  (3  Fed.  R. 

185),  289. 
v.  Lowell  Sav.  Ass'n  (111  Mass. 

285),  215,  223,  644. 
Foster  v.  Bank  of  Abingdon  (88  Fed. 

R.  604\  108,  131,  132. 
v.  Bank  of  New  Orleans  (21  La. 

Ann,  338),  238. 
v.  Chase  (75  Fed.  R.  797),  82. 
v.  Essex  Bank  (17  Mass.  479),  63, 

284. 

v.  Julian  (24  N.  Y.  28),  450. 
v.  Lincoln  (79  Fed.  R.  170),  80. 
v.  Lincoln  (74  Fed.  R.  382),  80, 

81. 
v.  McDonald  (5  Ala.  376),  474, 

475. 

v.  Paulk  (41  Me.  425),  525. 
v.  Rincker  (4  Wyo.  484),  324. 
v.  Sineath  (2  Rich.  Law,  338), 

473,  474. 
«r.  Swasey  (3  Woodb.  &  M.  364), 

222. 
Fourth  Nat.  Bank  v.  Altheimer  (91 

Mo.  190).  477,  479. 
v.  City  Nat.  Bank  (68  111.  298), 

229,  233,  247,  251,  252,  253. 
v.  Hueschen  (52  Mo.  207),  414. 
v.  Mayer  (89  Ga.  108),  191,  314, 

.318. 
Fourth  Street  Bank  v.  Yardley  (165 

U.  S.  634),  245,  617. 
Fowl  v.  Todd  (1  Bay,  176),  456. 
Fowler  v.  Bowery  Sav.   Bank  (47 

Hun,  399),  643. 
v.  Equitable    Trust     Co.    (141 

U.  S.  384),  331,  333. 
v.  Fleming  (1  McMul.  282),  531. 
v.  Gate  City  Nat.  Bank  (88  Ga, 

29),  356,  379,  384. 
v.  Scully  (72  Pa.  456),  196. 
Fox,  Appeal  of  (93  Pa.  406),  651. 
Fox  v.  Horah  (1  Ired.  Eq.  358),  573. 
v.  Newall  (8  W.  L.  J.  421),  421. 
v.  Onondaga  Sav.  Bank  (7  N.  Y. 

Supp.  17).  646. 
Frances  v.  People's  Bank  (1  Ohio, 

N.  P.  281),  235. 
Francis  v.  Evans  (69  Wis.  115),  605, 

614,  615. 
Frank  v.  Chemical  Bank  (84  N.  Y. 

209),  265.    • 
v.  Wessels  (64  N.  Y.  155),  405. 


740 


TABLE    OF   CASES. 


References  are  to  pages. 


Franklin  Bank  v.   Byram  (39  JHe. 

489),  277. 
v.  Commercial    Bank  (3  Ohio 

Dec.  339),  90. 
v.  Commercial  Bank  (36  Ohio 

St.  350).  190. 

v.  Lynch  (52  Md.  270),  361. 

v.  Steward  (39  Me.  519;,  170. 

Franklin  Co.  v.  Lewiston  Inst.  (68 

Me.  43),  635. 
Frayzer  v.  Dameron  (6    Mo.  App. 

153),  440. 
Frazier  v.  Erie  Bank  (8  Watts  &  S. 

18),  213. 
v.  Warfield  (9  Smedes  &  M.  220), 

354. 

v.  Wilcox  (4  Rob.,  La.,  517),  330. 
Frear  v.  Dunlap  ( 1  Greene,  331).  402. 
Freeland  v.  MeCullough  (1  Denio, 

414),  104. 
Freeman  v.  Bank  (3  Wills.  Civ.  Gas. 

§  339),  191. 
v.  Boynton  (7  Mass.  483),  412, 

429. 
v.  Citizens'  Nat.  Bank  (78  Iowa, 

.  150),  299,  304. 

v.  Curran  (1  Minn.  169),  38ft. 
v.  O'Brien  (38  Iowa,  406),  537. 
v.  Wikoff  (16  La.  20),  506,  508, 

512. 
Freeman's  Bank  v.  Perkins  (18  Me. 

292),  408,  412. 
French    v.    Bank  of  Columbia   (4 

Cranch,  141),  457. 
v.  Citizens'  Nat.  Bank  (97  Ind. 

211),  403. 

v.  Irwin  (4  Baxt.  401),  244,  259. 
v.  Jarvis  (29  Conn.  847),  392. 399, 

431. 
v.  O'Brien  (52  How.   Pr.   394), 

640. 

v.  Redman  (13  Hun,  502),  634. 
Fresno  Nat.  Bank  v.  Superior  Court 

(83  Cal.  491),  627. 
Freund  v.   Importers'  &  Traders' 

Bank  (76  N.  Y.  352),  261. 
Friberg  v.  Cox  (97  Tenn.  550),  615. 
Fricke  v.  German  Sav.  Bank  (4  N. 

Y.  Supp.  627',  640,  646. 
Frosh  v.  Holmes  (8  Tex.  29),  398.  . 
Frost  v.  Harrison  (8  La.  Ann.  123), 

542. 
v.  Stokes  (55  N.  Y.  Super.  Ct 

76).  442,  449. 

Fryer  v.  Rankin  (11  Sim.  55).  247. 
Fugett  v.  Nixon  (44  Ma  295),  355. 
Fuller  v.  Dingman  (41  Iowa;  506), 
55L 


Fuller  v.  Hooper  (3  Gray,  334),  521. 

v.  Jewett  (37  Vt.  473),  319. 

v.  Ledden  (87  111.  310),  101. 

v.  McDonald  (8  Ma  213),  532. 

v.  Scott  (8  Kan.  25),  403. 
Fulton  v.  McCracken  (18  Md.  528), 

546. 
Fulton  Bank  v.  New  York  Canal 

Co.  (4  Paige,  127),  172,  175,  213. 

Fultz  v.  Walters  (2  Mont.  165),  288. 

Funz  v.  Spanhorst  (67  Mo.  256),  132. 

Furber  v.  Caverly  (42  N.  H.  74),  400, 

529 

v.  Stephens  (35  Fed.  R  17),  614. 

G. 

Gaar  v.  Centralia  Bank  (20  Bradw. 

611),  192. 

Gage  v.  Dubuque  R  Co.  (11  Iowa, 
310).  552. 

v.  Mechanics'  Nat  Bank  (79  111. 
62),  403. 

v.  Sanborn  (106  Mich.  269),  195. 
Gage  Hotel  Co.  v.  Union  Nat.  Bank 

(171  111.  531),  228. 

Gager  v.  Bank  of  Edgerton  (77  N. 
W.  R  920),  107. 

v.  Marsden  (77  N.  W.  R  922), 

109. 
Gaither  v.  Farmers'  Bank  (1  Pet 

44).  331. 
Gale  v.  Corey  (112  Ind.  39),  397. 

v.  Kern  per  10  La,  205),  546. 

v.  Tappan  (12  N.  H.  145),  412. 
Gallagher  v.  Black  (44  Me.  99),  357. 

v.  Roberts  (11  Ma  484),  187. 
Gallatin  v.  Bradford  (1  Bibb,  209), 

186. 
Gallegher  v.  Roberts  (2  Wash.  C.  C. 

191),  392,  417.  425. 
Galpin  v.  Hard  (3  McCord,  394),  452, 

501. 
Gammel  v.  Parramore  (58  Ga.  54), 

404. 
Gammond  v.  Bowery  Sav.  Bank 

(15  Daly,  483),  223,  644. 
Garden  City  Banking  Co.  v.  Ceil- 

fuss  (86  Wis.  616),  575. 
Gardner  v.  Bank  of  Tennessee  (1 
Swan,  420),  548,  550. 

v.  First  Nat.  Bank  (10  Mont 
149),  224. 

T.  Nat.  City  Bank  (39  Ohio  St 
600),  326,  246. 

v.  Post  (43  Pa.  19),  564. 
Garland  v.  West  (9  Baxt  815),  509. 


TABLE   OF   CASES. 


741 


References  are  to  pages. 


Garner  v.  National  Bank  (66  Fed. 

R  369),  596. 
Garnett  Bank  v.  Bowen  (21  Kan. 

354),  231. 
Garrettson  v.  North  Atchison  Bank 

(47  Fed.  R  867),  354,  356,  414, 

470. 
Garthwaite  v.  Seipe  (23  La.  Ann. 

218),  553. 

Garver  v.  Downie  (33  Cal.  176),  505. 
Gas  Bank  v.  Desha  (19  La.  459),  550. 
Gasoh  v.  World's  Fair  Co.  (59  111. 

•    App.  391),  97. 
Gassaway  v.  Jones  (2  Cranch,  C.  C. 

334),  542. 
Gaston  v.  American  Ex.  Bank  (29 

N.  J.  Eq.  98),  172. 

Gatch  y.  Fitch  (34  Fed.  R  566),  578. 
Gate  City  Ass'n  v.  National  Bank 

(126  Mo.  82),  219,  220. 
Gates  v.  Beecher  (60  N.  Y.  518),  414, 
470. 

v.  Parker  (43  Me.  544),  364. 
Gauch  v.  Harrison  (12  Bradw.  457), 

105. 
Gauly  v.  Troy  City  Bank  (98  N.  Y. 

487),  286. 
Gaunt  v.  Jones  (1  Cranch,  C.  C.  210), 

483. 
Gawtry  v.  Doane  (51  N.  Y.  84),  410, 

505. 

Gay  v.  Haseltine  (18  N.  H.  530).  382. 
Gavarre  v.  Sabatier  (24  La.  Ann. 

358),  465. 
Gazzam  v.  Armstrong  (3  Dana,  554), 

388. 
Gee  v.  Bacon  (9  Ala.  699),  590. 

v.  Williamson  (1  Port.  313).  457. 
Geitelsohn  v.  Citizens'  Sav.  Bank 

(40N.Y.  Supp.  6621,  639. 
Gelpecke  v.  Lovell  (18  Iowa,  17), 

444. 
Geneva  Bank  v.  Howlett  (4  Wend. 

328),  491. 
Georgia  Bkg.  Ass'n  v.  Love  &  Good 

Will  Soc.  (85  Ga.  293),  265. 
Georgia  Nat.  Bank  v.  Henderson  (46 

Ga.  487),  349. 
Georgia  Seed  Co.  v.  Talmage  (96 

Ga.  254),  232. 

Gerard  v.  La  Coste  (1  Dall.  194),  376. 
Gerhardt  v.  Boatmen's  Sav.  Inst. 

(38  Mo.  60),  309. 
German  Bank  v.  Himstedt  (42  Ark. 

62),  219,  237. 
German-American  Bank  v.  Third 

Nat.  Bank  (5  Dili  104),  298, 299, 

323,  613. 


German  Nat.  Bank  v.  Burns  (12 

Colo.  539),  305. 

v.  Foreman  (138  Pa.  474),  234. 
v.  Medowcroft  (4  Bradw.  630), 

192. 
v.  National  State  Bank  (3  Colo. 

App.  17),  223. 
German  Savings  Bank  v.  Friend  (20 

N.  Y.  Supp.  434\  650. 
Germania  Bank  v.  Boutel  (60  Minn. 

189),  264 
Germania  Nat.  Bank  v.  Tooke  (101 

N.  Y.  442 1,  363. 
Germania   Sav.    Bank    v.    Wulfe- 

kuhler  (19  Kan.  60),  120,  189. 
Gerner  v.  Mosher  (78  N.  W.  R  384), 

128,  129. 
v.  Thompson  (74  Fed.  R  125), 

135,  593. 
Gerrish  v.  New  Bedford  Inst.  (128 

Mass.  159),  641,  643. 
Gettysburg  Nat.  Bank  v.  Kuhns  (62 

Pa.  88),  206. 
Gibbons  v.  Hecox  (105  Mich.  509), 

297. 

Gibbs,  In  re  (157  Pa.  59),  634. 

Gibbs  v.  Cannon  (9  S.  &  R  198),  403. 

Gibson  v.  Bailey  (24  Miss.  237),  380. 

v.  Goldthwaite(7  Ala.  281),  150. 

v.  Nat.  Park  Bank  (98  N.  Y.  87), 

221,  258. 
Giddings  v.  Baker  (80  Tex,  308),  128, 

129 
v.  McCumber  (51  III  App.  373), 

331 
Gifford  v.  Hardell  (88  Wis.  538),  432, 

434. 
v.  Rutland  Sav.  Bank  (63  Vt. 

108),  639,  641,  645,  646. 
Gilbert  v.  Dennis  (3  Met.  495),  4ia 
Gilchrist  v.  Donnell  (53  Mo.  591), 

505.   . 

Giles  v.  Perkins  (9  East,  12, 14),  211. 
Gill  v.  Palmer  (29  Conn.  54),  469. 

v.  Weller  (52  Md.  8),  381. 
Gillespie  v.  Campbell  (39  Fed.  R 

724),  379. 
v.  Hannehan  (4  McCord,  503), 

463. 

Gillett  v.  Averill  (5  Denio,  85),  459. 
v.  Campbell  (1  Denio,  520),  148, 

193. 
v.   Moody  (3  Comst  479),  189, 

577. 
Gilliam  v.  Merchants'  Nat  Bank  (70 

111.  App.  592),  228. 

Gillig  v.  Lake  Bigler  Road  Co.  (2 
Nev.  214),  383. 


742 


TABLE   OF   CASES. 


References  are  to  pages. 


Gillilan  v.  Myers  (31  Til  525),  849, 

376. 
'Oilman  v.  King  (2  Cranch,  C.  C.  48), 

886. 
Gilroy  v.  Brinkley  (12  Heisk.  392), 

497,  498. 
Gindrat  v.  Mechanics'  Bank  (7  Ala. 

324),  187,  474,  475,  520. 
Girard  Bank  v.  Bank  of  Penn  Town- 
ship (39  Pa.  92),  237, 256, 290. 

v.  Richards  (4  Phila.  250),  329. 
Gist  v.  Lybrand  (3  Ohio,  307),  450, 

492,  496. 
Gladstone  Ex.  Bank  v.  Keating  (94 

Mich.  439),  255. 

Glaser  v.  Rounds  (16  R  L  235),  452. 
Glasgow  v.  Copeland  (8  Mo.  268), 
374. 

v.  Prattle  (8  Mo.  336),  489. 
Glaze  v.  Ferguson  (48  Kan.  157),  536. 
Glendenning    v.   Canary  (5  Daly, 

489),  541. 

Glenn  v.  Farmers'  Bank  (84  N.  C. 
631),  588. 

v.  Farmers'  Bank  (80  N.  C.  97), 

588. 
Glicksman  v.  Early  (78  Wis.  223), 

468,  471,  474. 

Glover  v.  Tuck  (1  Hill,  66),  368. 
Godchaux  v.  Union  Nat.  Bank  (28 

La.  Ann.  576),  269. 
Goddard,  In  re  (66  Yt.  415),  358. 
Goddard  v.  Grand  Trunk  Ry.  Co. 
(57  Ma  202),  148. 

v.  Merchants'  Bank  (2  Sandf. 
247,  4  N.  Y.  147),  346,  378, 
406. 
Godfrey  v.  Terry  (97  U.  S.  171),  98, 

114,  574 
Godwin  v.  Davenport  (47  Me.  112), 

431. 
Goetz  v.  Bank  (119  U.  S.  551,  560), 

267.  340. 
Gold  M  ni  ig  Co.  v.  National  Bank 

(90  U.  S.  640),  67. 
Goldbecu  v.  Kensington  Nat.  Bank 

(147  Pa.  267)".  167. 
Goldneck  v.  Bristol  Sav.  Bank  (123 

Mass.  320),  640,  646. 
Goldsborough  v.  Jones  (2  Cranch, 

C.  C.  305),  447. 

Good  v.  Arrowsmith  (Anth.  N.  P. 
289)  428,  537. 

v.  Martin  (95  U.  S.  90),  395,  400. 
Goodell  v.  Brandon  Nat  Bank  (63 

Vt  303),  288. 
Goodenow  v.  Duffield  (Wright,  455), 

562. 


Goodland  v.  Bank  of  Darlington  (74 

Mo.  App.  365),  64,  190. 
Goodloe  v.  Godley  (13  Smedes  & 

M.  233),  173,  443,  504,  505. 
Goodman  v.  Norton  (17  Me.  381),  513. 
Goodnow  y.  Warren  (122  Mass.  79), 

518. 

Goodwin  v.  Davenport  (47  Ma  112), 
431. 

v.  McCoy  (13  Ala.  271),  450,  496. 
Gordon   v.   Commonwealth    Bank 
(6  Duer,  76),  260. 

v.  Dreux  (6  Rob.,  La.,  399),  409. 

v.  Montgomery    (19  Ind.  110), 
529,  530. 

v.  Muchler    (34  La.  Ann.  604), 
246. 

v.  Parmalee  (15  Gray,  413),  429. 

v.  Pedrick  (6  Phila.  254),  47a 

v.  Price  (10  Ind.  385),  552. 
Gorman  v.  Gorman  (39  Atl.  R  1038), 
642. 

v.  Guardian  Sav.  Inst.  (4  Ma 

App.  180),  635,  650. 

Goshen  Nat.  Bank  v.  Bingham  (118 

N.  Y.  349),  256,  258. 

v.  State  (141  N.  Y.  379),  166. 
Gough  v.  Staats  (13  Wend.  549),  396, 

432. 
Gould  v.  Cayuga  Co.  Bank  (86  N.  Y. 

*  75),  286. 

Governor  v.  Bowman  (44  III  499), 
583. 

v.  Lagow  (43  III  134),  583. 
Gowan  v.  Jackson  (20  Johns.  176), 

425.  521. 

Gower  v.  Moore  (25  Ma  16),  440. 
Grafton  Bank  v.  Cox  (13  Gray,  503), 

450,  500. 

Graham  v.  National  Bank  (5  Stew. 
804),  67,  197. 

v.  Orange  Co.  Nat.  Bank  (35 
Atl.  R.  1053),  176. 

v.  Sangston  (1  Md.  59),  468,  498. 
Grammel  v.  Carmer  (55  Mich.  201), 

348. 
Grand  Bank  v.  Blanchard  (23  Pick. 

306),  419,  509. 
Grand    Gulf    Bank    v.   Archer  (8 

Smedes  &  M.  151),  330,  335. 
Grand  Gulf  Co.  v.  Barnes  (12  Rob., 

La.,  127),  486,  494,  514 
Granite  Bank  v.  Ayres(16  Pick.  892), 

447,  448. 
Granmer  v.  Carroll  (4  Cranch,  C.  C. 

400),  381. 
Grant,  In  re  (Fed.  Cas.  No.  5691),  520, 

521. 


TABLE   OF   CASES. 


743 


References  are  to  pages. 


Grant  v.  Coal  Co.  (80  Pa.  208),  603. 
v.  Cropsey  (8  Neb.  205),  159. 
v.  Long  (12  La.  402),  430. 
v.  McNutt  (33  N.  Y.  Supp.  62), 

658. 

v.  Spencer  (1  Mont.  136),  520, 534 
v.  Spokane  Nat.  Bank  (47  Fed. 

B,  673),  592. 
v.  Strutzel  (53  Iowa,  712),  456, 

522. 

v.  Wood  (12  Gray,  220),  376. 
Graves  v.  American  Ex.  Bank  (17 

N.  Y.  205),  236. 
v.  United  States  (165  U.  S.  323), 

137,  138,  139, 140, 141,  276. 
Gray  v.  Bell  (3  Rich.  Law,  71),  468. 
v.  Coffin  (9  Gush.  192),  100. 
v.  Gibson  (6  Mich.  300),  56. 
v.  Kentucky  Bank  (29  Pa.  365), 

369.  379. 

v.  Merriam  (46  111.  App.  337),  285. 
v.  Portland  Bank  (3  Mass.  364), 

46. 
Graydon  v.  Patterson  (13  Iowa,  256), 

298. 
Greatrake  v.  Brown  (2  Cranch,  C.  C. 

541).  414,  417,  480. 

Greele  v.  Parker  (5  Wend.  414).  363. 
Greeley  v.  Hunt  (21  Me.  455),  458. 
v.  Nashua  Sav.  Bank  (63  N.  H. 

145),  637. 

Green  v.  Darling  (15  Me.  141),  511. 
v.  Goings  (7  Barb.  652),  388. 
v.  Odd  Fellows  Bank  (65  CaL 

71),  290. 

v.  Raymond  (9  Neb.  295),  383. 
v.  Walkill  Nat.  Bank  (7  Hun, 

63),  592. 
Greenawalt  v.  Wilson  (52  Kan.  109), 

150. 

Greene  v.  Duncan  (37  S.  C.  239),  376. 
v.  Farley  (20  Ala.  322),  474. 
v.  Jackson  Bank  (18  R.  L  779), 

316,  317. 
Greenleaf  v.   Mumford   (50  Barb. 

543),  215. 
Greenough  v.  Smead  (3  Ohio  St. 

415),  413,  414. 
Greenwich  Bank  v.  De  Groodt  (7 

Hun,  210),  507. 

Greenwood  v.  Curtis  (6  Mass.  358),  57. 

Gregg  v.  George  (16  Kan.  546),  432. 

v.  Union  Co.  Nat.  Bank  (87  Ind. 

238),  280,  281. 
Gregory  v.  German  Bank  (3  Colo. 

333),  126. 

Greves  v.  Tomlinson  (19  La.  Ann. 
90),  506. 


Grew  v.  Breed  (10  Met.  569),  562, 

563,  564. 
Grief  v.  McDaniel  (14  La.  Ann.  155), 

494 

Griffin  v.  Central  Bank  (3  Ga.  371), 
590. 

v.  Chase  (36  Neb.  328),  610. 

v.  Goff  (12  Johns.  423),  428. 

v.  Kemp  (46  Ind.  172),  411,  432. 

v.  Rice  (1  Hilt.  184),  215,  235. 
Griffith  v.  Assman  (48  Mo.  66),  486, 
487. 

v.  Grogan  (12  Cal.  37),  392. 
Grigsby  v.  Ford  (3  How.,  Miss.,  184), 

543. 
Grinman  v.  Walker  (9  Iowa,  426), 

473. 
Grissom  v.  Commercial  Nat.  Bank 

(87  Tenn.  350),  185,  187,  235,  295. 
Grocer  Co.  v.  Farmers'  Bank  (71  Mo. 

App.  132),  244 
Grocers'  Bank  v.  Kingman  (16  Gray, 

473),  116. 
Grosners  v.  Farmers'  Bank  (13  Conn. 

104),  319. 

Grosvenor  v.  Stone  (8  Pick.  79),  540. 
Groth  v.  Gyger  (31  Pa.  271),  441. 
Groton  v  Dallheim  (6  Me.  476),  458. 
Guelich  v.  National  State  Bank  (56 

Iowa,  434),  306. 
Guignon  v.  Trust  Co.  (156  III  135), 

443,  509. 
Guild  v.  First  Nat.  Bank  (4  S.  Dak. 

566),  334,338. 
Guinan,  Appeal  of  (70  Conn.  342), 

644 

Gulden  v.  Linderman  (34  Pa.  58),  402. 
Gumbel  v.  Abrams  (20  La.  Ann.  568), 

238,  239,  342. 

Gunkle,  Appeal  of  (48  Pa.  13),  101. 
Gurnee  v.  Hatton  (63  Hun,  197), 

372. 
Gurney  v.  Giegling  (108  Mich.  295), 

402. 

H. 

Haber  v.  Brown  (101  Cal.  445),  404, 

452,  500. 
Hackett  v.  Reynolds  (114  Pa.  328), 

315. 
Haddock  v.  Citizens'  Bank  (53  Iowa, 

542),  185,  304 

v.  Murray  (1  N.  H.  140),  429. 
Hagar  v.  Buffalo  Sav.  Bank  (31  N. 

Y.  Supp.  448),  646. 
v.  Union  Nat  Bank  (63  Me.  509), 
114. 


744 


TABLE   OF   CASES. 


References  are  to  pages. 


Hager  v.  Boswell  (4  J.  J.  Marsh.  61), 

510. 

Hagerstown  Bank  v.  Adams  Exp. 
Co.  (45  Pa.  419),  558. 

v.  Loutlon  Sav.  Soc.  (3  Grant 

Cas.  135),  160. 
Hagerty  v.  Engle  (43  N.  J.  Law, 

299),  438. 
Haight  v.  Kindhart  (1  S.  C.  189), 

413. 

Haines  v.  McFerron  (19  Bradw.  172), 
304. 

v.  Nance  (52  111.  App.  406),  356, 

357,  375,  380. 
Hale  v.  Burr  (12  Mass.  86),  413,  440. 

v.  Danforth  (46  Wis.  554),  536. 

v.  Rawallie  (8  Kan.  136),  285. 

v.  Richards  (80  Iowa,  164),  217, 
277. 

v.  Walker  (31  Iowa,  344),  81. 
Hall  v.  Bank  of  Virginia  (14  W.  Va. 
584),  563. 

v.  Bracket  (60  N.  H.  215),  651. 

v.  Bradbury  (40  Conn.  82),  416. 

v.  Conk  (17  S.  W.  R  1022),  373. 

v.  Cordell  (147  U.  S.  116),  355, 
361. 

T.  First  Nat.  Bank  (133  III  234), 
360,  369,  372. 

v.  First  Nat.  Bank  (35  III  App. 
116),  365. 

v.  Flanders  (83  Me.  242),  356. 

v.  Jones  (32  111.  38).  543. 

v.  Monohan  (6  Iowa,  216),  392, 
399,  431. 

v.  Otis  (77  Me.  122),  291. 

v.  Paris  (59  N.  H.  71),  652. 

v.  Steel  (68  111.  231),  359,  381. 
Hallbrook  v.  Allen  (4  Fla,  87),  525. 
Hallett  v.  Harrower  (33  Barb.  537), 

620. 
Halliday  v.  Martinet  (20  Johns.  160), 

548. 
Hallowell  v.  Curry  (41  Pa.  322),  443, 

477,  478,  516. 
Hallowell  Bank  v.  Hamlin  (14  Mass. 

180),  150,  573. 
Hallowell  Nat.  Bank  v.  Marston  (85 

Me.  488),  532. 

Halls  v.  Howells  (Harp.  426),  419. 
Halsey  v.  Warden  (25  Kan.  128),  373. 
Haly  v.  Brown  (5  Pa.  178),  450. 
Hammell  v.  First  Nat  Bank  (2  Colo. 

App.  571),  219. 
Hammett  v.   Frenworthy  (50  Mo. 

App.  281),  530. 
Hammond  v.  Chamberlain  (26  Vt. 

406),  40a 


Hammond  v.  Hastings  (134  U.  S. 

401),  90. 
Hamtramck  v.  Selden  (12  Grat.  28), 

55,  341,  556. 

Hanauer  v.  Anderson  (16  Lea,  340), 
464,  524. 

v.  Doane  (12  Wall.  342),  55. 
Hancock  v.  Branch  Bank  (5  Ala. 
440),  619. 

v.  Colyer  (99  Mass.  187),  319. 
Hand  v.  Atlantic  Bank  (55  How. 

Pr.  231),  124,  132,  133. 
Hankin  v.  Squire  (5  Biss.  186),  371. 
Hannon  v.  Williams  (34  N.  J.  Eq. 

255),  652. 
Hanover  v.  Williams  (79  N.  C.  129), 

326. 
Hansborough  v.  Gray  (3  Grat.  356), 

399. 
Hanson  v.  Heard  (38  AtL  R  788), 

153. 
Hardin  v.  Boyce  (59  Barb.  425),  464, 

523. 

Hardy  v.  Chesapeake  Bank  (51  Md. 
262).  265,  267. 

v.  Pilcher  (57  Miss.  18),  351. 
Hargroves  v.  Chambers  (30  Ga  580), 

126,  128,  279,  554. 
Barker  v.  Anderson  (21  Wend.  372), 

395. 
H"arley  v.  Eleventh  Ward  Bank  (76 

N.  Y.  618),  321. 
Harmanson  v.  Bain  (1  Hughes,  188), 

574. 

Harmon  v.  Moffett  (6  D.  C.  297), 
540. 

v.  Wilson  (1  Duv.  222),  409. 
Harp  v.  Kenner  (19  La.  Ann.  63), 

439,  524. 

Harper  v.  Calhoun  (7  How.,  Miss., 
203),  148,  186,  342. 

v.  Carroll  (62  Minn.  152,  69  N. 

W.  R  610),  80,  81. 
Harriman  v.  Sanborne  (43  N.  H.  128), 

349. 
Harris  v.  Clark  (10  Ohio,  5),  413, 414. 

v.  Dorchester  (23  Pick.  112),  132. 

v.  Memphis  Bank  (4  Humph. 
519),  501. 

v.  Robinson  (4  How.  336),  475, 

489.  505,  506. 
Harrisburg  Bank  v.  Commonwealth 

(26  Pa.  451),  557. 

Harrison  v.  Bailey  (99  Mass.  620), 
540. 

v.  Brown  (16  La.  282),  548. 

v.  Crowdei  (6  Smedes  &  M.  464), 
420. 


TABLE   OF   CASES. 


745 


References  are  to  pages. 


Harrison  v.  Harrison  (118  Ind.  179), 

240. 
v.  Nicollet  Bank  (41  Minn.  488), 

840. 
v.  Smith  (83  Mo.  210),  282,  406, 

603,  609. 

v.  Sternan  (4  Phila.  315),  364, 
v.  Trader  (29  Ark.  85),  460. 
v.  Wright  (100  Ind.  515),  348. 
Hart  v.  Eastman  (7  Minn.  74),  404, 

431,  535. 

v.  Shorter  (46  Ala.  453),  352. 
v.  Smith  (15  Ala.  807),  349. 
v.  Wills  (52  Iowa,  56),  452. 
Hartford  Bank  v.  Barry  (17  Mass. 

94),  154. 

v.  Green  (11  Iowa,  476).  447. 
v.  Stedman  (3  Conn.  489),  475, 

487. 

Harvey  v.  Allen  (16  Blatch.  29),  596. 
v.  Lord  (11  Biss.  144),  103,  110, 

111,  59?. 

v.  Nelson  (31  La.  Ann.  434),  530. 
Harwood  v.  Ramsey  (15  S.  &  R.  31), 

192. 
Haseltine  v.  Dunbar  (62  Wis.  162), 

382. 
Hasey  v.  White  Pigeon  Co.  (1  Doug. 

193).  351,  352. 
Haskell  v.  Boardman  (90  Mass.  38), 

514,  515,  539. 
Haslett  v.  Kunhardt  (1  Rice,  189), 

440. 
Hastings  v.  Barnd  (75  N.  W.  R.  49), 

101. 

v.  Hopkinson  (28  Vt.  108),  39. 
Haswell  v.  Mechanics'  Bank  (26  Vt. 

100),  274. 
Hatch  v.  Burrows  (1  Woods,  439), 

561 
v.  City  Bank  (1  Rob.,  La.,  470), 

93. 
v.  Fourth  Nat.  Bank  (147  N.  Y. 

184),  218,  231. 
Hatcher  v.  Stallworth  (25  Miss.  376), 

359. 

Hatley  v.  Jackson  (48  Md.  254).  530. 
Hatton  v.  Holmes  (97  Cal.  208),  265. 
Hauptmann  v.  First  Nat.  Bank  (83 

Hun,  78),  254. 

Hauser  v.  Tate  (85  N.  C.  81),  69. 
Havens  v.  Griffin  (N.  Chip.  23),  361. 

v.  Talbot  (11  Ind.  323),  534, 
Hawes  v.  Blackwell  (107  N.  C.  196), 

245. 

v.  Oakland  (104  U.  S.  450),  91. 
Hawkins  v.  Barney  (27  Vt.  392),  404, 
405. 


Hawkins  v.  Cleveland  R.  Co.  (89 

Fed.  R.  266),  600. 
v.  Fourth  Nat,  Bank  (49  N.  E. 

R.  957),  167. 

v.  Olsen  (48  111.  277).  458. 
Hawley  v.  Jette  (10  Oreg.  31),  348, 

458. 
v.  Kountze  (38  N.  Y.  Supp.  327), 

335. 
Hawthorne  v.  Calef  (2  Wall  10),  96, 

99,  104. 
Haxton  v.  Bishop  (3  Wend.  13),  563, 

574,  582,  592. 
Hayden  v.  Bank  of  Syracuse  (15  N. 

Y.  Supp.  48),  566. 
v.  Chemical  Nat.  Bank  (84  Fed. 

R.  874),  578. 

v.  Thompson  (67  Fed.  R.  273),  593. 
v.Thompson   (71    Fed.  R.   60;, 

133.  134,  593. 
Haydon  v.  Alton  Nat.  Bank  (29  111. 

App.  458),  231. 
Hayes  v.  Beardsley  (136  N.  Y.  299), 

578,  579. 

v.  Fitch  (47  Ind.  21),  529. 
v.  Shoemaker  (39  Fed.  R.  319),  80. 
v.  Werner  (45  Conn.  246),  541. 
Haynes  v.  Courtney  (15  La.  Ann. 

630),  326. 
Hays  v.  Northwestern  Nat.  Bank 

(9  Grat.  127),  399. 

Hazard  v.  Cole  (1  Idaho,  276),  351. 
v.  Nat.  Exchange  Bank  (26  Fed. 

R.  94),  87. 

v.  White  (26  Ark.  155),  541. 
Hazel  ton  Coal  Co.  v.  Megargal  (4  Pa. 

324),  556. 
v.  Ryerson  (20  N.  J.  Law,  129), 

475,  491,  493,  494. 
Hazen  v.  Union  Bank  (1  Sneed,  115), 

330. 
Hazleton  v.  Colburn  (1  Robt.  345), 

434. 
v.  Union  Bank  (32  Wis.  34),  150, 

205. 
Hazlett  v.  Commercial  Nat.  Bank 

(132  Pa.  118),  298.  309. 
Healy  v.  Gil  man  (1  Bosw.  235),  377. 
Heath  v.  Portsmouth  Sav.  Bank  (46 

N.  H.  78),  639,  648. 
v.  Second  Nat.  Bank  (70  Ind. 

106),  194. 
v.  Van  Cott  (9  Wis.  516),  402, 

533. 
Heaven  v.  Fender  (11  Q.  B.  D.  503), 

250. 

Heavener  v.  Donnell  (7  Smedes  & 
M.  244),  375,  380. 


746 


TABLE    OF    CASES. 


References  are  to  pages. 


Heenan  v.  Nash  (8  Minn.  407),  382. 
Heidelback,  Ex  parte  (2  Low.  526), 

452,  453. 
Heidinger  v.  Spruance  (101  III  278), 

100. 
Heilschmidt  v.   McAlpine  (59  III 

App.  231),  358. 
Heironirnus    v.   Sweeney  (83    Md. 

146),  636,  652. 
Hellings  v.  Hamilton  (4  Watts  & 

S.  462),  452. 

Helm  v.  Swiggett  (12  Ind.  194),  85, 90. 
Helphenstine    v.    Vincennes    Nat. 

Bank  (65  Ind.  582).  438. 
Helwege  v.  Hiiiernia  Nat.  Bank  (28 

La,  Ann.  320),  259,  269. 
Hemmelman  v.  Hotaling  (40  Cal. 

Ill),  433. 
Hendershot  v.  Nebraska  Nat.  Bank 

(25  Neb.  127),  473. 

Henderson  v.  Griffin  (3  Mart.,  N.  S., 
403),  404. 

v.  Myers  (11  Phila.  616),  595. 

v.  (/Conor  (106  Cal.  385),  610. 

v.  Union  Bank  (6  Smedes  &  M. 

314),  50. 
Henderson  Loan   Ass'n  v.  People 

(163  111.  196),  42. 
Henderson  Nat.  Bank  v.  Alves  (91 

Ky.  142).  337. 
Henelly  v.  Rittenhouse  (7  D.  C.  76). 

289. 
Hennessy  v.  City  of  St  Paul  (54 

Minn.  219),  68. 
Henrick  v.  Farmers'  Bank  (8  Port. 

539),  380. 
Henrietta  Nat.  Bank  v.  State  Nat. 

Bank  (80  Tex.  648),  243. 
Henry  v.  Hazen  (5  Ark.  401),  381. 

v.  Martin  (88  Wis.  367),  600. 

v.  State  Bank  (3  Ind.  216),  486. 
Henshaw  v.  Root  (60  Ind.  220),  348, 

432. 
Hentig  v.  Staniforth  (5  M.  &  S.  122), 

55. 

Hepburn  v.  Citizens'  Bank  (2  La. 
Ann.  1007),  208. 

v.  Griswold  (8  Wall.  603),  560. 

v.  Toledano  (10  Mart.,  O.  S.,  643), 

452 
Herbert  v.  Servin  (4  N.  J.  Law,  225), 

505. 
Herkiiner  Bank  v.  Cox  (21  Wend. 

119).  409. 
Herndon    v.    Louisville    Banking 

Ass'n  (1  Ky.  Law  R.  584),  245. 
Herrick  v.  Baldwin  (17  Minn.  209), 

450,  452. 


Herring  v.  Sanger  (3  Johns.  Cas.  71)r 

443, 446. 
Herron  v.  Vance  (17  Ind.  595),  634, 

635,  650,  651. 
Hershfield  v.  Fort  Worth  Nat.  Bank 

(83  Tex.  452),  438. 
Hert  v.  Vincent  (29  N.  Y.  Supp.  61V 

511. 
Herter  v.  Goss  Co.  (57  N.  J.  Law, 

42),  381. 
Hess  v.  Werts  (4  S.  &  R  356),  39, 

561. 
Hestres  v.   Petrovic  (1  Rob.,  La., 

119),  413,  414,  483. 
Hevener  v.  Kerr  (4  N.  J.  Law,  58), 

342. 

Hewitt  v.  Adams  (54  Me.  206),  101. 
Heywood  v.   Pickering  (43  L,   J. 

Q.  B.  145),  305. 
Hibernia  Nat.  Bank  v.  Lacombe  (84 

N.  Y.  367),  584. 

Higgins  v.  Hayden  (73  N.  W.  R 
280).  128. 

v.  Morrison  (4  Dana,  100),  467, 

484. 

High  v.  Cox  (55  Ga,  662),  384. 
Hightower  v.  Ivy  (2  Port.  308),  458. 
Higley  v.  First  Nat.  Bank  (26  Ohio 

St.  75),  336. 
Hilborn  v.  Artus  (4  III  344),  467, 

500. 

Hildeburn  v.  Turner  (5  How.  69),  549. 
Hill  v.  Martin  (12  Mart,  O.  S.,  177), 
401,  431,  531. 

v.  National  Bank  (56  Vt  582), 
337. 

v.  National  Trust  Co.  (108  Pa. 
1),  244 

v.  Norvel  (3  McLean,  583),  453, 
498. 

v.  Pine  River  Bank  (45  N.  H. 
300),  90. 

v.  Varrel  (3  Me.  233),  501. 

v.  Western  K.  Co.  (86  Ga.  284V 

577. 
Hillman    v.   McWilliams   (70  CaL 

449),  215. 
Hillstrom  v.  Anderson  (46  Minn, 

382),  350. 
Hinckley  v.  Belleville  (43  III  183), 

29,  71. 
Hindman  v.  First  Nat   Bank  (86- 

Fed.  R  1013),  200. 
Hines  v.  Marmolejo  (60  CaL  229), 

334. 
Hinsdale  v.  Miles  (5  Conn.  331),  418. 

v.  Orange  Bank  (6  Wend.  379), 
553, 


TABLE    OF   CASES. 


747 


References  are  to  pages. 


Hintermister  v.  First  Nat.  Bank  (64 

N.  Y.  212),  336. 

Hinton  v.  Dibbin  (2  Q.  B.  646),  122. 
Hirschfelder  v.  Manuf.  Co.  (17  N. 

Y.  Supp.  726),  458. 
Hirschfield  v.  Bopp  (50  N.  Y.  Supp. 

676),  48. 
Hiscock  v.  Lacey  (30  N.  Y.  Supp. 

860),  114. 
Hitchcock  v.  Hogan  (99  Mich.  124), 

438. 
v.  United  States  Bank  (7  Ala. 

386),  330. 
Hitner  v.  Finney  (1  Wkly.  Notes 

Gas.  50),  503. 
Hoadley   v.  Bliss  (9  Ga.  303),  455, 

540. 

Hobart  v.  Bennett  (77  Me.  401),  651. 
v.  Gould  (8  Fed.  R.  57),  105,  108. 
v.  Johnson  (8  Fed.  R  493),  77, 

101. 
Hobbs  v.  Straine  (149  Mass.  212), 

478,  496. 
v.  Western  Nat.  Bank  (Fed.  Cas. 

No.  6551a),  85. 
Hockaday  v.  Skeggs  (2  Phila.  268), 

483. 
Hodge  v.  First  Nat.  Bank  (22  Grat. 

51),  154. 
Hodges  v.  Iowa  Barb  Wire  Co.  (80 

Iowa,  65),  365. 

v.  Screw  Co.  (1  R  L  312),  129. 
v.  Shuler  (22  N.  Y.  114),  470. 
Hodgson  v.  Cheever  (8  Mo.  App. 

318),  108. 
v.   McKinstrey   (3    Kan.  App. 

412),  566. 
Hoffman  v.  Bank  of  Milwaukee  (12 

Wall.  181),  340. 

Hogg,  Appeal  of  i22  Pa.  479),  590. 
Hogg  v.  Orgill  (34  Pa.  344),  56. 
Hogue  v.  Edwards  (9  Bradw.  148), 

236  251 

Hoke  v!  People  (122  111.  511),  75, 142. 
Holbrook  v.  Payne  (151  Mass.  383), 

359,  371. 

Holden  v.  Phelps  (135  Mass.  61),  637. 

v.  Upton  (134  Mass.  177),  637, 651. 

Holland  v.  Citizens'  Sav.  Bank  (17 

R  I.  87),  183. 
v.  Lewiston  Falls  Bank  (52  Me. 

564),  118. 
v.  Turner  (10   Conn.  308),  458, 

490. 
Hollister  v.  Central  Nat  Bank  (119 

N.  Y.  634),  286. 

v.  Hollister  Bank  (2  Keyes,  245), 
N& 


Holman  v.  Whiting  (19  Ala.  703), 

399,  538. 

Holmer  v.  Roe  (62  Mich.  199),  435. 
Holmes  v.  Boyd  (90  Ind.  332),  194. 

v.  Preston  (70  Miss.  152),  402. 

v.  Wilmington  Nat.  Bank  (18 

S.  C.  31),  627. 
Holt  v.  Bacon  (25  Miss.  567),  153. 

v.  Winfield  Bank  (25  Fed.  R 

812),  63,  194 
Holtz  v.  Boppe  (37  N.  Y.  634),  447, 

451. 
Holyoke    Bank    v.    Burnham    (11 

'Gush.  183),  104. 
Home  Ins.  Co.  v.  Green  (19  N.  Y. 

518),  470. 
Home  Nat.  Bank  v.  Newton  (8  I1L 

App.  563),  231,  235. 
Homes  v.  Smith  (20  Me.  264),  438. 

v.  Smith  (16  Me.  181),  548. 
Honig  v.  Pacific  Bank  (73  CaL  464), 

216,  217,  218,  237. 
Hooks  v.   Anderson  (58  Ala.  238), 

395. 

Hoover  v.  Glasscock  (16  La.  242), 
535. 

v.  McCormick  (84  Wis.  215),  529. 

v.  Wise  (91  U.  S.  308),  306. 
Hopkins  v.  Beebe  (26  Pa.  85),  372. 

v.  Nash  Co.  (77  N.  W.  R.  53).  372» 
Hopkirk  v.  Page  (Fed.  Cas.  No.  6697, 

2  Brock.  20),  461,  523. 
Hopps  v.  Savage   (69  Md.  513),  383. 
Homer,  In  re  (10  Leigh,  790),  554. 
Horton  v.  Mercer  (71  Fed.  R  153), 

82,  83. 

Hotchkiss    v.  Artisans'    Bank  (2 
Keyes,  564),  156. 

v.  Artisans'  Bank  (42*Barb.  517), 
187. 

v.  Mosher  (48  N.  Y.  478),  292. 
Hough  v.  Gray  (19  Wend.  202),  403. 

v.  Young  (1  Ohio,  230),  427, 428. 
Houghton  v.  First  Nat.  Bank  (26 

Wis.  663),  166. 

House  v.  Adams  (48  Pa.  261),  374, 
472,  523. 

v.  Vinton  Nat.  Bank  (43  Ohio 

St.  346),  398,  485. 
Houston  v.  Thompson  (29  &  R  R 

827),  128,  130. 

Howard  v.  Deposit  Bank  (80  Ky. 
496),  219. 

v.  Ives  (1  Hill,  263),  513,  516. 

v.  Mississippi  Valley  Bank  (28 
La.  Ann.  727),  345. 

v.  Savings  Bank  (40  Vt  597), 
644 


748 


TABLE   OF   CASES. 


References  are  to  pages. 


Howard  v.  Walker  (92  Tenn.  452), 

185,  301. 
Howard  Nat   Bank,   Ex  parte  (2 

Low.  487),  231,  232. 
Howard  Nat.  Bank  v   Loomis  (51 

Vt.  349),  197. 

Howe  v.  Barney  (43  Fed.  R  668),  593. 

v.  Bradley  (19  Me.  31),  469,  478. 

Ho  well  v.  Adams  (68  N.  Y.  314),  288, 

290. 
Hower  v.   Weiss  Malting  Co.   (55 

Fed.  R  356).  628. 
Howland  v.  Adrian  (30  N.  J.  Law, 

41),  469,  511. 

v.  Carson  (15  Pa.  453).  361. 
v.  Spencer  (14  N.  H.  580),  319. 
Hubbard  v.  Charleston  Co.  (11  Met. 

124),  278. 
v.  Hamilton  Bank  (7  Met.  340), 

584. 

v.  Matthews  (54  N.  Y.  43),  479. 
v.  New  York  Ex.  Co.  (36  Barb. 

286),  33. 

v.  Troy  (2  Ired.  134),  511. 
Hubbell  v.  Houghton  (86  Fed.  R. 

547),  82. 
Huber  v.  German  Congregation  (16 

Ohio  St.  371),  68. 
Hudson  v.  Wolcott  (39  Ohio  St.  618), 

534. 
Huertematte  v.  Morris  (101  N.  Y. 

63),  379. 
Huff  v.  Ashcroft  (1  Disn.  277),  440, 

441. 

v.  Hatch  (2  Disn.  63),  303. 
Huffaker  v.  National  Bank  (75  Ky. 
287,  12  Bush,  287),  469,  625. 
v.  National  Bank  (13  Bush,  644), 

459. 
Hughes  v.  Bank  of  Somerset  (5  Litt. 

45),  148,  572. 
r.  First  Nat.  Bank  (110  Pa,  428), 

167,  286. 
v.  Neal   Banking    Co.   (97  Ga. 

383),  309. 

v.  Settle  («0  S.  W.  R.  577),  176, 
Hulitt  v.  Bell  (85  Fed.  R.  98),  591. 
Hull  v.  Myers  (90  Ga.  674),  393,  398, 

521. 
v.  State  Bank  (Dud.  Law,  259), 

274. 
Hum  v.  Union  Bank  (4  Rob.,  La., 

109),  306. 
Humboldt  Trust  Co.,  In  re  (3  Pa. 

Co.  Ct.  R  621),  589. 
Hume  v.  Watt  (5  Kan.  34),  484,  507. 
Hummel  v.   Bank  of  Monroe  (75 
Iowa,  689),  177. 


Hun  v.  Gary  (82  N.  Y.  65,  59  How 

Pr.  426),  122.  633. 
v.  Van  Dyck  (26  Hun,  567,  93 

N.  Y.  660),  633. 
Hungerford  v.  O'Brien  (27  Minn. 

306),  403. 
Hunt  v.  Appellant  (141  Mass.  515), 

199. 

v.  Divine  (37  111.  137),  279,  280. 
v.  Jackson  (96  Ala.  130),  388. 
v.  Maybee  (7  N.  Y.  266),  410, 417, 

448. 
v.  Nugent  (10  Smedes  &  M.  541X 

505. 

v.  Standart  (15  Ind.  33),  354. 
v.  Townsend  (26  S.  W.  R  310), 

317,  319,  321,  325,  610. 
v.  Wadleigh  (26  Me.  271),  392, 

431.  458. 
Hunter  v.  Hempstead  (1  Ma  67), 

414. 
v.  Van   Bomhorst  (1  Md.  504), 

468. 
Huntington  v.  Attrill  (146  U.  S.  657), 

126. 
v.  Crescent  City  Bank  (18  La. 

Ann.  350),  571. 

v.  Harvey  (4  Conn.  124),  540. 
v.  Savings  Bank  (96  U.  a  388), 

629,  630. 
Huntsville  Bank  v.  McGeehee  (1 

Stew.  &  P.  306),  572. 
Hurd  v.  Green  (17  Hun,  327).  636. 

v.  Kelly  (78  N.  Y.  588),  636. 
Hurlbut  v.  Brittain  (2  Doug.  191),  58. 

v.  Kelley  (62  Wis.  590),  582. 
Huse  v.  Hamblin  (29  Iowa,  501),  404 
Hussey  v.  Freeman  (10  Mass.  84), 

511. 
Hutchins  v.  Manhattan  Co.  (29  N.  Y. 

Supp.  1103).  316. 
Hyslop  v.  Jones  (3  McLean,  96),  477. 


Idaho  Forwarding  Co.  v.  Insurance 

Co.  (8  Utah,  41),  170. 
Ide  v.  Bremer  Co.  Bank  (73  Iowa, 
58).  302. 

v.  Pierce  (134  Mass.  260),  630. 
Ihl  v.  St.  Joseph  Bank  (26  Mo.  App. 

129),  171,  206,  237. 
Illinois  State  Bank  v.  Batty  (5  III 

200),  255. 
Illinois  Trust  &  Savings  Bank  v. 

First  Nat.  Bank  (15  Fed.  R  858), 

612. 


TABLE    OF   CASES. 


740 


References  are  to  pages. 


Ilsley  v.  Jones  (12  Gray,  260),  362, 369. 
Importers'  Nat.  Bank  v.  Shaw*  (144 

Mass.  421).  502. 

Importers'  &  Traders'  Bank  v.  Lit- 
tell  (46  N.  J.  Law,  506),  75, 
336. 

v.  Peters  (123  N.  Y.  272),  319, 

324,  614,  615. 
India  Rubber  Mfg.  Co.  v.  Bishop 

(3  E.  D.  Smith,  148),  420. 
Indiana  Mfg.  Co.  v.  Porter  (75  Ind. 

428),  372. 
Indiana  R.  Co.  v.  Davis  (20  Ind.  6), 

351. 
Indig  v.  Nat.  City  Bank  (80  N.  Y. 

100),  235,  251,  296,  299,  303,  305. 
Industrial  Bank  v.  Bowes  (165  I1L 

70),  348,  434 
Industrial  Co.  v.  Weakley  (103  Ala. 

458),  432, 436. 
Ingraham  v.  Speed  (30  Miss.  410), 

194. 
Innerarity  v.  Merchants'  Nat.  Bank 

(139  Mass.  332),  163, 182. 
Insurance  Co.  v.  National  Bank  (93 

Ky.  129),  274. 

International  Bank  v.  Bradley  (19 
N.  Y.  245),  333. 

v.  Jones  (119  111.  407),  231. 
International  Trust  Co.  v.  Loan  Co. 

(153  Mass.  261),  46. 
Interstate  Nat.  Bank  v.  Ferguson 

(48  Kan.  732),  193. 
Iowa  State  Bank  v.  Black  (91  Iowa, 

.  490),  161. 

Ireland  v  Kip  (10  Johns.  490,  11 
Johns.  231),  474,  494 

v.  Kip  (Anth.  N.  P.  195),  495. 
Irons  v.  Manufacturers'  Nat.  Bank 

(27  Fed.  R.  591),  80, 103. 106, 108, 

110,  112,  150,  594,  598;  (36  Fed. 

R.  343),  595;  (21  Fed.  R.  197),  84, 

101,  103;  (6  Biss.  301),  579,  592; 

(17  Fed.  R.  308),  110,  622. 
Irvine  v.  Adams  (48  Wis.  468),  385. 

v.  Dean  (93  Tenn.  346),  232. 
Irving  Bank  v.  Alley  (79  N.  Y.  536), 
250 

v.  Wetherald  (36  N.  Y.  335),  256, 

257,  266. 

Irwin  v.  Brown  (2  Cranch,  C.  C.  314), 
516. 

v.  Planters'  Bank  (1  Humph. 

145),  564. 
Isbell  v.  Lewis  (98  Ala.  550),  185, 

474,  477,  480,  496. 
Iselin  v.  Chemical  Nat.  Bank  (40 

N.  Y.  Supp.  388),  379. 


Ish  v.  Mills  (1  Cranch,  C.  C.  567), 

404 

Isham  v.  McClure  (58  Iowa,  515), 
534 

v.  Post  (141  N.  Y.  100),  '344. 
Isom  v.  First  Nat.  Bank  (52  Miss. 

902).  213. 
Israel  v.  Bowery  Sav.  Bank  (9  Daly, 

507),  646. 
Ivory  v.  State  Bank  (36  Mo.  475), 

303,  349. 

J. 

Jaccard  v.  Anderson  (37  Mo.  91),  528, 

530. 
Jacks  v.  Darrin  (3  E.  D.  Smith,  557), 

461. 

Jackson  v.   Bank   of  Paterson  (1 
Stockt.  205),  586. 

v.  Brown  (5  Wend.  590),  195. 

v.  Commercial  Bank  (2  Rob., 
La.,  128),  377. 

v.  Packer  (13  Conn.  342),  388. 
Jackson  Ins.  Co.  v.  Cross  (9  Heisk. 

283),  206,  239. 
Jacksonville  R.  Co.  v.  Hooper  (160 

U.  S.  514,  524),  70. 
Jacobs  v.  Turner  (2  La.  Ann.  964), 

482. 
Jacobson  v.  Allen  (20  Blatch.  525), 

103. 

Jaff  ray  v.  Krauss  (79  Hun,  449).  530. 
Jagger  v.  German- American  Bank 

(53   Minn.   386),  202,    294,  310, 

521. 

James  v.  Ocoee  Bank  (2  Cold.  59), 
388. 

v.  Rogers  (23  Ind.  451),  198. 

v.  Wade  (21  La.  Ann.  548),  523. 
Jameson  v.  Collins  (11  Phila.  258), 
214 

v.  Pothaus  (26  La.  Ann.  63),  474 
Janin  v.  London  Bank  (92  Cal.  14), 

265,  266. 
Jarnagin  v.  Stratton  (95  Tenn.  619), 

489. 

Jarvis  v.  St.  Croix  Mfg.  Co.  (23  Me. 
287),  475,  491. 

v.  Wilson  (46  Conn.  90),  258, 358. 
Jaycox,  In  re  (18  Blatchf.  70),  636. 
Jefferson  v.  Darling  (91  Hun,  236), 

517. 

Jefferson  Co.  Bank  v.  Chapman  (19 
Johns.  322),  342. 

v.  Commercial  Nat.  Bank  (39 
S.  W.  R.  338),  299. 


750 


TABLE   OF   CASES. 


References  are  to  pages. 


Jemison  v.  Planters'  Bank  (23  Ala. 

168),  572. 
Jenkins  v.  Nat.  Village  Bank  (58 

Me.  275),  329. 

v.  White  (147  Pa  303),  536. 
Jenks  v.  Doylestown  Bank  (4  Watts 

&  S.  505),  443. 
Jennery  v.  Olmstead  (36  Hun,  536), 

631. 
Jennings  v.  Bank  of  California  (79 

Cal.  323),  89. 

v.  People  (8  Mich.  81),  50. 
Jennison  v.  Citizens'  Sav.  Bank  (122 

N.  Y.  135),  635,  637. 
v.  Parker  (7  Mich.  355),  392, 525. 
Jerome  v.  County  Commissioners 

(18  Fed.  R  873),  350. 
v.  Stebbins  (14  Cal.  457),  428. 
Jerrey  v.  Wilber    (1    Bailey,  453), 

528. 
Jewett  v.  Yardley  (81  Fed.  R.  920), 

617. 
Jex  v.  Tureand  (19  La.  Ann.  64), 

430,  439,  464. 
Jochumsen  v.  Suffolk  Sav.  Bank  (85 

Mass.  87).  647. 
John  v.  City  Nat.  Bank  (57  Ala.  96), 

477. 
v.  Farmers'  Bank  (12  Blackf. 

367),  198. 
Johnson,  In  re  (103  Mich.  109),  283, 

284,  301,  603,  609,  616. 
Johnson  v.  Bank  of  North  America 

(5  Robt.  554),  435. 
v.  Blakemore  (28  La.  Ann.  140), 

362. 

v.  Brant  (38  Kan.  754),  222. 
v.  Brown  (154  Mass.  105).  476. 
v.  Catlin  >27  Vt.  87),  620. 
v.  Cbarlottesville  Nat.  Bank  (3 

Hughes,  657),  66. 
v.  Clark  (39  N.  Y.  216),  367. 
v.  Clark  (50  N.  E.  R  762),  360. 
v.  Crane  (16  N.  EL  68),  542,  543. 
v.  Farmers'  Bank  (1  Har.  117), 

287. 

v.  Harth  (1  Bailey,  482),  440. 
v.  Hurley  (115  Mo.  513).  159. 
v.  Laflin  (103  U.  S.  800),  80,  85. 
v.  Laflin  (5  Dill.  65),  80,  85. 
v.  National  Bank  (74  N.  Y.  329), 

334,  335. 

v.  Parsons  (140  Mass.   173),  530. 
v.  Payne   Bank    (56  Mo.   App. 

257),  220. 

v.  Ward  (2  Bradw.  261),  204. 
v.  Wilmarth  (13  Met  416),  403. 


Johnson  v.  Zeckendorf  (12  Pac.  R 

TC5),  527. 
Johnson   Co.   Sav.   Bank  v.  Lowe 

(47  Mo.  App.  151).  530. 
Johnston    v.   Humphrey  (91  Wis. 
76),  230. 

v.     Southwestern    Bank    (3 

Strobh.  Eq.  263).  167,  564 
Johnston-Fife  Hat  Co.  v.  National 

Bank  (4  Okl.  17),  165,  167. 
Jones.  Ex  parte  (77  Ala.  330),  236. 
Jones  v.  Albee  (70  111.  34),  402,  529. 

v.  Berryhill  (25  Iowa,  289).  546. 

v.  Brown  (50  N.  E.  R  648),  92. 

v.  Fales  (4  Mass.  245),  427,  428, 
455,  520. 

v.  Goodwin  (39  Cal.  493),  395. 

v.  Iowa  Bank  (34  III  313),  361, 
866. 

v.  Johnson    (86  Ky.   530),  122, 
125. 

v.  Kilbreth  (49  Ohio  St.  401), 
.  317,  613. 

v.  Lewis  (8  Watts  &  S.  14),  474 

v.  Mansker  (15  La.  51),  478. 

v.  Manufacturers'     Bank     (10 
Wkly.  Notes  Gas.  102),  275. 

v.  Middleton  (29  Iowa,  188),  431. 

v.  Pacific  Co.  (13  N.  W.  R  359;, 
245. 

v.  Pienning  (85  Wis.  264),  240. 

v.  Robinson  (11   Ark.  504),  431, 
522 

v.  Robinson  (26  Barb.  310),  586. 

v.  Wiltberger  (42  Ga.  575),  105, 

107. 
Jordan  v.  Ford  (7  Ark.  416),  486. 

v.  Hurst  (12  Pa.  269),  522. 

v.  Long  (109  Ala.  414),  546. 

v.  National  Bank  (74  N.  Y.  467), 
232 

v.  Sharlock  (84  Pa.  366),  240. 

v.  Wheeler  (20  Tex.  698),  356. 
Josselyn  v.  Ames  (3  Mass.  274).  401. 
Journey  v.  Price  (4   Houst   176), 

469. 
Juilliard  v.  Greenman  (110  U.  S. 

421),  560. 
Jumper  v.  Commercial  Bank  (26  S. 

E.  R  725),  208. 
Jung  v.  Second  Ward  Savings  Bank 

(55  Wis.  364),  236. 
Jungk  v.  Reed  (8  Utah,  49),  23& 
Juniata  Bank  v.  Hale  (16  S.  &  R 

157),  440. 
Justt  v.  National  Bank  (36  N.  Y. 

Super.  Ct  273),  210. 


TABLE    OF   CASES. 


751 


References  are  to  pages. 


Kahn  v.  Bank  of  St.  Joseph  (70  Mo. 
262 '  91 

v.  Walton  (46  Ohio  St.  195',  243. 
Kaiser  v.  Lawrence  Sav.  Bank  (56 
Iowa,  104),  69. 

v.  Nial  (9  Mo.  App.  590),  532. 
Kansas  Nat,  Bank  v.  Rowell  (2  Dill. 

371),  196. 
Kaskaskia  Bridge  Co.  v.  Shannon 

(6  III.  15),  351,  352. 
Kaufman  v.  Barringer  (20  La.  Ann. 

419),  356. 
Kavanagh    v.   Farmers'  Bank    (59 

Mo.  App.  540),  243. 
Keater  v.  Hock  (11  Iowa,  536),  468. 
Keene  v.  Collier  (1  Met.,  Ky.,  415), 

273 
Keith  v.  Mackey  (5  Rob.,  La.,  277), 

541. 

Kellogg  v.  Douglas  Co.  Bank  (58 
Kan.  43),  59. 

v.  Pacific  Box  Factory  (57  Cal. 

327),  552. 
Kelly  v.  Bronson  (26  Minn.  359),  349. 

v.  Emigrant  Sav.  Bank  (2  Daly. 
227),  646. 

v.  Garret  (6  111.  649),  343. 

v.  Greenough  (9  Wash.  659),  358, 
361,  366. 

v.  Phelan  (5  Dill.  228),  329. 

v.  Smith  (1  Met,,  Ky.,  313),  354. 
Kelsey  v.  National  Bank  (69  Pa. 

426),  149,  167,  566. 

Kemble  v.  Lull  (3  McLean,  272),  376. 
Kendrick   v.   Campbell    (1  Bailey, 

522  \  414. 
Kennedy  v.  California  Bank  (101 

Cal.  495),  64,  160. 

Kennedy  ats.  California  Bank  (167 
U.  S.  362),  64,  160. 

v.  First  Nat.  Bank  (Fed.  Gas. 
No.  7701a).  168. 

v.  Geddes  (8  Port.  263),  361, 363, 
368. 

v.  Gibson  (8  Wall.  498),  102, 103, 
108,  110,  112. 

v.  Knight  (21  Wis.  345),  196. 

v.  Otoe  Co.  Bank  (7  Neb.  59),  165. 
Kenner  v.  Creditors  (1  La.  120),  383, 

427. 

Kent  v.  Dawson  Bank  (13  Blatchf. 
237),  295,  306. 

v.  Warner  (94  Mass.  561),  534. 
Kentucky    Commercial    Bank    v. 

Barksdale  (36  Mo.  563),  386,  409, 

410,  546,  563. 


Kenyon  v.  Stanton  (44  Wis.  479), 

435,  436. 
Kern  v.  Von  Phul  (7  Minn.  426),  474, 

476,  547. 
Kerr  v.  People's  Bank  (158  Pa.  305), 

216,  219. 
v.  Roberts  (5  Wkly.  Notes  Cas. 

25),  480. 

v.  Urie  (37  Atl.  R.  789),  82,  84    ' 
Keyes  v.  Bank  of  Hard  in  (52  Mo. 

App.  323),  200,  311. 
v.  Fenstermaker  (24  CaL  329), 

428. 
v.  Follett  (41  Ohio  St.  535),  381, 

382. 
Keyser  v.  Hitz  (2  Mackey,  473),  49, 

77. 

v.  Hitz  (133  U.  S.  138),  85. 
Keysor  v.  Railroad   Co.  (66  Mich. 

390),  170. 
Kiddell  v.  Ford  (2  Treadw.  Const 

678),  429,  457. 
Kiggins  v.  Munday  (19  Wash.  233), 

33. 
Kilgore  v.  Buckley  (14  Conn.  363, 

367),  185,  186,  187,  279,  405. 
Kellam  v.  McCoon  (31  Hun,  519), 

546. 
Kilpatrick  v.  Heaton  (3  Brev.  92), 

511. 
v.  Home   Building  Ass'n  (119 

Pa.  £0),  434. 

Kimball  v.  Bryan  (56  Iowa,  632),  459. 

v.  Donald  20  Mo.  597),  371. 

v.  Ives  (30  Hun,  568),  125. 

v.  Norton  (59  N.  H.  1),  640. 

Kimbro  v.  Bank  of  Fulton  (49  Ga. 

419),  563. 

v.  Lamb  (4  Humph.  94),  401. 531. 
Kimins  v.  Boston  Sav.  Bank  (141 

Mass.  33),  640. 
Kimmel  v.  Dickson  (5  S.  D.  221).  282, 

603. 
King  v.  Crowell  (61  Me.  244),  413, 

418,  446,  509. 
v.  Dedham  Bank  (15  Mass.  447), 

555. 
v.  Elliot  (5  Smedes  &  M.  428), 

46,95. 
v.  Foyles  (2  Cranch,  C.  C.  303), 

516. 

v.  Holmes  (11  Pa,  456),  446. 
v.  Hurley  (85  Mo.  525),  470. 
v.  Sarria"  (69  N.  Y.  32),  57. 
v.  Summit  (73  Ind.  312),  401. 
Kingbury  v.  Wall  (68  111.  311),  860. 
Kingman  v.    Hotaling  (25    Wend. 
423),  378. 


752 


TABLE    OF   CASES. 


References  are  to  pages. 


Kingman  v.  Perkins  (105  Mass.  Ill), 

644. 
Kingsland  v.  Koeppe  (137  111.  344). 

402,  533. 
Kingston  v.  First  Nat.   Bank  (26 

Wis.  663),  158. 
Kinnersley  v.  Knott  (7  C.  B.  980), 

223. 

Kinney  v.  Paine  (68  Miss.  258),  317. 
Kinsela  v.  Cataract  City  Bank  (18 

N.  J.  Eq.  158),  284. 
Kinser  v.  Farmers'  Bank  (58  Iowa, 

728),  337. 
Kinsley  v.  Robinson  (21  Pick.  327), 

459,  461. 
Kirkwood  v.  First  Nat.  Bank  (40 

Neb.  484),  279. 

Klein  v.  Currier  (14  111.  237),  403. 
Kleinmann  v.  Bormstein  (32  Mo. 

311),  479. 

Klepper  v.  Cox  (97  Tenn.  534),  615. 
Klockenbaum  v.  Pearson  (16  Cal. 

375),  470. 
Klopp  v.  Lebanon  Bank  (46  Pa.  88), 

90. 
Knapp  v.  Roche  (62  N.  Y.  614),  119, 

632.      - 
Knatchbull  v.  Hallett  (L.  R.  13  Ch. 

D.  696).  603,  614. 
Knecht  v.  Savings  Inst.  (2  Mo.  App. 

563),  232.   . 

Knight  v.  Bank  (3  Cliff.  429),  89. 
Knorr,  Appeal  of  (89  Pa.  93),  647. 
Knox  v.  Bank  of  United  States  (26 
Miss.  655),  330. 

v.  Buhler  (6  La.  Ann.  104),  550. 

v.  Lee  (12  Wall.  457),  560. 
Kobbi  v.  Underbill  (3  Sandf.  Ch. 

277),  435. 

Koch  v.  Branch  (44  Mo.  542),  350. 
Koetting,  In  re  (90  Wis.  166),  137. 
Kolloch  v.  Emmett  (43  Ma  App. 

566),  276. 

Konig  v.  Bayard  (1  Pet.  250),  388. 
Koons  v.  First  Nat  Bank  (89  Ind. 

178),  87. 

Kramer's  Appeal  (37  Pa.  71),  380. 
Kramer  v.  Sanford  (4  Watts  &  S. 

328),  538. 
Kress  v.  East  Side  Bank  (21  N.  Y. 

Supp.  652),  639. 
Kummel  v.  Germania  Sav.  Bank 

(127  N.  Y.  488).  639,  640,  645. 
Kuntz  v.  Tempel  (48  Mo.  71),  402, 

437,  533. 
Kupfer  v.  Bank  of  Galena  (34  111. 

328),  282. 
Kyle  v.  Green  (14  Ohio,  490),  536. 


Laclede  Bank  v.  Schuler  (120  U.  S. 

511),  224,  228,  229. 
Lacoste  v.  Harper  (3  La.  Ann.  385), 

Lafayette  Bank  v.  McLaughlin  (4 

W.  L.  J.  70),  421,  488. 
Lafayette  Nat.  Bank  v.  Ringel  (51 

Ind.  393),  280. 

Laing  v.  Burley  (101  111.  591),  81. 
Laird  v.  State  (61  Md.  309),  348. 
Lake  Erie  R.  Co.  v.  National  Bank 

(65  Fed.  R.  690),  614. 
Lake  Shore  R.  Co.  v.  Prentice  (147 

U.  S.  101),  148,  159. 
Lamb  v.  Cecil  (25  W.  Va.  288),  154, 
577, 584. 

v.  Pannell  (28  W.  Va.  663),  240. 
Lambert  v.  Ghiselin  (9  How.  552), 
508. 

v.  Jones  (2  Pat.  &  H.  144),  380. 

v.  Sanford  (2  Blackf.  137),  384. 
Lambeth  v.  Caldwell  (1  Rob.,  La., 

61),  546. 
Lamkin  v.  Edgerly  (151  Mass.  348), 

478. 
Lampton    v.    Commonwealth    (11 

Pet.  257),  555. 
Lanson  v.  Beard  (94  Fed.  R.  30),  120, 

165,  166. 
Lancaster  Bank  v.  Woodward  (18 

Pa.  357),  277.     , 

Lancaster  Co.  Bank  v.  Huver  (114 
Pa.  216),  350. 

v.  Smith  (62  Pa.  47),  284,  286. 
Landrum  v.  Trowbridge  (2  Met, 

Ky.,  281),  374,  472,  540,  541. 
Lane's  Appeal  (105  Pa.  49),  97. 
Lane  v.  Bank  of  West  Tennessee 
(9  Heisk.  419),  75,  445,  464, 
465.  520,  521,  523. 

v.  Harris  (16  Ga.  217),  561,  562. 

v.  Morris  (8  Ga.  468),  113,  563. 

v.  Steward  (20  Me.  98),  402,  530, 

536. 
Lanfear  v.  Blossom  (1  La.  Ann.  148), 

349. 
Langdale  v.  Whitefield  (27  L.  J.  Ch. 

795),  577. 
Langenburger  v.  Kroeger  (48  CaL 

147),  419. 
Langley  v.  Palmer  (30  Ma  467),  440, 

548. 
Lanier  v.  Tripp  (6  Smedes  &  M.  641), 

340. 
Lanterman  v.  Travous  (73  III  App. 

670),  211,  600,  609. 


TABLE    OF   CASES. 


753 


References  are  to  pages. 


Lanterman  v.  Travous  (174  111.  459), 

211,  600. 
Lanuse  v.  Barker  (3  Wheat.  101), 

862,  367. 
Laporte  v.  Landry  (5  Mart.,  N.  S., 

359),  544 

Larsen  v.  Breene  (12  Colo.  480),  256. 
Lary  v.  Young  (13  Ark.  401),  534. 

536. 

Lathrop  v.  Harlow  (23  Mo.  209),  368. 
Latimer  v.  Bard  (76  Fed.  R  536),  79. 

v.  State  Bank  (71  N.  W.  R.  225), 
190. 

v.  Wood  (73  Fed.  R.  1001),  588. 
Laubuch  v.  Leibert  (87  Pa.  55),  213, 

217. 
Laugh!  in  v.  Marshall  (19  111.  390), 

428. 
Lawler  v.  Burt  (7  Ohio  St.  340),  100. 

v.  Walker  (18  Ohio,  151),  554. 
Lawrence  v.  Bank  of  Republic  (35 
N.  Y.  320),  217,  230. 

v.  Batchellor  (131  Mass.  504),  56. 

v.  Dobyns  (30  Mo.  196),  443. 

v.  Langley  (14  N.  H.  70),  509. 

v.  Miller  (16  N.  Y.  235),  488,  491, 
505.  507. 

v.  Ralston  (8  Bibb,  102),  496. 

v.  Schmidt  (35  111.  440),  436. 

v.  Stonington   Bank  (6  Conn. 

521),  187,  297. 

Lawson  v.  Farmers'  Bank  (1  Ohio 
St.  206).  486,  488,  512,  513. 

v.  Pinckney  (40  N.  Y.  Super.  Ct. 

187),  548. 
Lazear  v.  Nat.  Union  Bank  (52  Md. 

78),  197. 
Leach  v.  Hale  (31  Iowa,  69),  192. 

v.  Hill  (76  N.  W.  R.  667),  258. 
Leake  v.  Brown  (43  111.  372),  226. 
Leaphart  v.  Commercial  Bank  (45 

S.  C.  563).  204. 

Leather  Manufacturers'    Bank   v. 
Cooper  (120  U.  S.  778),  563. 

v.  Morgan  (117  U.  S.  96),  265, 

267,  647. 
Leathers  v.  -Shipbuilders'  Bank  (40 

Me.  386),  270. 

Leavitt  v.  Beers  (Hill  &  D.  Supp. 
221),  118. 

v.  Blatchford  (3  N.  Y.  19),  554. 

v.  Palmer  (3  N.  Y.  19),  279. 

v.  Simes  (3  N.  H.  14),  427,  428. 

v.  Stanton  (Hill&  D.  Supp.  413), 
265. 

v.  Tyler  (1  Sandf.  Ch.  207),  577. 

v.  Yates  (4  Edw.  Ch.  136),  148, 
198,  584 

48 


Leazure  v.  Hillegas  (7  S.  &  R  313), 

195. 
Lebanon  Bank  v.  Mangan  (28  Pa. 

452),  279,  405. 
Lebanon  Nat.  Bank  v.  Karmany  (98 

Pa.  65),  337. 
Lebanon  Sav.  Bank  v.  Hollenbeck 

(29  Minn.  322),  635. 
Le  Due  v.  Moore  (111  N.  C.  516),  164, 

177,  179. 
Lee  v.  Buford  (4  Met.,  Ky.,  7),  410. 

v.  Citizens'  Bank  (5  Ohio  Dec. 
21).  85.  91,  628. 

v.  Smith  (80  Mo.  304).  165,  166. 
Leeds  v.  Hamilton  Paint  Co.  (35  S. 

W.  R  77),  529. 
Leegrue  v.  Woodruff  (29  Ga.  648), 

361. 
Leffingwell  v.  White  (1  Johns.  Cas. 

99),  536. 
Leffman  v.  Flannigan  (5  PhiL  155), 

633,  634 
Legg  v.  Vinal  (165  Mass.  555),  419, 

467,  483,  550. 

Leggett  v.  Bank  of  Sing  Sing  (24 
N.  Y.  283),  90. 

v.  New  Jersey,  etc.  Co.  (Saxt. 

541),  150,  153,  197. 
Lehman  v.  Jones  (1  Watts  &  S.  126), 

463. 
Lemoine  v.  Bank  of  North  America 

(3  Dill.  44),  340. 
Lennig  v.  Tobley  (4  Clark,  275,  14 

Pa.  483),  469. 
Lenox  v.  Cook  (8  Mass.  460),  389. 

v.  Leverett  (10  Mass.  1),  411. 

v.  Roberts  (2  Wheat.  373),  513. 
Leonard  v.  Gary  (10  Wend.  504),  544 

v.  Hastings  (9  Cal.  236),  544 

v.  Lattimer  (67  Mo.  App.  138), 
164,  603. 

v.  Mason  (1  Wend.  522),  358. 

v.  New  Bedford  Bank  (116  Mass. 

210),  222. 
Leonardsville  Bank  v.  Willard  (25 

N.  Y.  574),  50,  620. 
Leslie  v.  Basset  (50  N.  Y.  Super.  Ct* 

403  >,  379. 
Lester  v.  Given  (8  Bush,  357),  225, 

245,  390. 
Levert  v.  Planters'  Bank  (8  Port. 

194),  619. 
Levi  v.  National  Bank  (5  Dill.  104), 

301. 
Levisohn  v.  Wagner  (76  Ala.  412), 

319. 
Levy  v.  Drew  (14  Ark.  334),  392, 431,. 

450. 


754 


TABLE    OF   CASES. 


References  are  to  pages. 


Levy  v.  First  Nat.  Bank  (27  Neb. 

557),  264. 
v.  Franklin     Sav.     Bank    (117 

Mass.  448).  639.  646. 
v.  Peters  (9  S.  &  R  125),  542. 
v.  Pike  (25  La.  Ann.  830),  285. 
Lewis  v.  Bakewell  (6  La.  Ann.  859), 

519. 
v.  Bank  of  Kentucky  (12  Ohio, 

132),  621. 

v.  Brehrae  (33  Md.  412),  542. 
v.  Brewster  (2  McLean,  21),  403, 

458,  511. 

v.  Burr  (2  Games'  Gas.  195),  516. 
v.  Eastern    Bank  (32  Me.   90), 

148. 

v.  Harper  (73  Ga.  564),  352. 
v.  Jeffries  (86  Pa.  340),  195. 
v.  Kramer  (3  Md.  265),  361,  368, 

538. 
v.  Lynn  Inst.  (148  Mass.  235), 

650. 

y.  Switz  (74  Fed.  R.  381),  83. 
Lewiston   Falls  Bank  v.  Leonard 

(43  Me.  144i.  492. 
L'Herbette  v.  Pittsfield  Nat.  Bank 

(162  Mass.  137).  284. 
Libby  v.  Adams  (32  Barb.  542),  478, 

505. 

v.  Pierce  (47  N.  H.  309),  542. 
v.  Union  Nat.  Bank  (99  III  622), 

195. 
Lienau  v.  Dinsmore  (3  Daly,  365), 

312. 
Lienow  v.  Pitcairn  (Fed.  Cas.  No. 

8341),  362,  367,  369. 
Life  Ass'n  v.  Levy  (33  La.   Ann. 

1203;,  81. 
Light  v.  Kingsbury  (50  Mo.   331), 

431. 
Lime  Rock  Bank  v.  Hewitt  (52  Ma 

531),  332,  474,  520. 

Lincoln  v.  Fitch  (42  Me.  456),  584. 
Lincoln  Bank  v.  Hammatt  (9  Mass. 

159),  476. 

v.  Page  (9  Mass.  155),  187. 
Lindauer  v.  Fourth  Nat.  Bank  (55 

Barb.  75),  315. 
Lindenberger  v.  Wilson  (1  Cranch, 

C.  C.  340),  374. 
Linderberg  v.  Crescent  Mining  Co. 

(9  Utah,  163),  170. 
Linderman  v.  Guldin  (34  Pa.  54), 

518. 
Lindley  v.  First  Nat.  Bank  (76  Iowa, 

629),  368. 

v.  Ross  (137  Pa.  629),  397. 
Lindsay  v.  Price  (33  Tex.  280),  350. 


Lindsey  v.  Lambert  Ass'n  (4  Fed. 
R  48),  217,  218,  220. 

v.  McClelland  (18  Wis.  481),  405, 

429. 
Linn  v.  Horton  (17  Wis.  151),  486. 

v.  State  Bank  (1  Scam.  87),  44, 

555. 
Linn  Co.  Nat.  Bank  v.  Crawford 

(69  Fed.  R.  532),  594. 
Linville  v.  Welch  (29  Mo.  203),  355, 

356,  467. 
Lionberger  v.  Mayer  (12  Mo.  App. 

575),  154,  546. 
Lititz  Nat.  Bank  v.  Siple  (145  Pa. 

49),  536. 
Little  v.  Blunt  (9  Pick.  488),  542. 

v.  Phoenix  Bank  (2  Hill,  425,  7 
Hill,  359),  425,  434. 

v.  Pratt  (1  Mo.  201),  425. 
Littlehale  v.  Mayberry  (43  Me.  264), 

468. 
Littleton  v.  People's  Bank  (63  N.  W. 

R.  666),  192. 
Liverpool  Ins.  Co.  v.  Massachusetts 

(10  Wall.  566),  40,  56. 
Livingston  v.  Bank  of  New  York 

(26  Barb.  304),  574. 
Lloyd  v.  West  Branch  Bank  (15  Pa. 

172),  146,  154,  156,  287. 
Loan  Ass'n  v.  Topeka  (20,Wall.  655), 

39. 
Loan  Bank  v.  Miller  (39  S.  a  175), 

278. 

Lock  v.  Huling  (24  Tex.  311),  410. 
Locke    v.   Bank    of  Tennessee   (6 
Humph.  51),  484. 

v.  First  Nat.  Bank  (65  N.  H. 
270),  290. 

v.  Merchants'   Nat.    Bank    (66 

Ind.  353),  308. 
Lockhart  v.  United  States  Bank  (2 

Ashm.  406),  569. 
Lock  haven  Nat.  B;ink  v.  Mason  (95 

Pa.  113),  213,  2b7. 

Lock  wood  v.  Bock  (50  Minn.  142), 
540. 

v.  Crawford  (18  Conn.  361),  427, 
429,  509. 

v.  Mechanics'  Nat  Bank  (9  R  I. 

308),  47. 
Logan  Co.  Nat.  Bank  v.  Townsend 

(139  U.  8.  67),  64. 
Logan  Nat.  Bank  v.  Williamson  (2 

Ohio  Cir.  Ct.  R  118),  199,  279. 
Logwood    v.   Huntsville    Bank    (1 

Minor,  23),  619. 
Lollerstedt  v.  Griffin  (29  Ga.  708.', 

383. 


TABLE   OF   CASES. 


T55 


References  are  to  pages. 


London  v.  Howard  (2  Hay  w.,  N.  C., 

332),  511. 
Long  v.  Bank  of  Yanceyville  (90 

N.  C.  405),  98,  114." 
v.  Bank  of  Yanceyville  (81  N.  C. 

41).  563. 
v.  Citizens'  Bank  (8  Utah,  104), 

207. 

v.  Emsley  (57  Iowa,  11),  216, 218. 

v.  Farmers'  Bank  (1  Clark,  284, 

2  Pa.  Law  J.  230),  559,  571. 

v.  Moore  (2  Brev.  172),  537. 

Long    Island    Bank  v.   Townsend 

(Hill  &  D.  Supp.  204),  231. 
Lonsdale    v.    Lafayette    Bank  (18 

Ohio,  126),  354.  362. 
Loomis  v.  Fay  (24  Vt.  240),  151,  158. 
Lord  v.  Appleton  (15  Me.  270),  478. 
v.  Midland  R  Co.  (L.  R.  2  C.  P. 

339),  122. 
Loring  v.  Brodie  (134  Mass.  453),  161, 

172,  218. 

Losee  v.  Dunkin  (7  Johns.  70),  428. 
Loudon  Savings  Soc.  v.  Hagerstown 

Bank  (36  Pa.  498),  279. 
Louisiana  v.  New  Orleans  (109  U.  S. 

285),  99,  203. 

v.  Wood  (102  U.  S.  294),  63. 
Louisiana  Ice  Co.  v.  State  Nat.  Bank 
(1  McGloin,   181),  296,  319,  320, 
322,  656. 

Louisiana  Ins.  Co.  v.  Louisiana  State 
Bank  (3  Mart.,  N.  S.,  610), 
303. 
v.  Shamburgh  (2  Mart.,  N.  S., 

511),  450. 
Louisiana  Nat.  Bank  v.  Schuchardt 

(15  Hun,  405),  367. 

Louisiana  State  Bank  v.  Dumar- 

trait  (4  La.  Ann.  483),  550. 

v.  Ellery  (4  Mart.,  N.  S.,  87),  483. 

v.  Hibernia  Nat.  Bank  (26  La. 

Ann.  399),  257. 
v.  Rowell  (6  Mart,  N.  S.,  506), 

473. 
v.  Senecal  (13  La.  525),  148,  172, 

182. 
Louisville  Bank  v.  Ellery  (34  Barb. 

630),  379. 
Louisville  Trust  Co.  v.  Louisville  R. 

Co.  (75  Fed.  R,  433),  175, 181. 
Loux  v.  Fox  (171  Pa.  68),  439. 
Lovett  v.  Cromwell  (6  Wend.  369). 

456. 

Low  v.  Howard  (10  Cush.  159),  541. 
v.  Taylor  (41  Mo.  App.  517),  276. 
Lowenstine    v.   Bressler   (109  Ala. 
326),  255,  299,  435. 


Lowery  v.  Scott  (24  Wend.  358),  500, 
501. 

v.  Steward  (3  Bosw.  505, 25  N.  Y. 

239),  350, 361,  372. 

Lowry  v.  Iiiman  (46  N.  Y.  119),  48, 
100. 

v.  Parsons  (52  Ga.  356),  563. 

v.  Steele  (27  Ind.  168).  529. 
Lucas  v.  Coe  (86  Fed.  R  972),  84. 

v.  Government  Nat.  Bank  (78 
Pa.  228),  335. 

v.  Ladew  (28  Mo.  342),  389. 
Luff  v.  Pope  (5  Hill,  413),  357,  358. 
Lum  v.  Robertson  (6  Wall.  297),  598. 
Lumbermen's  Bank  v.  Bearce  (41 

Me.  505),  330,  335. 
Lund  v.  Seamen's  Bank  (37  Barb. 

129  J,  213.  630,  650. 
Luning  v.  Wise  (64  CaL  410),  416, 

483. 
Lunt  v.  Adams  (17  Me.  230),  420. 

v.  Bank  of  North  America  (49 

Barb.  221),  244. 
Lyell  v.  Lapeer  Co.  (6  McLean,  416), 

404,  405. 

Lynch  v.  First  Nat.  Bank  (107  N.  Y. 
179),  244,  256. 

v.  Goldsmith  (64  Ga.  42),  279. 

v.   Merchants'  Nat.   Bank    (22 

W.  Va.  554),  337. 
Lyndenberger  v.  Beall  (6  Wheat. 

104),  509. 
Lyne  v.  Bank  of  Kentucky  (5  J.  J. 

Marsh.  545).  182. 
Lyon  v.  State  Bank  (1  Stew.  442), 

619. 

M. 

Maccoun  v.  Atchafalaya  Bank  (13 

La.  342),  552. 
Mackall  v.  Gozler  (2  Cranch,  C.  C. 

240).  459. 
Mackintosh  v.  Eliot  Bank  (123  Mass. 

393),  267. 
Macon  v.  Macon  Sav.  Bank  (60  Ga. 

133),  71. 
Madderom  v.  Heath  Mfg.  Co.  (35 

111.  App.  588),  463,  508. 
Madison  Bank,  In  re  (5  Biss.  515), 

316. 
Madrazo  v.  Wells  (3  Barn.  &  Aid. 

353),  58. 

Magee  v.  Dunbar  (10  La.  546),  484. 
Magoun   v.   Walker  (49  Me.   419), 

444. 
Magruder  v.  Bank  of  Washington 

(9  Wheat.  598),  428,  450. 


T56 


TABLE   OF   CASES. 


References  are  to  pages. 


Magruder  v.  Colston  (44  Md.  349),  81. 

v.  State  Bank  (18  Ark.  9),  196. 

v.  Union  Bank  (3  Pet  87),  398, 
441. 

v.  Union  Bank  (2  Cranch,  C.  C. 

687),  441. 
Mahaiwe  Bank  v.  Peck  (127  Mass. 

298),  234. 

Mahan  v.  Waters  (60  Mo.  167),  398. 
Mahone  v.  Central  Bank  (17  Ga. 

Ill),  619.  621. 
Mahoney  v.  State  Bank  (4  Ark.  620), 

45. 
Mahro  v.  Greenwich  Sav.  Bank  (38 

N.  Y.  Supp.  126),  649. 
Maine  v.  Second  Nat.  Bank  (6  Biss. 

26),  626,  627. 

Maine  Bank  v.  Butts  (9  Mass.  49), 
333 

v.  Smith  (18  Me.  99),  417. 
Maisch  v.  Savings  Fund  (5  Phila. 

30),  633,  634. 
Makin  v.  Inst  for  Savings  (19  Me. 

128),  630,  649. 
Maiden  Bank  v.  Baldvria  (13  Gray, 

154),  442. 
Malecek  v.  Tower  Grove  R  Co.  (57 

Mo.  17),  170. 

Mallon  v.  Hvde  (76  Fed.  R  388),  130. 
Maloney  v.  Bruce  (94  Pa.  249),  40, 56. 
Man  v.  Cheeseman  (Fed.  Gas.  No. 

9002a),  80. 

Manchester  Bank   v.  Fellows  (28 
N.  H.  302),  489,  509,  514. 

v.  White  (30  N.  H.  456),  470, 491, 

513. 
Manderson  v.  Commercial  Bank  (28 

Pa.  379),  93. 

Mandeville  v.  Bracey  (31  Miss.  460), 
591. 

v.  Riggs  (2  Pet.  482),  620. 

v.  Rumney  (3  Cranch,  C.  C.  424), 
516. 

v.  State  Bank  (19  La.  Ann.  392), 

239. 
Mandue  v.  Kitchin  (3  Rob.,  La.,  261), 

550. 
Manhattan  Brass  Co.  v.  Allen  (35 

111.  App.  336),  39. 
Manhattan  Co.  v.  Lydig  (4  Johns. 

377),  157,  205,  208. 

Manhattan  Life  Ins.  Co.  v.  Farm- 
ers' Bank  (10  Blatchf.  344),  159, 

167. 
Mann  v.  Blount  (65  N.  C.  99),  343, 

591. 
Manney  v.  Coit  (80  N.  C.  300),  525, 

K97 

Wet* 


Manning  v.  Kohn  (56  Ala.  235),  380. 

v.  Lyon  (70  Hun,  345),  457. 

v.  Maroney  (87  Ala.  563),  461. 
Manuel  v.  Mississippi  R  Co.  (2  Pa. 

198),  281. 

Manufacturers'  Bank  v.  Continental 
Bank  (148  Mass.  553),  208. 

v.  Hazzard  (30  N.  Y.  226),  468. 
Manufacturers'  Nat.  Bank,  In  re  (5 

Biss.  499),  592. 

Manufacturers'  Nat.  Bank  v.  Baack 
(8  Blackf.  137),  625,  626. 

v.  Barnes  (65  111.  69),  214. 

v.  Jones  (2  Penny.  377),  232. 

v.  Swift  (70  Md.  515),  273. 

v.  Thompson  (129  Mass.  438),  656. 
Mapes  v.  Scott  (94  111.  379),  68, 195. 

v.  Second  Nat.   Bank   (80  Pa. 

163>,  158. 
Maples  v.  Traders'  Deposit  Bank  (15 

Ky.  Law  R  879>,  532. 
Marbourg    v.    Brinkman   (23   Mo. 

App.  511),  426,  433. 
Marine  Bank  v.  Butler  Colliery  Co. 
(5  N.  Y.  Supp.  291, 125  N.  Y. 
695),  276. 

v.  Chandler  (27  111.  525),  184, 
238. 

v.  Fulton  Bank  (2  Wall.  252), 
209,  321. 

v.  Rushmore  (28  III  463).  209. 

v.  Smith  (18  Ma  99),  187,  53a 

v.  State  Auditor  (14  111.  185),  72. 

v.  Terry  (40  111.  255),  156. 
Marine  Co.  v.  Stanford  (28  III  168), 

225. 
Marine  Nat.  Bank  v.  City  Nat.  Bank 

(59  N.  Y.  67),  259. 
Marion  Nat.  Bank  v.  Phillips  (35  & 

W.  R  910),  399. 
Marion  Sav.  Bank  v.  Dunkin  (54 

Ala,  471),  72. 
Market  Nat.  Bank  v.  Pacific  Nat 

Bank  (93  N.  Y.  648),  596. 
Markham  v.  First  Nat  Bank  (Fed. 
Caa  No.  9097),  335. 

v.  Hazen  (48  Ga.  270),  383. 
Markland  v.  McDaniel  (51  Kan.  350), 

536. 

Marks  v.  Bodie  Bank  (8  Pac.  R  807), 
303. 

v.  Boone  (24  Fla.  177),  5ia 
Marr  v.  Bank  of  W'est  Tennessee  (4 
Lea,  578),  46,  48,  96,  104, 
598. 

v.  Johnson  (9  Yerg.  1),  486,  498. 
Marrett  v.  Brackett  (60  Me,  524),  186, 

455. 


TABT.E    OF   CASES. 


757 


References  are  to  pages. 


Mars  v.  Albany  Sav.  Bank  (69  HUD, 

398),  649. 
Marsaudet  v.  Jacobs  (6  Eob.,  La., 

276),  410. 
Marsh  v.  Badcock  (2  D.  Chip.  124), 

534. 
v.  Burrows  (1  Woods,  463),  95, 

107,  109. 

Marshall  v.  Clary  (44  Ga.  511),  382. 
v.  Farmers'  Bank  (85  Va.  676), 

131. 

v.  Mitchell  (35  Me.  221),  528. 

v.  Overbay  (10  La.  166),  527. 

Martel  v.  Tureand  (6  Mart.,  N.  S., 

118).  393,  399. 
Martin  v.  Bacon  (3  Const.  R  132), 

359,  361. 
v.  Bank  of  United  States    (4 

Wash.  C.  G  253),  559. 
v.  Belmont  Bank  (13  Ohio,  250), 

572. 
v.  Blydenburgh  (1  Daly,  314), 

559. 
v.  Branch  Bank  (15  Ala.  587), 

194. 

v.  Brown  (75  Ala.  442),  467. 
v.  Funk  (75  N.  Y.  134),  214. 
Y.  Ingersoll  (8  Pick.  1),  517. 
v.  Minnekahta  Bank  (7  S.  Dak. 

263),  213,  238. 
v.   Perqua  (65  Hun,  225),  529, 

541. 
v.  State  Bank  (7  S.  D.  263),  213, 

238. 

v.  Webb  (110  U.  S.  7),  151,  161. 
v.  Winslow  (2  Mason,  241),  427, 

428. 
Martinez  v.  Hemme  Co.  (105  Cal. 

376),  30. 
Martyn  v.  Lamar  (75  Iowa,  235), 

403. 
Marvine  v.  Hymers  (12  N.  Y.  223), 

333. 
Marysville  Bank  v.  Brewing  Co.  (50 

Ohio  St.  lot),  371. 
Marzetti  v.  Williams  (1  Barn.  &  Ad. 

415),  201,  241. 
-Mason  v.  Dousay  (35  I1L  424),  354, 

359,  408. 
v.  Farmers'  Bank  (12  Leigh,  84), 

51. 
v.  Franklin  Bank  (3  Johns.  202), 

389. 

v.  Graff  (35  Pa.  448),  375. 
v.  Pritchard  (9  Heisk.  793),  452, 

'  501. 

Masonic  Sav.  Bank  v.  Bangs  (84  Ky. 
135),  329. 


Maspero  v.  Pedisclaux  (22  La.  Ann. 

227),  517. 
Massachusetts  Bank  v.  Oliver  (10 

Cush.  557),  518. 
Massey  v.  Fisher  (62  Fed.  R  958), 

282,  603,  609. 
Matteson  v.  Moulton  (11  Hun,  268, 

79  N.  Y.  627),  359. 

Matthews    v.    Abbott    (Fed.    Cas. 
No.  9275),  197. 

v.  Albert  (24  Md.  527).  102,  104. 

v.  Allen  (16  Gray,  594).  540,  541. 

v.  Creditors  (10  La.  Ann.  342), 
283. 

v.  Manufacturing  Co.  (3  Robt. 
711),  135. 

v.  Massachusetts     Nat.     Bank 
(Fed.  Cas.  No.  9286),  154 

v.  Skinner  (62  Mo.  329),  191, 196. 
Matthewson  v.  Sprague  (1  R  L  8), 
403. 

v.  Stafford  Bank  (45  N.  H.  104), 

503,  508,  518. 
Matthie  v.  Town  of-  Cameron  (62 

Mo.  504),  350. 

Maurin  v.  Perot  (16  La.  276),  459. 
Maury  v.  Cole  (34  Md.  235),  284. 

v.  Ingraham  (28  Miss.  171),  332. 
Mauser  v.  Pratt  (101  Mass.  60),  84. 
Maux  Ferry  Co.  v.  Brannigan  (40 

Ind.  361),  351. 

Maxwell  v.  Agnew  (21  Fla.  154),  405. 
Mayer  v.  Chattanooga  Bank  (51  Ga. 
325),  220,  222. 

v.  Heidelbach  (123  N.  Y.  332), 

238. 

Mayhew  v.  Prince  (1 1  Masa  55),  363. 
Maynard  v.  Mechanics'  Nat.  Bank 

*  (1  Brewst.  483),  566. 
McAfee  v.  Bland  (11  S.  W.  R.  439), 

578,  600. 
McAllister  v.  Smith  (17  111.  328),  57, 

548. 
McBricle  v.  Farmers'  Bank  (26  N.  Y. 

450),  316. 
McCagg  v.  Woodman  (28  III  84), 

240  253 
McCandlish  v.  Cruger  (2  Bay,  377), 

OK9 

McCann  v.  First  Nat  Bank  (112 

Ind.  354),  79. 
v.  Rogers  (15  Ky.  Law  R  127), 

574. 

v.  State  (4  Neb.  324),  173. 
McCarthay  v.  Lavasche  (89  111.  270), 

106. 

McCarthy  v.  Provident  Inst  (159 
Mass.  527),  645. 


758 


TABLE   OF   CASES. 


References  are  to  pages. 


McCaskell  v.  Conn.  Sav.  Bank  (60 

Conn.  300),  643,  644 
McCausland  v.  Wheeler  Sav.  Bank 

(43111.  App.  381).  360. 
McClane  v.  Fitch  (4  B.  Hon.  599), 

410,  444. 
McClelland  v.  Bishop  (42  Ohio  St. 

113),  462,  463. 
McComb  v.  Thompson  (2  Minn.  139), 

533. 
McConville  v.  Gilmour  (36  Fed.  R. 

277),  597,  624 
v.  Means  (21  Wkly.  Law  BuL 

193),  589. 
McCord  v.  California  Nat  Bank  (96 

Cal.  197),  255. 
v.  Curtis  (59  111.  221),  411. 
McCormick  v.  Hickey  (24  Mo.  App. 

362),  352. 
v.  Market  Nat.  Bank  (165  U.  S. 

538),  50,  60,  61,  66,  70. 
v.  Walthers  (134  U.  S.  41),  625. 
cCornick  v.  Western  Union  Tel. 

Co.  (79  Fed.  R.  449),  250. 
McCory  v.  Chambers  (48  III  App. 

445),  192. 

McCraith  v.  National  Mohawk  Val- 
ley Bank  (104  N.  Y.  414),  194 
McCrummen    v.    McCrummen    (5 

Mart..  N.  S.,  159),  496. 
McCulloch  v.  Maryland  (4  Wheat 

316),  41. 
McCutcheon  v.  Rice  (56  Miss.  455), 

359. 
McDermott  v.  Miners'  Sav.  Bank 

(100  Pa.  285),  649. 
McDonald  v.  First  Nat  Bank  (41  III 

App.  368),  596. 
v.  Mosher  (23  111.  App.  206),  426, 

430,  432. 

v.  Stokey  (1  Mont.  388),  348. 
v.  Williams  (174  U.  S.  397),  64, 

578,  580. 
McDougal  v.  Holmes  (1  Ohio,  176), 

343. 
McDougald  v.  Ballamy  (18  Ga.  411), 

59,  559. 

v.  Lane  (18  Ga.  444).  552. 
McDowell  v.  Bank  of  Wilmington 

(2  Del  Ch.  1),  217,  234 
v.  Wilmington  Bank  (1  Harr. 

369),  234 
McElhanny  v.  First  Nat.  Bank  (Fed. 

Cas.  No.  8779),  593,  595. 
McEwen  v.  Davis  (39  Ind.  109),  213, 

214  215,  233. 
v.  Scott  (49  Vt  376),  358. 
McFarland  v.  Pico  (8  Cal.  626),  430, 
549. 


McFarlin  v.   First  Nat  Bank  (62 

Fed.  R.  868),  78. 
McGehee  v.  Powell  (8  Ala.  827),  40, 

56. 
McGough  v.  Jamison  (107  Pa.  336), 

290. 
McGowan  v.  McDonald  (111  CaL  57). 

275. 
McGrade  v.  German  Sav.  Inst  (4 

Mo.  App.  330),  246. 
McGrew  v.  Produce  Exchange  (85 
Tenn.  572),  55,  60. 

v.  Toulmin  (2  Stew.  &  P.  438), 

495. 
McHenry  v.  Keller  (6  La.  Ann.  326), 

448. 
Mcllhenny  v.  Jones  (6  Har.  &  J. 

256),  431. 

Mclntyre  v.  Ingraham  (35  Miss.  25), 
198. 

v.  Parks  (3  Met.  207),  58. 
McKavlin  v.  Breslin  (8  Gray,  177), 

292. 

McKee  v.  Boswell  (33  Mo.  567),  462. 
McKeever  v.  Kirtland  (33  Iowa,  348), 

522. 
McKennon  v.  McRae  (7  Port  175), 

542. 

McKirdy  v.  Hare  (7  Atl.  R.  172),  375. 
McKnight  v.  Lewis  (5  Barb.  681), 

548. 
McLain  v.  Wallace  (103  Ind.  562), 

283,  284 
McLaren  v.  Marine  Bank  (52  Ga. 

131),  393. 

McLaughlin  v.  First  Nat  Bank  (6 
Dak.  406),  289. 

v.  O'Neil  (51  Pac.  R.  251),  101. 
McLean  v.  Lafayette  Bank  (3  Mc- 
Lean, 587),  90. 
McLean  Co.  Bank  v.  Mitchell  (88 

111.  52),  275. 
McLennan   v.   Anspaugh  (2  Kan. 

App.  269),  69. 

McLeod  v.  Evans  (66  Wis.  401),  209, 
210,  605. 

v.  Fourth  Nat.  Bank  (20  Fed.  R. 

225),  172. 
McLochlin  v.  Bank  (139  N.  Y.  514), 

274 
McMasters  v.  Reed  (1  Grant's  Cas. 

36),  555. 

McMean  v.  Little  (3  Baxt  330),  521 
McMurtrie  v.  Jones  (3  Wash.  C.  C. 

206),  492,  496. 
McNabb  v.  Tally  (27  La.  Ann.  640), 

391. 
McNamara  v.  McDonald  (69  Conn. 

484),  644 


TABLE    OF   CASES. 


759 


References  are  to  pages. 


McNatt  v.  Jones  (52  Ga.  473),  474. 
McNulta  v.  Corn  Belt  Bank  (164  III 

427),  48,  78,  79. 
McPherson  v.  Walton  (42  N.  J.  Eq. 

282),  359. 
McVeigh  v.  Allen  (29  Grat.  588,  26 

Grat  785),  497,  498. 
Mead  v.  Engs  (5  Cow.  303),  486. 

v.  Small  (2  Me.  207),  538. 
Meadowcroft  v.  People  (163  III  56), 

136. 

Meads  v.  Merchants'  Bank  (25  N.  Y. 
143),  263,  266. 

v.  Walker  (Hopk.  Ch.  587),  79. 
Mechanics'  Bank  v.  Bank  of  Colum- 
bia (5  Wheat,  326),  147. 

v.  Banks  (11  La.  Ann.  261),  208. 

v.  Compton  (3  Rob.,  La.,  4),  494. 

v.  De  Bolt  (1  Ohio  St.  591),  48. 

v.  Earp  (4  Rawle,  384),  90,  306, 
320  321 

v.  Griswold'  (7  Wend.  165),  538. 

v.  Heard  (37  Ga.  401),  565. 

v.  Livingston  (33  Barb.  458),  379. 

v.  Mariposa  Co.  (3  Robt.   395), 
267. 

v.  Merchants'  Bank  (6  Met.  13), 
184,  294.  454. 

v.  Seitz  (150  Pa.  632),  231,  234. 

v.  Smith  (19  Johns.  115),   146, 
208. 

v.  Yager  (62  Miss.  529),  356. 
Mechanics'  Banking  Ass'n  v.  Place 

(4  Duer,  212),  479. 
Medill  v.  Collier  (16  Ohio  St.  599), 

60,  70,  73. 

Meggett  v.  Baum  (57  Miss.  22),  384. 
Meise  v.  Newman  (76  Hun,  341),  410. 
Mel  v.  Hoi  brook  (4  Edw.  Ch.  539), 

591. 
Memphis  Nat.  Bank  v.  Sneed  (97 

Tenn.  120),  175. 
Memphis  Ry.  Co.  v.  Dow  (22  Blatchf. 

48),  63. 
Menard  v.  Winthrop  (2  La.  Ann. 

333),  550. 
Menzies  v.  Farmers'  Bank  (3  Ky. 

Law  R.  822),  494,  495,  502. 
Mercantile  Bank  v.   McCarthy  (7 
Mo.  App.  318).  161,  418. 

v.  New  York  (121  U.  S.  138),  32, 

53. 

Mercer  v.  Cononge  (8  La.  Ann.  37), 
173. 

v.  Dyer  (15  Mont.  317),  587. 

v.  Lancaster  (5  Pa.  160),  494. 
Merchants    v.    Shouse    (14   Wkly. 

Notes  Cas.  133),  89. 


Merchants'  Bank  v.  Bank  of  Com- 
merce (24  Md.  12),  309.  310. 
v.  Birch  (17  Johns.  25),  517,  518. 
v.  Central  Bank  (1  Ga.  418,  1 

Kelly,  418).  147,  61'9. 
v.  Elderkill  (25  N.  Y.  178),  443. 
v.  Evans  (9  W.  Va.  373),  231. 
v.  Exchange  Bank  (16  La,  457), 

269. 

v.  Griswold  (9  Hun,  561),  368. 
v.  Harrison  (39  Mo.  433),  194, 195. 
v.  Jeffries  (21  W.  Va,  504),  122. 
v.  Marine  Bank  (3  Gill,  96).  170, 

266. 

v.  Masonic  Hall  (63  Ga.  549),  292. 
v.  McClelland  (9  Colo.  608),  620. 
v.  Mclntyre  (2  Sandf.  431).  264. 
v.  Meyer  (56  Ark.  499).  222,  296. 
v.  Parker  (12  N.  Y.  St.  R  558), 

434. 

v.  Rudolf  (5  Neb.  527),  157. 
v.  Sassie  (33  Mo.  350),  33a 
v.  Seton  (1  Pet.  299),  173. 
v.  Spalding  (9  N.  Y.  53),  76. 
v.  Spicer  (6  Wend.  443),  419. 
v.  Stafford  Nat.  Bank  (44  Conn. 

565),  308,  310. 
v.  State  Bank  (10  Wall  604), 

152,  256,  258,  348. 
v.  Woodruff  (6  Hill,  174),  184, 

251,  253. 
Merchants'  Exchange  Bank  v.  Field- 

ner  (92  Wis.  415),  240. 
Merchants'  Exchange   Nat.   Bank 
v.  Cardago  (35  N.  Y.  Super.  Ct 
162),  364. 
Merchants'  Nat.  Bank  v.  Armstrong 

(65  Fed.  R.  932),  128. 
v.  Carhart  (95  Ga.  394),  286. 
v.  Clark  (139  N.  Y  314),  173. 
v.  Eustis  (8  Tex.  Civ.  App.  350), 

150. 
v.  First  Nat.  Bank  (7  W.  Va. 

544\  199. 

v.  Fouche  (103  Ga.  851).  591. 
v  Gaslin  (41  Minn.   522),  565, 

573. 
v.  Goodman  (109  Pa.  422),  294, 

305. 

v.  Guilmartin  (88  Ga.  797),  285. 
v.  Guilmartin  (93  Ga.  503),  284, 

285. 

v.  Hanson  (33  Minn.  40),  66. 
v.  Masonic  Hall  (65  Ga.  603), 

565. 
v.  McAnulty  (31  S.  W.  R  1091), 

167,  172,  385. 
v.  Mears  (8  Biss.  158),  196. 


760 


TABLE   OF   CASES. 


References  are  to  pages. 


Merchants'  Nat.  Bank  v.  Nat.  Bank 
of    Commerce    (139    Mass. 
513),  273,  274,  275,  656. 
v.  Nat.  Eagle  Bank  (101  Mass. 

281),  274,  656. 
v.  Pennsylvania  (165  U.  S.  461), 

52. 

v.  Procter  (1  City  R.  1),  471. 
v.  Ritzinger  (20  Bradw.  27),  226, 

232. 

v.  Ritzinger  (118  111.  484),  348. 
v.  Robinson  (47  Ky.  552),  253. 
v.  Sevier  (14  Fed.  R.  662),  333. 
v.  School  District  (94  Fed.  R 

705),  134,  605.  609,  616. 
v.  Thomas  (28  Wkly.  Law  Bui 

164),  128. 

v.  Tracy  (77  Hun,  443),  178.     - 
Merchants'  State    Bank    v.   State 

Bank  (69  N.  W.  R.  170),  304 
Merchants'  Trust  Co.  v.  Metropolis 

Bank  (7  Daly,  137),  259. 

Meridian  Nat.  Bank  v.  First  Nat. 

Bank  (33  N.  E.  R  247),  259. 

v.  Hauser  (145  Ind.  496),  216, 239. 

Merrick  v.  Bank  of  Metropolis  (8 

Gill,  59),  149. 

v.  Plank  Road  Co.  (11  la.  74),  479. 
Merrill  v.  Call  (15  Me.  428),  92. 

v.  First  Nat.  Bank  (75  Fed.  R 

148),  594. 
v.  National  Bank  (173  U.  S.  13t), 

588,  595. 

v.  Suffolk  (31  Me.  57),  573. 
Merritt  v.  Todd  (23  N.  Y.  28).  429. 
Mersman  v.  Werges  (112  U.  S.  139), 

406. 

Merz  v.  Kaiser  (20  La.  Ann.  377),  478. 
Metropolitan  Bank  v.  Godfrey  (23 

III  579),  194 

v.  Lloyd  (90  N.  Y.  530),  210. 
v.  Van  Dyck  (27  N.  Y.  400  \  560. 
Metropolitan  Nat.  Bank  v.  Clagget 
(141  U.S.  520,  125N.Y.729), 
566. 
v.  Jones  (137  111.  634).  225,  227, 

252  256  257 

v.  Race' (32  ill  App.  126),  255. 
Meyer  v.  Hibsher  (47  N.  Y.  265),  443, 

445. 
Meyers  v.  Bank   of  Tennessee  (3 

Head,  330  >  469. 
Michaud  v.  Legarde  (4  Minn.  43), 

467,  500,  535. 
Michigan  Bank  v.  Ely  (17  Wend. 

508),  364 

Michigan  State  Bank  v.  Gardner 
(15  Gray,  362),  373,  375. 


Michigan  State  Bank  v.  Leaven- 
worth  (28  Vt  209),  368,  369. 
v.  Pecks  (28  Vt.  200),  366. 
Middle  Dist.  Bank,  In  re  (1  Paige, 

585),  586. 
Middlesex  Co.  v.  State  Bank  (32  N. 

J.  Eq.  467),  296. 
Middleton    v.   Boston  Locomotive 

Works  (26  Pa.  257),  444 
Middleton  Bank  v.  Magill  (5  Conn. 

28),  104 

v.  Morris  (28  Barb.  616),  432. 
Miles  v.  Hall  (12  Smedes  &  M.  332), 

519. 

Milks  v.  Rich  (80  N.  Y.  269),  401. 
Millard  v.  National  Bank  (3  MacA. 

54),  244 

Millaudon  v.  Arnaud  (4  La.  542),  380. 

Miller  v.  Andrews  (3  Cold.  380),  590. 

v.  Austin  (13  How.  218),  279, 

405. 

v.  Bledsoe  (2  111.  530),  227. 
v.  Butler  (1  Cranch,  C.  C.  470), 

356. 
v.  Excelsior  Stone  Co.  (1  Bradw. 

273),  350. 
v.  Farmers'  Bank  (30  Md.  592), 

329. 
v.  Franklin  Bank  (1  Paige,  444), 

240. 
v.  Hackley  (5  Johns.  375),  411, 

541. 
v.  Henner  (3  Mart,  N.  S.,  587), 

450. 

v.  Howard  (95  Tenn.  407),  12a 
v.  Moseley  (26  La.  Ann.  667), 

434 
v.  National  Bank  (106  U.  S.  542), 

624  ' 

v.  Neihaus  (51  Ind.  401),  35a 
v.  Race  (1  Burr.  452),  558. 
v.  Western  Bank  (172  Pa.  197), 

206. 
Milliken  v.  Shapleigh  (36  Ma  596), 

316. 

v.  Steiner  (56  Ga.  251),  116. 
Mills  v.  Bank  of  U.  S.  (11  Wheat 

431),  187,  453,  469, 471. 
v.  Beard  (19  CaL  158),  532. 
v.  Kuykendall  (2  Blackf.  47), 

349. 

v.  Rice '(6  Gray,  458),  327,  335. 
v.  Scott  (99  U.  S.  25),  106. 
v.  State  (23  Tex.  295),  70. 
Miltenberger  v.  Attwood  (18  How. 

Pr.  330),  360,  372. 
v.  Cooke  (18  Wall.  421),  370. 
v.  Spaulding  (33  Mo.  421),  410. 


TABLE   OF    OASES. 


761 


References  are  to  pages. 


Miner  v.  Bank  of  Louisiana  (1  Mart., 
O.  S.,  30),  559. 

v.  Mechanics'  Bank  (1  Pet.  46), 

146. 
Miners'  Bank.  In  re  (13  Wkly.  Notes 

Cas.  370),  636,  650. 
Miners'    Bank    v.    Thomas   (4    G. 

Greene,  336),  572. 
Minier  v.  Second  Nat.  Bank  (13  N.  Y. 

St.  R  222),  296. 
Minneapolis    Co.    v.    Metropolitan 

Bank  (44  L.  R  A.  594),  306. 
Minor  v.  Rogers  (40  Conn.  512),  214. 
Minot  v.  Russ  (156  Mass.  458),  256. 
Minton  v.  Stahlmann  (96  Tenn.  98), 

129. 

Minturn  v.  Fisher  (4  Cal.  35),  349, 395. 
Miranda  v.  City  Bank  (6  La.  740), 

537. 
Missouri  Pac.  R  Co.  v.  Wright  (38 

Mo.  App.  141),  360,  371. 
Missouri  Tel.  Co.  v.  First  Nat.  Bank 

(74  111.  217),  339,  627.  628. 
Mitchell  v.  Bank  of  St.  Paul  (7  Minn. 
252),  571. 

v.  Beckmann  (64  111.  117),  101, 
193,  629. 

v.  Cross  (2  R  I.  437),  514. 

v.  De  Grand  (1  Mason,  176),  374. 

v.  Easton  (64  N.  Y.   155),   279, 
290,  405. 

v.  Home  Sav.  Bank  (38  Hun, 
255),  648. 

v.  Logan  (34  La.  Ann.  998),  326. 

v.  Young  (21  La.  Ann.  279),  505. 
Mitting  v.  Sloan  (57  Ga.  392),  360, 372. 
Mobile  Bank  v.  Meagher  (133  Ala. 

622),  558,  562,  563,  564. 
Mobile  Branch  Bank  v.  Collins  (7 

Ga.  95),  117. 

Mobley  v  Clark  (28  Barb.  390),  351. 
Moeser  v.  Schneider  (158  Pa.  412), 

357. 

Moffatt  v.  Griswold  (1  Neb.  415),  530. 
Mohawk    Bank    v.    Broderick    (10 

Wend.  304),  422,  432,  433. 
Mohawk  Nat.  Bank  v.  Schenectady 

Bank  (151  N.  Y.  665),  90. 
Mohrenstecker   v.   W  ester velt  (87 

Fed.  R  157),  144. 

Moiese  v.  Knapp  (30  Ga.  942),  356. 
Moise  v.  Chapman  (24  Ga.  249),  342. 
Moniteau  Nat.  Bank  v.  Miller  (73 

Me.  187),  335,  336. 
Molson's  Bank  v.  Howard  (40  N.  Y. 

Super.  Ct.  15),  364. 
Monmouth  First  Nat.  Bank  v.  Dun- 
bar  (118  III  625),  285. 


Monmouth  Nat.  Bank  v.  Dunbar 

(19  Bradw.  558),  288. 
Monroe  v.  Pilkington  (14  How.  Pr. 

250).  364. 

v.  Woodruff  (17  Md.  159),  410. 
Montague  v.  Pacific  Bank  (81  Fed. 

R  602),  282.  608. 
Montelius  v.  Charles  (76  111.  303), 

425. 
Montgomery    v.    Galbraith    (11 

Smedes  &  M.  555),  575. 
v.  Merrill  (18  Mich.  338),  572. 
v.  Reif  (15  Utah,  495),  248. 
v.  Tutt  (11  Cal.  307).  397. 
Montgomery  Co.  Bank  v.  Albany 
City  Bank   (7   N.  Y.  459), 
309. 
v.  Marsh  (11  Barb.  645,  7  N.  Y. 

481),  494 
Montross  v.  Doak  (7  Rob.,  La.,  170), 

442. 

Moody  v.  Mack  (43  Mo.  210),  434. 
Moore  v.  Britton  (29  La.  Ann.  64), 

421,  443. 
v.  Brungard  (6  Miss.  557),  392, 

525. 

v.  Burr  (14  Ark.  230),  513. 
v.  Coffield  (12  N.  C.  247, 1  Dev. 

247;,  462,  539,  541. 
v.  Gravelot  (3  Bradw.  442),  227, 

228. 

v.  Goddard  (17  N.  E.  R  535),  319. 
v.  Jones  (3  Woods,  53),  81. 
v.  Louisiana  Nat.  Bank  (44  La. 

Ann.  99),  299. 
v.  Meyer  (57  Ala.  20),  300. 
v.  Penn  (5  Ala.  135).  620. 
v.  Pillow  (3  Humph.  448),  319. 
v.  Waitt  (13  N.  H.  415),  454,  455. 
v.  Worthington    (2  Duv.   307), 

552. 
Moorman  v.  Bank  of  Alabama  (3 

Port.  353),  469,  470. 
Morehead  Banking  Co.  v.  Tate  (30 

S.  E.  R  341),  46. 
Morehouse   v.   National  Bank  (30 

Hun,  628),  337. 
Moreland  v.  Brown  (86  Fed.  R  257), 

281,  603,  608,  609. 
v.  Citizens'  Sav.  Bank  (97  Ky. 

211),  409,  503,  508. 
Morgan  v.  Bank  of  Louisville  (4 

Bush,  82),  524 

v.  Davidson  (1  Stark.  92).  420. 
v.  First  Nat.  Bank  (93  N.  C.  352), 

338. 

v.  State  Bank  (1  Duer,  434),  291. 
v.  Van  Ingen  (2  Johns.  204),  487. 


762 


TABLE    OF   CASES. 


Morris  v.  Dixon  Nat.  Bank  (55  111. 

App.  298),  193. 
-  v.  Eufala  Nat.  Bank  (106  Ala. 

383),  300,  311.  435. 
v.  Foreman   (1   Dall.  193),  412, 

546,  553. 
v.  Gardner  (1  Cranch,  C.  C.  213), 

458,  511. 

v.  Husson  (4  Sandf.  93),  481. 

v.  Thomas  (17  III.  112),  572. 

v.  Wibaux  (159  III.  627),  331. 

Morris  R.  Co.  v.  Sussex  R  Co.  (21 

N.  J.  Eq.  542',  68. 
Morrison,  In  re  (Fed.  Gas.  No.  9839), 

90. 
Morrison  v.  Bailey  (5  Ohio  St.  13), 

184.  349,  454. 

v.  McCartney  (30  Mo.  183),  436. 
Morse   v.   Chapman  (24    Ga.   249), 

591. 

v.  Massachusetts  Nat.  Bank  (1 

Holmes.  209,  Fed.  Cas.  No. 

9857),  165,  243,  344,  258,  276. 

v.  Railroad  Co.  (6  Gray,  450), 

170. 

v.  Rice  (36  Neb.  212),  275. 
Morton  v.  Westcott  (8  Cush.  425), 

491. 
Moseley  v.  Williamson  (5    Heisk. 

278),  230. 

Moses  v.  Ela  (43  N.  H.  557),  538. 
v.  Franklin  Bank  (34  Md.  574), 

411. 
v.  Ocoee  Bank  (1  Lea,  398),  46, 

590. 
Moss  v.   Chicago,  etc.   R.   Co.   (73 

Iowa,  226).  328. 
v.  Oakley  (2  Hill,  265),  103. 
Mottv.  Havana  Bank  (22  Hun,  354), 

312. 

Mound  City  Paint  Co.  v.  Commer- 
cial Nat.  Bank  (4  Utah,  353), 
200,  212,  303. 

Mount  Pleasant  Branch  Bank  v. 

McLeran  (26  Iowa,  306),  412, 414. 

Mount  Sterling  Bank  v.  Green  (99 

Ky.  262),  201. 
Mount  Vernon  Bank  v.  Holden  (2 

R.  L  467),  476. 
.   v.  Porter  (52  Mo.  App.  244),  63, 

126,  344 
Movius  v.  Lee  (30  Fed.  R  298),  119, 

593. 

Mudd  v.  Harper  (1  Md.  110),  427. 
Muench  v.   Valley  Bank  (11  Mo. 

App.  144),  233. 

Mulcaney  v.  Emigrant  Sav.  Bank 
(62  How.  Pr.  463),  641. 


Mulherrin  v.  Hannum  (2  Yerg.  81), 

397. 
Mumford  v.  American  Life  Ins.  Co. 

(4  N.  Y.  463),  554. 
Munger  v.  Albany  Nat.  Bank  (85 

N.  Y.  580),  240,  288. 
Muun  v.  Birch  (25  111.  35),  226,  227, 

245,  251,275. 

v.  Illinois  (94  U^S.  113),  48. 
Munnerlyn  v.  Augusta  Sav.  Bank 

(88  Ga.  333).  217,  237,  289,  290. 
Murdock  v.  Mills  (11  Met.  5).  365. 
v.  Union  Bank  (2  Rob.,  La.,  112), 

558. 
Murphy  v.  Branch  Bank  (5  Ala. 

421),  619. 
v.  Farmers'  Bank  (20  Pa.  415), 

571. 
v.  Pacific  Bank  (119  CaL  334), 

629. 
v.  Plielps  (12  Mont.   531),  392, 

525. 
Murray  v.  American  Surety  Co.  (70 

Fed.  R.  341),  572,  583. 
v.  Bull's  Head  Bank  (3   Daly, 

364),  344. 

v.  Ormes  (3  MacA.  60),  496,  501. 
v.  Pauly  (56  Fed.  R  962),  163, 

279. 
Musgrove  v.  Hudson  (2  Stew.  464), 

364. 
Mussey  v.  Eagle  Bank  (9  Met.  306), 

152,  258. 
Musson  v.  Lake  (4  How.  262),  385, 

386,  417,  418,  549. 
Mutual  Ass'n  v.  Jacobs  (43  111.  App. 

340),  283. 
Mutual  Building    Ass'n,  In  re  (2 

Hughes,  374),  283,  636. 
Mutual  Nat.  Bank  v.  Rotge  (28  La. 

Ann.  933),  411. 
Myers  v.  Board  of  Education  (51 

Kan.  87),  603. 

v.  Irvine  (2  S.  &  R  368),  33,  84 
v.  Manhattan  Bank  (26   Ohio, 

283),  60. 

v.  Standart  (11  Ohio  St.  29),  383. 
v.  Union  Nat.  Bank  (27  111.  App. 

254),  243,  252. 

v.  Valley  Nat.  Bank  (Fed.  Cas. 
No.  9519),  189. 


Nagley  v.  Lyman  (14  Cal.  450),  364. 
Nailor  v.  Bowie  (3  Md.  251),  549,  550, 
55L 


TABLE   OF   CASES. 


763 


References  are  to  pages. 


Nance  v.  Hemphill  (1  Ala.  551),  33, 35. 
Naser  v.  First  Nat.  Bank  (36  Hun, 

343),  319. 

Nash  v.  Brown  (165  Mass.  384),  442. 
v.  Whites  Bank  (6  N.  Y.  396), 

334. 
Nashville  Bank  v.  Bennett  (1  Yerg. 

166),  473,  493. 

v.  Henderson  (5  Yerg.  104),  416. 
Nassau  Bank  v.  Jones  (95  N.  Y.  115), 

190. 
National  Bank  v.  Bangs  (106  Mass. 

441),  264,  272,  656. 
v.  Blnmensweig  (46  111.  App. 

297),  225. 
v.  Boles  (12  Ky.  Law  R  422;, 

242. 

v.  Bruher  (64  Tex.  571),  334 
v.  Case  (99  U.  S.  628),  80,  81. 
v.  Colby  (21  Wall.  609),  594, 596. 
v.  Commonwealth  (9  Wall.  353), 

52. 

v.  Cook  (73  Pa.  483),  244. 
v.  Crawford  (69  Fed.  R.  352),  624. 
v.  Davis  (8  Biss.  100),  337. 
v.  Eliot  Bank  (5  Am.  Law  Reg. 

711),  248. 

v.  Eyre  {52  Iowa,  114),  622. 
v.  First  Nat.  Bank  (79  Fed.  R. 

296),  198. 
v.  First  Nat.  Bank  (79  Fed.  R. 

961),  160. 

v.  Fore  (25  Fed.  R.  209),  622. 
v.  Gooding  (87  Me.  337),  404. 
v.  Gormley  (2  Walk.,  Pa.,  493), 

231. 

v.  Graham  (100  U.  S.  699),  67. 
v.  Greene  (45  N.  J.  Eq.  546).  232. 
v.  Hill  (76  Ind.  223),  231. 
v.  Insurance  Co.  (104  U.  S.  54), 

216,  217. 

v.  Johnson  (104  U.  S.  271),  216, 

217,  219,  230,  334,  335. 

v.  Johnson  (91  Ky.  181),  335. 
v.  Lattimer.  See  Bank  v.  Lat- 

imer. 
v.  Lewis  (75  N.  Y.  516,  81  N.  Y. 

15),  338. 

v.  Lewis  (50  Vt.  622),  528. 
v.  Lovett  (21  S.  W.  R  825),  182. 
v.  Matthews  (98  U.  S.  621),  196. 
v.  Mechanics'  Bank  (94  U.  S. 

437),  594,  597. 
v.  Mechanics'    Nat.   Bank    (89 

N.  Y.  440),  596. 
v.  National  City  Bank  (68  111. 

398),  226. 
v.  Norton  (1  Hill,  578),  172. 


National    Bank  v.   Onondaga   Co. 

Bank  (7  Hun,  549),  566,  573. 

v.  Orcutt  (48  Barb.  256),  338. 

v.  Procter  (98  111.  538),  231,  232. 

v.  Raymond  (29  La.  Ann.  355), 

195. 
v.  Shoemaker  (11  Wkly.  Notes 

Cas.  215),  232. 

v.  Shumway  (49  Kan.  224),  119. 
v.  Smith  (66  N.  Y.  271),  234. 
v.  Wade  (84  Fed.  R.  10),  134, 135. 
v.  Ward  (100  U.  S.  195),  250. 
v.  Watsontown  Bank  (105  U.  & 

217),  85,  87.  152. 
v.  Whitney  (103  U.  S.  99),  196. 
v.  Wood  (142  Mass.  563),  385. 
National    Bank    of  Commerce    v. 
Atkinson  (55  Fed.  R.  465), 
199. 
v.  Manufacturers'  Bank  (122  N. 

Y.  367),  300,  345. 
v.  Merchants'  Nat.  Bank  (91  U. 

S.  92),  299. 
v.  National  Banking  Ass'n  (55 

N.  Y.  211),  261,  269. 
v.  National  Bank  of  Mo.  (Fed. 

Cas.  No.  18,310),  199.      . 
v.  Seattle  (166  U.  S.  463),  52. 
National  Bank  of  North  America  v. 
Bangs  (106  Mass.  441),  264,  272, 
656. 

National  Butchers'  Bank  v.  Hub- 
bell  (117  N.  Y.  384),  208,  209, 
210. 

National  City  Bank  v.  New  York 
Gold  Ex.  Bank  (101  N.  Y.  595), 
658. 

National  Commercial  Bank  v.  Mil- 
ler (77  Ala.  168),  224,  301. 
National  Exchange  Bank  v.  Beal 

(50  Fed.  R.  355),  322. 
v.  Moore  (2  Bond,  170),  536. 
v.  National    Bank    of    North 
America   (132   Mass.    147), 
236,  274.  656. 

v.  Peters  (44  Fed.  R  13),  593. 
National  Lafayette  Bank  v.  Cin- 
cinnati Oyster  Co.   (18  Wkly. 
Law  Bui.  350),  256. 
National  Gold  Co.  v.  McDonald  (51 

Cal.  64),  200. 
National  Hudson  River    Bank  v. 

Reynolds  (57  Hun,  307),  536. 
National  Life  Ins.  Co.  v.  Beebe  (7 

N.  Y.  364),  554 

National  Newark  Building  Co.  v. 
Second  Nat.  Bank  (63  Pa.  404)r 
425,  426. 


764: 


TABLE    OF    CASES. 


References  are  to  pages. 


National  Pahquioque  Bank  v.  First 
Nat.  Bank  (36  Conn.  325),  573, 
594 
National  Park  Bank  v.  Harmon  (79 

Fed.  R.  891),  81. 
v.  Ninth  Nat  Bank  (46  N.  Y.  77), 

346. 
v.  Seaboard  Bank  (114  N.  Y.  28), 

300. 
National  Pemberton  Bank  v.  Porter 

(125  Mass.  333),  66. 
National  Safe  Co.  v.  People  (50  111. 

App.  336),  254. 
National  Security  Bank  v.  Butler 

(129  U.  S.  223),  581,  657. 
v.  Cushman(121  Mass.  490),  119, 

173,  181. 

v.  Price  (B9  U.  S.  223),  577, 580. 
National  State  Bank  v.   Brainard 

(61  Hun.  339),  336. 
v.  Weil  (141  Pa.  457),  432,  434 
Neal  v.  Wood  (23  Ind.  523),  529,  540. 
Neale  v.  Janney  (2  Cranch,  C.  C. 

86),  89. 

v.  Wall  (70  Fed.  R  806),  112. 
Nebraska  Nat.  Bank  v.  Logan  (29 

Neb.  278),  434,  435. 
Neederer  v.  Barber  (Fed.  Cas.  No. 

10,079),  353,  461,  545. 
Neeley  v.  Morris  (2  Head,  595),  409. 
Neiifer  v.   Bank    of  Knoxville  (1 

Head,  162),  146,  149,  161. 
Nelson  v.   Burrows  (9  Abb.  N.  C. 

280),  124  133. 
v.  First  Nat  Bank  (48  III  36), 

244,  253.  276,  362. 
v.  First  Nat  Bank  (69  Fed.  R 

798),  409. 

v.  Fotteral  (7  Leigh,  180),  417. 
Neponset  Bank  v.  Leland  (5  Met. 

259),  329. 
Nesbit  v.  Macon  Bank  (12  Fed.  R. 

686),  175,  179. 
Nesmith  v.   Washington  Bank  (6 

Peck,  324),  90. 
Nessmith  v.   Shelden    (4  McLean, 

375),  58. 
Nevens  v.  Bank  of  Lansingburgh 

(10  Mich.  547).  473,  494 
Nevitt  v.  Bank  of  Port  Gibson  (6 
Smedes  &  M.  513),  570,  574,  582. 
New  Amsterdam  Sav.  Bank  v.  Tart- 

ters  (4  Abb.  N.  C.  215),  652. 
New  England  Bank   v.   Bank    of 
Metropolis  (Fed.   Cas.  No. 
10,152),  298. 

v.  Newport  Steam  Factory  (6 
R.  L  154),  100,  101. 


New  Hampshire  Sav.  Bank  v.  Ela 

(11  N.  H.  335),  638. 
New  Hope  Co.  v.  Phoenix  Bank  (3 

Comst.  156),  172. 
New  Orleans  Bank  v.  Girard  Bank 

(10  La.  562),  411. 
New  Orleans  Co.  v.  Bien  (9  Rob., 

La.,  110),  514 

New  Orleans  R  Co.  v.  Kerr  (9  Rob., 
La.,  122),  519. 

v.  McKelvey  (2  La.  Ann.  359), 

417. 
New  Orleans  Sav.  Bank  v.  Harper 

(3  La.  Ann.  385),  393. 
New  York  Bank  v.  Gibson  (5  Duer, 

574),  356,  371. 
New  York  Contracting  Co.  v.  Selma 

Sav.  Bank  (51  Ala.  305),  483. 
Newark  Sav.  Inst,  In  re  (28  N.  J. 

Eq.  552),  630. 
Newberry  v.  Trowbridge  (13  Mich. 

263),  241,  542,  543.  544 
Newbold  v.  Boralf  (155  Pa.  227),  512. 

v.  Patrick  (25  Pittsb.  L.  J.  299), 

231 
Newell  v.  First  Nat  Bank  (13  Ky. 

Law  R  775),  336. 

Newhall  v.  Clark  (3  Cush.  376),  381. 
Newman  v.  Wait  (46  Vt  689),  52. 
Newport  Nat.   Bank  v.  Tweed  (4 

Houst.  225),  172. 
Newport  Sav.  Bank,  In  re  (68  Me. 

396),  650. 
News  v.   Shackamoxon  Bank   (16 

Wkly.  Notes  Cas.  207).  576. 
Newton  Wagon  Co.   v.   Diers  (10 

Neb.  284),  403. 

Niagara    Bank  v.  Manuf.  Co.  (31 
Barb.  403),  382. 

v.  Rosevelt  (9  Cow.  409),  343, 591. 
Niagara  Co.  Bank  v.  Baker  (15  Ohio 

St  68).  185. 
Niblack  v.  Coster  (80  Fed.  R.  596),  164 

v.  Park  Nat.  Bank  (169  III  517), 

228,  233,  252. 
Nicholls  v.  Diamond  (9  Exch.  154), 

383. 

Nichols  v.  Blackmore  (27  Tex.  586), 
423,  425. 

v.  Goldsmith  (7  Wend.  160),  459. 

v.  Pool  (47  N.  C.  23),  397,  444 

v.  Schofleld  (2  R  L  123).  644. 

v.  State  (46  Neb.  715),  136,  137, 
277. 

v.Webb  (8  Wheat  326),  548, 

551,  552. 
Nicholson  v.  Barnes  (11  Neb.  452), 

451,  452,  501. 


TABLE    OF   CASES. 


765 


Keferences  are  to  pagea 


Nicholson  v.  National  Bank  (92  Ky. 
251),  198,  336. 

v.  State  Bank  (92  Ky.  251),  198, 

336. 

Nicolet  v.  Gloyd  (18  La.  417),  393. 
Nicollet  Nat.   Bank   v.   City  Nat 

Bank  (38  Minn.  85),  49,  87. 
Nielsville  Bank  v.  Tuthill  (4  Dak. 

295),  67,  327. 
Nightingale  v.  Chaffee  (11  R.  L  609), 

215. 
Nimic  v.  Iron  Works  (25  W.  Va.  184), 

100. 
Nimocks  v.  Woodey  (97  N.  C.  1),  367, 

372. 

Noble  v.  Cornell  (1  Hilt,  98).  66. 
Nolan  v.  Bank  of  New  York  (67 

Barb.  24),  263. 
Nonotuck  Silk  Co.  v.  Flanders  (87 

Wis.  237),  209.  210,  605,  615. 
Norfolk  Nat.  Bank  v.  Schwenk  (46 

Neb.  381),  339. 

Norris  v.  Despard  (38  Md.  487),  464, 
523,  524. 

v.  Johnson  (34  Md.  485),  102. 

v.  Merchants'  Bank  (30  111.  App. 

54),  596. 
North  v.  Campbell  (72  111.  380),  372, 

373. 
North  American  Coal  Co.  v.  Dyett 

(7  Paige,  9),  375. 
North  Atchison  Bank  v.  Garretson 

(51  Fed.  R  168),  364,  368. 
North  Bank  v.  Abbott  (13  Pick  465), 

442,  443.  455,  520. 

North  Brookfield  Sav.  Bank  v.  Flan- 
ders (161  Mass.  335),  638. 
North  Missouri  Co.  v.  Winkler  (33 

Mo.  354),  95,  572. 
North  Star  Co.  v.  Stebbins  (2  S.  D. 

74),  154 

Northampton  Bank  v.   Allen    (10 
Mass.  284).  332. 

v.  Balliet  (8  Watts  &  S.  311), 
342,  343. 

v.  Pepoon  (11  Mass.  288),  149. 

v.  Winder  (3  Clark.  284),  590. 
Northern  Bank  v.  Farmers'  Bank 
(18  B.  Mon.  506),  559. 

v.  Johnson  (5  Cold.  88),  147. 

v.  Leverich  (8  Rob.,  La.,  207), 
381,  382. 

v.  Zipp  (28  111.  180).  55,  63. 
Northrup  v.  Hale  (72  Me.  275),  641. 
Northumberland  Bank  v.  McMich- 

ael  (106  Pa,  460),  371. 
Northwestern  Coal  Co.  v.  Bowman 

(69  Iowa,  150),  433.  434 


Northwestern  Nat  Bank  v.  Bank 
of  Commerce  (107  Mo.  402), 
270,  346. 

v.  Keen  (14Phila.7),  116. 
Norton  v.  Derry  Nat  Bank  (61  N.  H. 

249),  67. 
v.  Knapp  (64  Iowa,   112),  357, 

358. 

v.  Lewis  (2  Conn.  478),  537. 
v.  Piscataqua    Co.    (Ill    Mass. 

532).  644 

Norvell  v.  State  (50  Ala.  174),  556. 
Noteholders  v.  Funding  Board  (84 

Tenn.  46),  559. 
Nott  v.  Downing  (6  La.  680),  414, 

479,  484. 
Nowak  v.  Excelsior  Stone  Co.  (78 

111.  307),  376. 
Nugent  v.  Mazange  (2  Mart.,  O.  S., 

264),  446,  451. 
Nutt  v.  Citizens'  Bank  (22  La.  Ann. 

346),  326. 

Nutting  v.  Birkhead  (48  Mich.  241), 
425,  433. 

O. 

Oak  Grove  Cattle  Co.  v.  Foster  (41 

Pac.  R.  522),  164,  179. 
Gates   v.   Montgomery  Nat.  Bank 

(100  U.  S.  239),  336. 
Oatnian  v.  Batavian  Bank  (77  Wis. 

501),  232. 
Oberman  v.  Hoboken  City  Bank  (30 

N.  J.  Law,  61),  656. 
Ocean  Nat  Bank  v.  Tant  (50  N.  Y. 
475),  418. 

v.  Williams  (102  Mass.  141),  553. 
Oddie  v.  Nat.  City  Bank  (45  N.  Y. 

735),  209. 

Off  utt  v.  Hall  (1  Cranch,  C.  C.  534), 
403. 

v.  Rucker  (2  Ind.  App.  350).  432. 
Ogden  v.  Dobbin  (2  N.  Y.  Super.  Ct 

112),  443. 
Oglesby  v.  Stacy  (18  Ohio,  54),  544, 

545. 
Ohio  Life  Ins.  Co.,  In  re  (9  Ohio, 

291),  554 
Ohio  Life  Ins.  Co.  v.  McCague  (18 

Ohio,  54),  490. 
Oldham  v.  First  Nat  Bank  (85  N.  C. 

240),  67,  196. 
Olendorf  v.  Swarty  (5    CaL   480), 

542. 

Oliver  v.  Munday  (3  N.  J.  Law,  982), 
«      457. 


766 


TABLE   OF   CASES. 


References  are  to  pages. 


Oliver  Lee  Bank,  In  re  (21  N.  Y.  9), 

48,  100. 

Olmstead  v.  New  England  Mort.  Co. 
(11  Neb.  487),  332. 

v.  Winstead  Bank  (32  Conn. 

278),  560. 
Olney  v.  Chadsey  (7  R  L  224),  148, 

151. 

Olshausen  v.  Lewis  (1  Biss.  419).  425. 
Oneida  Bank  v.  Ontario  Bank  (21 

N.  Y.  490),  62,  338.  554 
Onondaga  Bank  v.  Bates  (3  Hill,  53), 

410. 
Ontario  Bank  v.  Wortkington  (12 

Wend.  593).  361,  363. 
Orear  v.  McDonald  (9  Gill.  350).  425. 
Oregon  Investment  Co.  v.  Rathburn 

(5  Sawy.  32),  31. 
Oriental  Bank  v.  Blake  (22  Pick. 

206),  517. 
Orono  Bank  v.  Wood  (49  Me.  26), 

551,  552. 

Orr  v.  Lacey  (2  Doug.  230),  335. 
Osborn  v.  Bank  of  United  States  (9 
Wheat.  738).  624. 

v.  Byrne  (43  Conn.  155),  652. 

v.  First  Nat  Bank  (175  Pa.  494), 

338  339 

Osgood  v.  McConnel  (32  111.  74),  238. 
Oswego  Bank  v.  Knawer  (Hill  &  D. 

Supp.  122),  534. 

Otis  v.  Gross  (96  III  612),  283,  500. 
Otsego   Co.   Bank    v.    Warren   (18 

Barb.  290),  447,  454,  549. 
Ouderkirk   v.   Central  Nat.   Bank 

(119  N.  Y.  263),  286,  328. 
Oulton  v.  Savings  Inst.  (17  Wall. 

118).  28,  29. 
Overman  v.  Bank  (31  N.  J.  Law, 

563),  243. 
Owen  v.  Lavine  (1  4 Ark.  389),  349. 

v.  Merchants'  Bank  (16  Kan. 
341),  196. 

v.  Purdy  (12  Ohio  St.  73),  48, 100. 
Owens  v.  Stapp  (32  III  App.  653), 

167,  278. 

Owensboro  v.  Daviess  Co.  Court  (12 
S.  W.  R.  930),  164,  182. 

v.  Daviess  Co.  Court  (13  S.  W. 

R  101),  164. 
Owensboro  Bank  v.  Owensboro  (173 

U.  S.  636),  53. 
Owiugs  v.  Baker  (54  Md.  82),  402, 

533. 
Oxford  Bank  v.  Davis  (4  Gush.  188), 

349. 
Oxnard  v.  Varnum  (111  Pa.   193), 

452. 


O'Brien  v.  Bridge  Co.  (55  N.  Y.  Supn 

206),  577. 
v.  Fitzgerald  (143  N.  Y.  377), 

123.  125, 133. 
v.  Grant  (146  N.   Y.   163),  657, 

660. 

v.  Smith  (1  Black,  99),  433.  620. 
O'Connel  v.  Walker  (1  Port.  263), 

552. 
O'Conor    v.   Mechanics'  Bank  (54 

Hun,  272),  221. 
v.  Mechanics'  Bank  (124  N.  Y. 

324),  221. 

v.  Witherby  (111  Cal.  523),  112. 
O'Donnel  v.  Smith  (2  E.  D.  Smith, 

124),  357,  363. 
O'Hare  v.  Second  Nat.  Bank  (77  Pa. 

46),  67. 

O'Neill  v.  Bradford  (1  Pin.  390),  279. 
O'Niel   v.   Dickson   (11    Ind.  253), 
551. 


P. 

Pabst  Brewing  Co.   v.  Reeves  (42 

III  App.  154),  227,  237,  245. 
Pacific  Bank  v".  Mixter  (124  U.  S. 

721),  595,  596.  628. 
Pacific  Nat.  Bank  v.  Eaton  (141  U.  S. 

227),  79. 
Pacific  Trust  Co.  v.  Dorsey  (72  Cal. 

55),  47. 
Pack  v.  Thomas  (13  Smedes  &  M.  1), 

432. 

Packard  v.  Lyon  (5  Duer,  82),  451. 
Packing  Co.  v.  First  Nat.  Bank  (69 

Miss.  700),  233. 
Page  v.  Prentice  (5  B.  Mon.  7),  502. 

v.  Webster  (15  Me.  249),  442. 
Pahquioque    Bank    v.    First    Nat. 

Bank  (36  Conn.  325),  159.  304 
Paine  v.  Barnuni  (50  How.  Pr.  303), 
121,  632,  634.  635. 

v.  Edsell  (19  Pa.  178),  478. 

v.  Irwin  (59  How.  Pr.  316),  633. 

v.  Stewart  (33  Conn.  516),  105, 

107,  108. 

Palmer  v.  Bank  of  Zumbrota  (75  N. 
W.  R.  380),  78,  114,  582. 

v.  Lawrence  (3  Sandf.  161),  95. 

v.  Lee  (7  Rob..  La.,  537),  550. 

v.  Providence  Sav.  Inst  (14  R.  L 
68),  648. 

v.  Rice  (36  Neb.  844),  369. 

v.  Whitney  (21  Ind.  58),  504 
Pape  v.  Capital  Bank  (20  Kan.  440), 

30,  197,  635. 


TABLE   OF    CASES. 


767 


References  are  to  pages. 


Pardee  v.  Fish  (60  N.  Y.  265),  403, 

406. 

Parke  v.  Koser  (67  Ind.  500),  259. 
Parker  v.  Caroline  Sav.  Bank  (31  S. 
E.  R.  673).  105,  108. 

v.  Donelly  (4  W.  Va.  648),  167. 

v.  Hartley  (91  Pa.  465),  214. 

v.  Kellogg  (158  Mass.  90),  413, 
446. 

v.  Lewis  (39  Tex.  394),  378,  379. 

v.  Marchant  (1  Pa.  356),  247. 

v.  Reddick  (65  Miss.  242),  432. 

v.  Robinson  (71  Fed.  R.  256),  84. 

v.  Rochester  Nat.  Ban  k  (59  N.  H. 
310),  75. 

v.  Stroud  (98  N.  Y.  379),  419. 
Parkers  burg    Bank,   Appeal  of  (6 

Wkly.  Notes  Cas.  394).  817. 
Parkersburg  Nat.  Bank  v.  Als  (5 

W.  Va.  50),  274. 
Parkman  v.  Brewster  (15  Gray,  271), 

403. 
Parks  v.  Nichols  (20  Bradw.  143), 

377. 
Parmalee  v.  Williams  (72  Ga.  42), 

375,  384. 
Parmley  v.  Tenth  Ward  Bank  (3 

Edw.  Ch.  395),  556. 
Parshley  v.  Heath  (69  Me.  90),  529. 
Parsons  v.  Armor  (3  Pet.  413),  373. 

v.  Dickinson  (23  Mich.  56),  544, 
545. 

v.  Tread  well  (50  N.  H.  356),  204, 

274. 
Pascoag  Bank  v.  Hunt  (3  Edw.  Ch. 

583).  120. 
Pate  v.  State  Bank  (3  Ind.  176),  486, 

489. 
Paterson  Bank  v.  Butler  (12  N.  J. 

Law,  268),  480,  495. 
Patillo  v.   Alexander  (96  Ga.  60), 
511. 

v.  Mayer  (70  Ga.  715),  352. 
Paton  v.  Lent  (4  Duer,  231),  451,  474. 
Patrick  v.  Beasley  (6  How.,  Miss., 

609),  473. 
Patriotic  Bank  v.  Farmers'  Bank  (2 

Cranch,  C.  C.  560  ,  185, 187,  304, 

454,  520,  560. 
Patterson,  In  re  (18  Hun,  227,  78 

N.  Y.  608),  601.  618. 
Patterson  v.  Lynde(112  111.  196),  97, 
105. 

v.  Lynde  (106  U.  S.  519),  98. 

v.  Marine  Bank  (130  Pa.  419), 
237,  242. 

v.  Union  Nat.  Bank  (52  Pa.  206), 
210. 


Pattison  v.  Syracuse  Bank  (1  Hun, 
606),  156,  282,  285,  287. 

v.  Syracuse  Nat  Bank  (80  N.  Y. 

82),  160. 
Patton  v.  State  Bank  (2  Nott  & 

McC.  464),  558. 
Paul  v.  Draper  (73  Mo.  App.  566), 

604. 
Pauley  v.  State  Loan  &  Trust  Co. 

(165  U.  S.  606),  81. 

Payne  v.  Clark  (23  Mo.  259),  274, 
281. 

v.  Clark  (19  Mo.  152),  292. 

v.  Patrick  (21  Tex.  680',  487, 489, 

491. 
Peabody  Ins.  Co.  v.  Wilson  (29  W. 

Va.  528),  417,  444,  512,  550. 
Peak  v.  Ellicott  (30  Kan.  156),  282, 

610. 
Pearce  v.  Bank  of  Mobile  (33  Ala. 

693),  330. 
Pearson  v.  Bank  of  Metropolis  (1 

Pet.  89),  443,  445,  520.  522. 
Pease  v.  Landauer  (63  Wis.  29),  261. 

v.  Warren  (29  Mich.  9),  295. 
Peck  v.  Bank  of  America  (16  R.  L 
710),  85. 

v.  Cochrane  (7  Pick.  34),  35S. 

v.  First  Nat.  Bank  (43  Fed.  R. 
357),  319,  322. 

v.  People's  Nat.  Bank  (88  Tenn. 

380),  319,  322. 

Peebles,  In  re  (2  Hughes.  394),  90. 
Peet  v.  Zanders  (6  La.  Ann.  364),  428, 

451,  474. 

Peets  v.  Wilson  (19  La.  478),  539. 
Pelham  v.  Adams  (17  Barb.  384),  274, 

279. 
Pendergast  v.  Bank  of  Stockton  (2 

Sawy.  116),  87. 

Pendleton  v.  Bank  of  Kentucky  (1 
T.  B.  Mon.  171).  117.  154, 158. 

v.  Knickerbocker  Life  Ins.  Co. 

(5  Fed.  R.  238),  374,  472. 
Peninsular    Bank   v.   Hanmer  (14 

Mich.  208),  167. 
Penn  v.  First  Nat.  Bank  (130  Mass. 

391),  118. 

Penn  Bank,  In  re  (152  Pa.  65),  290. 
Pennington  v.  Townsend  (7  Wend. 

276),  56,  59. 
Pennsylvania  Bank,  In  re  (39  Pa. 

103),  590. 

People  v.  Bank  of  Pontiac  (12  Mich. 
527),  571,  572. 

v.  Barton  (6  Cow.  290),  28,  82. 

v.  Brewster  (4  Wend.  498),  28, 32. 

v.  Campbell  (14  111.  400),  73. 


768 


TABLE   OF   CASES. 


References  are  to  pages. 


People  v.   Central  City  Bank  (53 

Barb.  412),  583. 

v.  City  Bank  (96  N.  Y.  32),  603. 
v.  Clements  (42  Hun,  286),  138. 
v.  Conklin  (7  Hun,  188),  70. 
v.  Doty  (80  N.  Y.  225),  28,  32. 
v.  Helmer  (43  N.  Y.  Supp.  642), 

136. 
v.  Holmes  (3  Mich.  544),  72,  560, 

590. 
v.  Insurance  Co.  (15  Johns.  358), 

68. 

v.  Kessler  (13  Utah,  69),  170. 
v.  Lowenthal  (93  111.  191),  30. 
v.  Manhattan  Bank  (9  Wend. 

351).  48,  68. 

v.  Marshall  (6  III  672),  45. 
v.  Mechanics'  Sav.  Inst  (92  N.  Y. 

7),  630,  651. 
v.  Merchants'  Bank  (78  N.  Y. 

269),  294,  301,  601. 
V.  Metropolitan  Bank  (7  How. 

Pr.  144),  332. 
v.  National  Sav.  Bank  (129  III 

618),  78,  568. 
v.  New  York  C.  P.  (19  Wend. 

113),  562. 
v.  Niagara  Bank  (6  Cow.  196), 

569,  570,  571. 
v.  North  River  Bank  (62  Hun, 

484),  479. 
v.  Oakland  Co.  Bank  (1  Doug. 

282),  46,  51.  344 

v.  Olmistead  (45  Barb.  644),  565. 
v.  Peabody  (25  Wend.  472).  50. 
v.  Perrin  (56  Cal.  345),  59. 
v.  Remington  (121  N.  Y.  336), 

588. 

v.  Ridgely  (21  III  65),  574, 
v.  River  Raisin  Co.  (12  Mich. 

389),  32,  554. 
v.  Saint  Nicholas  Bank  (77  Hun, 

159),  600. 
v.  Saint  Nicholas  Bank  (76  Hun, 

522),  584. 
v.  Saint  Nicholas  Bank  (28  N.  Y. 

Supp.  407),  282,  283. 
v.  State  Bank  (102  N.  Y.  740),  219. 
v.  State  Bank  (36  Hun,  607),  219. 
v.  Superior  Court  (100  CaL  105), 

572. 
v.  Third    Ave.  Sav.  Bank  (98 

N.  Y.  661),  292. 
v.  Ulster   Co.   Sav.    Inst    (133 

N.  Y.  689,  20  N.  Y.  Supp. 

148),  650. 
v.  Walker  (17  N.  Y.  502, 21  Barb. 

630),  73. 


People  v.  Whittemore  (4  Mich.  S7), 

72,  560. 
Peoples  v.  First  Nat.  Bank  (15  Ky. 

Law  R.  748),  334, 
People's  Bank  v.  Franklin  Bank  (88 

Tenn.  299),  271. 
v.  Gridley  (91  111.  475),  87. 
v.  Keech  (26  Md.  521),  443.  484. 
v.  Legrand  (103  Pa.  309),  234 
v.  National  Bank  (101  U.  S.  181), 

150,  151,  199. 
v.  Mechanics'    Nat.   Bank   (62 

How.  Pr.  422),  595. 
People's  Nat.  Bank  v.   Debell  (91 

Tenn.  301),  469. 

v.  Lutterloh  (95  N.  C.  495),  447. 
People's  Sav.  Bank  v.  Cupps  (91  Pa. 

315),  640,  645,  647. 
v.  Superior  Court  (103  CaL  27), 

572,  583. 
Pepper  v.   Planters'  Nat.  Bank  (5 

Ky.  Law  R  85),  122. 
Percy  v.  Millaudon  (3  La.  568),  148. 
Perkins  v.  Bank  of  Louisiana  (5  La. 

Ann.  222),  168. 
v.  Church  (31  Barb.  84),  195. 
v.  Franklin  Bank  (21  Pick.  483), 

184 

v.  White  (36  Ohio  St.  530),  457. 
Perry  v.  Friend  (57  Ark.  437),  399. 
v.  Green  (19  N.  J.  Law,  61),  392, 

399,  427. 

v.  Turner  (55  Mo.  418),  107. 
Peterborough  Nat.  Bank  v.  Guilds 

(133  Mass.  248),  75,  336,  339. 
Peters  v.  Foster  (56  Hun,  607),  103, 

110,  624 

v.  Hobbs  (25  Ark.  67),  465,  523. 
Petri  v.  Commercial  Nat.  Bank  (142 

U.  S.  644),  623,  624,  625. 
Petillon  v.  Lorden  (86  III  361),  352. 
Pettis  v.  Atkins  (60  111.  454),  69. 
Phelps  v.  Blood  (2  Root,  518),  510. 

v.  Northrup  (56  111.  156),  381, 382. 
Philadelphia  Loan  Co.  v.  Towner 

(13  Conn.  249),  66. 
Philadelphia  Nat.   Bank  v.  Dowd 

(38  Fed.  R.  172),  612,  615. 
Philadelphia  R  Co.  v.  Pollock  (19 

Fed.  R  401),  557. 
Philip  v.  Poindexter  (18  Ala.  579V 

416. 
"Philips  v.  Bank  of  Lewiston  (18  Pa. 

394),  343. 
Philler  v.  Jewett  (166  Pa.  456),  580, 

660. 

v.  Patterson  (168  Pa.  468),  580, 
654,  661. 


TABLE   OF   CASES. 


769 


References  are  to  pages. 


Philler  v.  Woodfall  (32  Wkly.  Notes 

Gas.  183),  240. 

Phillips  v.  Alderson  (5  Humph.  403), 
477. 

v.  Blake  (1  Met.  156),  342. 

v.  Frost  (29  Me.  77).  381. 

v.  McCurdy  (1  Har.  &  J.  187), 
374,  411. 

v.  Merchants'  Nat.   Bauk  (140 

N.  Y.  556),  166.  260. 
Phinney  v.  Baldwin  (16  111.  108),  58. 
Phipp  v.  Harding  (70  Fed.  R.  468), 
395,  458,  520,  521. 

v.  Milbury  Bank  (8  Met.  79),  304. 
Phoenix  Ins.  Co.  v.  Allen  (11  Mich. 
501),  425,  525. 

v.  Gray  (13  Mich.  191),  425. 
Piatt  v.  Eads  (1  Blackf.  63),  427. 
Pickering  v.  Hastings  (76  N.  W.  R. 

587),  101,  107. 
Pickett  v.  Merchants'  Nat.  Bank 

(32  Ark.  346),  336. 

Picklar  v.  Harlan  (75  Mo.  678).  441. 
Picquett  v.  Mayer  (14  La.  74),  389. 
Pier  v.  Heinrichshoffen  (67  Mo.  168, 

6  Cent.  L.  J.  285),  426.  551. 
Pierce  v.   Boston  Sav.  Bank  (129 

Mass.  425).  644,  650. 
•  v.  Butter  (14  Mass.  303),  453. 

v.  Gate  (12  Gush.  190),  463,  509. 

v.  Indseth  (106  U.  S.  546),  385, 
547. 

v.  Kennedy  (5  Gal.  138),  403. 

v.  Kittredge  (1 15  Mass,  374).  258, 
358. 

v.  Langfit  (101  Pa.  507),  476. 

v.  Fender  (5  Met.  352),  492,  507. 

v.  Red  Bluff  Hotel  Co.  (31  CaL 
160),  174. 

v.  Schaden  (55  Gal.  406),  467. 

v.  Struthers  (27  Pa.   249),  444, 

446. 
Pierrat  v.  Young  (49  S.  W.  R.  694), 

129. 

Pierson  v.  Hooker  (3  Johns.  68),  541. 
Pilkington  v.  Woods  (10  Ind.  432), 

378. 
Pillow  v.   Hardeman  (3    Humph. 

538),  517. 
Pindar  v.  Nathan  (4  Mart.,  O.  S., 

346).  512. 
Pine  River  Bank  v.  Hodson  (46  N.  H. 

114),  59. 

Finer  v.  Clary  (17  B.  Mon.  645),  405. 
Pinkham  v.  Macy  (9  Met.  174),  468, 

470. 
Piscataqua  Ex.  Bank  v.  Carter  (20 

N.  H.  246),  184. 

49 


Pitman  v.  Brackenridge  (3  Grat. 

127),  404. 
Pittsburg  v.  First  Nat.  Bank  (55 

Pa.  45),  52. 
Pittsburgh  Bank  v.  Neal  (22  How. 

97),  383. 
Pittsburgh  R.  Go.  v.  Keokuk  Bridge 

(131  U.  S.  379),  63. 
Plankinton   Bank,  In  re  (87  Wis. 

378),  216,  218. 

Planters'  Bank  v.  Bivingsville  Cot- 
ton Co.  (11  Rich.  Law,  677), 
333 

v.  Bradford  (4  Humph.  39),  50a 
v.  Colby  (81  Ga,  264),  596. 
v.  Evans  (36  Tex.  592),  352. 
v.  Farmers'  Bank  (8  Gill  &  J. 

440),  287. 
v.  First  Nat.  Bank  (75  N.  C.  534), 

299. 
v.  Goetter  (108  Ala.  408),  331, 

332. 
v.  Markham  (5  How.,  Miss.,  397), 

420. 
v.  Sharp  (6  How.  301),  48,  168, 

198. 
v.  Sharp  (4  Smedes  &  M.  17), 

340. 
v.  State  (7  Smedes  &  M.  163), 

509. 

v.  White  (2  Humph.  112),  518. 
Plato  v.  Reynolds  (27  N.  Y.  586),  388, 

389. 
Platt,  In  re  (Fed.  Gas.  No.  11,211), 

595.  624. 

v.  Drake  (1  Doug.  296),  467. 
Pococke  v.  Blount  (6  Mo.  338),  456. 
Pollard  v.  Bailey  (20  Wall.  520),  106. 
v.  Bo  wen  (57  Ind.  232),  411, 433, 

540. 

v.  State  (65  Ala.  628),  41. 
Polley  v.  Hicks  (50  N.  R  R.  809), 

644. 

Pollock  v.  Helm  (54  Miss.  1),  364. 
v.  National  Bank  (7  N.  Y.  274), 

85. 
Pomeroy  v.  State  Bank  (1  Wall  23), 

573. 

Pope  v.  Bank  of  Albion  (57  N.  Y. 

126,  131),  165,  166,  186,  187. 

v.  Burlington  Sav.  Bank  (56  Vt 

284),  630,  642. 
v.  Huth  (14  Gal.  403),  357. 
v.  Luff  (7  Hill,  577),  357. 
Portas  v.  Painboeuf  (1  Mart.,  O.  S., 

267),  548. 

Porter  v.  Bank  of  Rutland  (19  Vt. 
410),  172. 


770 


TABLE   OF   CASES. 


References  are  to  pages. 


Porter  v.  Kimball  (53  Barb.  467), 

530. 
v.  Shenvo-  1   Co.   Br'g  Co.   (40 

Neb.  274),  238. 
v.  State  (46  Wis.  375),  41. 
Portland  Nat.   Bank  v.   Scott  (20 

Oreg.  421),  67. 
Portsmouth  Sav.  Bank  v.  Wilson 

(5  App.  D.  C.  8),  529. 
Posey  v.  Denver  Nat.  Bank  (7  Colo. 

App.  108),  367,  368. 
Post  v.  Toledo  R  Co.  (144  Mass.  341), 

100. 

Potter  v.  Couch  (141  U.  S.  296),  221. 
v.  Merchants'  Bank  (28  N.  Y. 

641),  155. 
v.  United  States  (155  U.  S.  438), 

142,  144.  145. 

Powell,  In  re  (Johns.,  V.  C.,  49).  247. 
Powell  v.  State  Bank  (1  Disn.  260), 

412,  444. 
Power  v.  First  Nat.  Bank  (6  Mont. 

251),  294,  305.  306. 
v.  Mitchell  (7  Wis.  161),  474. 
Poydras  v.  Delamere  (13  La.  98).  351. 
Pratatongo  v.  Larco  (47  Cal.  378), 

380. 
Prather  v.  Kean  (29  Fed.  R  498), 

149,  286. 

Pratt  v.  Adams  (7  Paige,  615),  556. 
v.  Eaton  (79  N.  Y.  449),  636. 
v.  Foote  (9  N.  Y.  463),  210. 
v.  Short  (79  N.  Y.  437),  63,  66, 

636. 
v.  Topeka  Bank  (12  Kan.  570), 

621. 
Presbyterian  Cong.  v.  Carlisle  Bank 

(5  Barr,  345),  90. 
Prescott  v.   Haughey  (65  Fed.  R. 

653),  128,  130,  134. 
Prescott  Bank  v.  Courly  (7  Gray, 

217),  355. 
Prescott  Nat.  Bank  v.  Butler  (157 

Mass.  548),  66. 
Preston  v.  Canadian  Bank  (23  Fed. 

R  179),  271,  274,  278,  656. 
»    v.  Cutter  (64  N.  H.  461),  166. 

v.  Prather  (137  U.  S.  604),  285. 
Price  v.  Abbott  (17  Fed.  R  506),  74, 

592,  594,  624. 

v.  Coleman  (22  Fed.  R  694),  581. 
v.  Whitney  (28  Fed.  R  297),  80. 
v.  Yates  (Fed.  Cas.  No.  11,418), 

113,  595. 
v.  Young  (1  Nott  &  McC.  438), 

440. 

Priestley  v.  Bisland  (9  Rob.,  La., 
425),  495. 


Pritchard  v.  First  Nat.  Bank  (76 
N.  W.  R  1106),  565. 

v.  Hamilton  (6  Mart.,  N.  S.,  457), 
550. 

v.  Scott  (7  Mart,  N.  S.,  491),  494 
Procter  v.  Greene  (14  R.  I.  42),  222. 
Providence  Ass'n  v.  Citizens'  Sav. 

Bank  (19  R  L  142),  213. 
Pryor  v.  Wright  (14  Ark.  189),  397. 
Pryse  v.  Farmers'  Bank  (33  S.  W. 

R  532),  117,  121. 
Public  Grain  and  Stock  Exch.  v. 

Kune  (20  Bradw.  137),  261,  262. 
Purcell  v.  Allemong  (22  Grat.  739), 

445. 
Purchas  v.  New  York  Ex.  Bank  (3 

Robt.  164),  85. 
Purchase  v.  Mattison  (6  Duer,  587), 

461. 
Pursefaal  v.  Pineville  Bank  (30  S. 

W.  R  203),  234 

Q. 

Queenan  v.   Palmer  (117  III  169), 

629,  634.   . 

Quincy  v.  Steele  (120  U.  S.  245),  93. 
Quinn  v.  Hanley  (5  Bradw.  51),  37a 

K. 

Raborg  v.  Peyton  (2  Wheat  385), 

375,  376. 
Radley  v.  London  R  Co.  (1  App. 

Cas.  754),  647. 
Rahm    v.    Philadelphia    Bank   (1 

Rawle,  335),  443. 

Raignet  v.  Ayliff  (16  Ark.  594),  350. 
Railroad  Co.  v.  Lockwood  (17  Wall 
382),  122. 

v.  O'Brien  (119  U.  S.  99),  170. 

v.  Peniston  (18  Wall.  5),  52. 
Railway  Co.  v.  Metropolitan  Nat 

Bank  (54  Ohio  St.  60).  246. 
Ralston  v.  Bullitts(3  Bibb,  261),  540. 
Ramdulollday  v.  Davieux  (4  Wash. 

C.  C.  61),  459. 
Rand  v.  State  Bank  (77  N.  C.  52), 

289. 
Randall  v.  Smith  (34  Barb.  452),  503. 

v.  Way  (111  Mass.  506),  222. 
Randolph  v.  Allen  (73  Fed.  R  23), 
216,  218. 

v.  Canby  (Fed.  Cas.  No.  11,559;, 
372. 

v.  Parrish  (9  Port  96),  352. 


TABLE   OF    CASES. 


771 


References  are  to  pages. 


Randolph  Nat.  Bank  v.  Hornblower 

(160  Mass.  401),  256. 
Ranger  v.  Sargent  (36  Tex.  26).  369. 
Ransom  v.  Mack  (2  Hill,  587),  474. 
Rapp  v.  Nat.  Security  Bank  (136  Pa. 

426',  210. 
Ratcliff  v.  Planters'  Bank  (2  Sneed, 

425),  463. 

Rawl  v.  Saulsbury  (66  Ga.  394),  210. 
Ray  v.  Bank  of  Kentucky  (10  Bush, 
344),  568. 

v.  Smith  (17  Wall.  411),  538,  539. 
Raymond  v.  Holmes  (11  Tex.  54), 
386. 

v.  Mann  (45  Tex.  301),  352. 

v.  Palmer  (41    La.    Ann.   425), 

231. 
Rea  v.  Dorrance  (18  Me.  137),  392, 

399. 

Read  v.  City  of  Buffalo  (67  Barb. 
526 »,  350. 

v.  Cutts  (7  Me.  186),  403. 

v.  Marsh  (5  B.  Mon.  8),  361. 

v.  Wilkinson  (2  Wash.  C.  C.  514). 

381. 
Reapers'  Bank  v.  Millard  (24  111.  433), 

560. 
Reciprocity  Bank,  In  re  (22  N.  Y. 

9),  48,  77,  80,  96,  100. 
Redington  v.  Woods  (45  Cal.  406), 

269. 

Redman  v.  Adams  (51  Me.  429),  350. 
Reed  v.  People  (125  111.  592),  30,  630. 

v.  Powell  (11  Rob.,  La.,  98),  146, 
151. 

v.  Wilson  (41  N.  J.  Law,  29),  90, 

91,  421. 
Reedy  v.  Seixas  (2  Johns.  Cas.  337), 

470. 

Reese  v.  Bank  of  Commerce  (14  Md. 
271).  90. 91. 

v.  Bank  of  Montgomery  Co.  (31 

Pa.  78),  46,  93. 

Reeside  v.  Knox  (2  Wheat.  253),  350. 
Reeves  v.  State  Bank  (8  Ohio  St. 

465),  209,  306. 

Reid  v.  Morrison  (2  Watts  &  S.  400), 
393,  459. 

v.  Payne  (16  Johns.  218),  493, 495. 

v.  Reid  (11  Tex.  585),  550. 
Reier  v.  Strauss  (54  Md.  278),  551. 
Reiff  v.  McMiller  (45  Leg.  Int.  26), 

536. 

Reilly  v.  Daly  (159  Pa.  605),  371. 
Reinke  v.  Wright  (93  Wis.  638),  450, 

543. 
Relf  v.  Mobile  Bank  (20  Pa,  435), 

360. 


Remington  v.  Harrington  (8  Ohio, 

507),  443,  509. 
Renfro  v.  Merchants'  Bank  (83  Ala. 

425),  279,  280. 
Renner    v.   Bank  of  Columbia  (9 

Wheat,  581),  184,  187,  428. 
Renshaw  v.  Triplett  (23  Mo.  213), 

486,  490. 
Rey  v.  Simpson  (22  How.  341),  400, 

402,  533. 
Reynes  v.  Dumont  (130  U.  S.  354), 

344 
Reynolds  v.  Appleman  (41  Md.  615), 

471. 
v.  Bank  of  Mt.  Vernon  (39  N.  Y. 

Supp.  623),  114. 
v.  Bank  of  State  (18  Ind.  467), 

238,  560,  569. 

v.  Douglas  (12  Pet.  497),  403. 458. 
v.  Simpson  (74  Ga.  454),  192. 
Rezner  v.  Hatch  (2  Handy,  42),  57, 

556. 
Rheim  v.  Carlisle  Deposit  Bank  (76 

Pa.  132),  516. 
Rhett  v.  Poe  (2  How.  457),  403,  458, 

459,  467. 
Rhodes  v.   Morgan  (1    Baxt.   360), 

404. 

v.  Webb  (24  Minn.  292),  153, 165. 
Rice  v.  Hogan  (8  Dana,  133).  352. 
v.  Porter  ( 16  N.  J.  Law,  440),  381. 
v.  Ragland    (10   Humph.    545), 

383. 
v.  Third  Nat.  Bank  (97  Mich. 

414),  222.      • 
v.  Wisson  (11  Met.  400),  427, 429, 

471,  472. 
Rich  v.  Niagara  Co.  Bank  (5  Thomp. 

&  C.  589),  206. 
v.  Shaw  (23  Me.  343),  123. 
v.  State  Nat.  Bank  (7  Neb.  201), 

67. 

Richards  v.  Attleborough  Nat.  Bank 

(148  Mass.  187),  116,  565, 572. 

v.  Kountze  (4  Neb.  200),  66, 195, 

197. 

v.  Waring  (1  Keyes,  576),  404. 
Richardson  v.  Carpenter  (46  N.  Y. 

660\  376. 

v.  Wallace  (39  S.  C.  216),  598. 
Richdale,  Ex  parte  (19  Ch.  D.  40B),    ' 

210. 
Richie  v.  McCoy  (13  Smedes  &  M. 

541),  460. 
Richmond  v.  Blake  (132  U.  S.  592), 

28. 

v.  Irons  (121  U.  S.  27),  80, 84, 100, 
103,  112,  595, 598,  599. 


772 


TABLE   OF    CASES. 


References  are  to  pages. 


Richmond  Bank  v.  Robinson  (42 

Ma  489),  66,  327. 

Richter  v.  Selin  (8  S.  &  R  425),  543. 
Ricketts  v.  Pendleton  (14  Md.  320), 

462,  463. 

Riddle  v.  First  Nat.  Bank  (27  Fed. 
R  503),  199,  290,  406. 

v.  McBeth  (4  W.  L.  M.  153),  484 

v.  Mott  (2  Cranch,  C.  G   73), 

458. 
Ridenour  v.  Mays  (40  Ohio  St.  9), 

634. 
Rider  Raft  Co.  v.  Roach  (97  N.  Y. 

378),  68. 
Ridgley  v.  Davidson  (2  Mill  Const. 

33),  431. 
Ridgley  Bank  v.  Patton  (109  III  479), 

226,  227.  235,  252,  255. 
Ridgvvay  v.  Day  (13  Pa.  208).  430. 
Ridgway  Co.  v.  McCarthay  (96  U.  S. 

258),  63. 

Riggs  v.  Dyche  (2  Smedes  &  M.  606), 
343. 

v.  Lindsay  (7  Cranch.  500),  362. 

v.  Swan  (3  Cranch,  C.  C.  183), 

39,  561. 
Riker  v.  Sprague  Mfg.  Co.  (14  R.  L 

402),  528. 

Riley  v.  Albany  Sav.  Bank  (36  Hun, 
513),  639. 

v.  Smith  (64  N.  Y.  576),  381. 
Rindge  v.  Kimball  (124  Mass.  209), 

540. 
Rindskoffv.  Malone  (9  Iowa,  1540), 

546. 
Ringling  v.  Kohns  (6  Mo.  App.  333), 

152,  169, 198. 

Ringo  v.  Biscoe  (13  Ark.  563),  560, 
590,  597. 

v.  Real  Estate  Bank  (13  Ark. 
563),  560,  590.  597. 

v.  Trustees  (13  Ark.  563),  560, 

590,  597. 
Rio  Grande  Exp.  Co.  v.  Goby  (7 

Colo.  299),  351. 
Risley  v.  Phoenix  Bank  (83  N.  Y. 

318),  215,  223. 
Ritenour  v.  Harrison  (57  Mo.  502), 

330. 
Riverside  Bank  v.  First  Nat.  Bank 

(74  Fed.  R  276),  235,  236,  237, 

262,  263,  274,  295. 

Rives  v.  Parmley  (18  Ala.  256),  496. 
Roan  v.  Winn  (93  Mo.  503).  577. 
Roane  Iron  Co.  v.  Wisconsin  Trust 

Co.  (74  N.  W.  R.  818),  42. 
Roanoke  Nat.  Bank  v.  Hamberck 

(82  Va.  135),  309. 


Robb  v.  Pennsylvania  Co.  (186  Pa. 

456),  265,  267. 
v.  Ross  Co.  Bank  (41  Barb.  586), 

198. 
Robbins  v.  Lambeth  (2  Rob.,  La., 

304),  358,  369,  370. 
v.  Pinckard  (5  Smedes  &  M.  51), 

542. 
Robbins  Electric  Co.  v.  Weber  (172 

Pa.  033),  40. 
Roberts  v.  Austin  Corbin  &  Co.  (26 

Iowa,  315),  246,  348. 
v.  Bethell  (12  C.  B.  778),  383. 
v.  Corbin  (26  Iowa.  315),  246, 

348. 
v.  Hill  (24  Fed.  R  571,  23  Fed. 

R  311),  579. 

v.  Mason  (1  Ala.  373),  444, 445. 
v.  State  Bank  (9  Port.  312).  551. 
v.  Taf t  ( 120  Mass.  169),  297. 
v.  Tucker  (16  Q.  B.  560),  296. 
v.  Wald  (61  Minn.  291),  437, 438, 

553. 
Robertson  v.  Agric.  Bank  (28  Miss. 

237),  584. 
v.  Noeninger  (20  HL  App.  227), 

97. 
Robinson  v.  Ames  (20  Johns.  146), 

356,  424. 
v.  Bank  of  Darien  (18  Ga.  65),  96, 

590. 
v.  Barber  (3  Am.  Law  J.,  N.  S., 

59),  492. 

v.  Barrett  (19  Fla.  670),  540. 
v.  Beall  (26  Ga.  17),  80,  81,  126, 

559. 

v.  Beall  (20  Ga.  575),  160,  562. 
v.  Carey  (8  Ga.  527),  97. 
v.  Chemical  Nat.  Bank  (86  N.  Y. 

404),  218. 

v.  Floyd  (159  Pa.  165).  291. 
v.  Gardner  (18  Grat.  509),  204, 

598. 

v.  Hall  (63  Fed.  R  222),  122, 134 
v.  Hamilton  (4  Stew.  &  P.  91), 

501,  502. 

v.  Hawes  (20  N.  Y.  84),  58a 
v.  Lane  (19  Ga.  337),  561. 
v.  National  Bank  (81  N.  Y.  885), 

595,  627. 

v.  Threadgill  (13  Ired.  39),  284 
Robson  v.  Benton  Bkg.  Co.  (7  Smedes 

&  M.  729),  590. 

Rochester  Printing  Co.  v.  Loomis 
(45  Hun,  93,  120  N.  Y.  659),  128, 
615. 

Rock  River  Bank  v.  Sherwood  (10 
Wis.  230),  330,  335. 


TABLE    OF   CASES. 


773 


References  are  to  pages. 


Rockwell  v.  Elkhorn  Bank  (13  Wis. 
731),  198. 

v.  Farmers'  Bank  (4  Colo.  App. 

562),  334. 
Rodney  v.  Wilson  (67  Mo.  123),  401,- 

533. 
Roebling  v.  First    Nat,   Bank  (30 

Fed.  R  744),  194,  195. 
Roehner  v.  Knickerbocker  Life  Ins. 

Co.  (63  N.  Y.  160),  438. 
Rogers  v.  Durant  (140  U.  S.  298), 
348. 

v.  Huntingdon  Bank  (12  S.  & 
R  77),  90. 

v.  Jackson  (19  Wend.  383),  550. 

v.  Union  Stone  Co.  (130  Mass. 

581),  359. 

Rolin  v.  Stewart  (14  C.  B.  595),  242. 
Rome  Savings  Bank  v.  Kramer  (102 

N.  Y.  331),  66,  327,  635. 
Roosevelt  v.  Woodhull  (Anth.  N.  P. 

50),  464,  524, 

Root  v.  Goddard  (3  McLean,  102), 
556. 

v.  Olcott  (42  Hun,  536, 115  N.  Y. 
635),  153. 

v.  Sinnock  (120  111.  350),  104. 
Rosenbaum  v.  Little  (8  Ky.  Law 

R  607),  246,  248. 

Rosenberg  v.  Block  (50  N.  Y.  Super. 
Ct.  357),  56. 

v.  First  Nat.  Bank  (27  S.  W.  R 

897),  620. 
Rosenblatt  v.  Manufacturers'  Bank 

(69  N.  Y.  358),  601,  618. 
Rosenheim   Co.   v.   Southern   Nat. 

Bank  (46  S.  W.  R  1026),  596. 
Rosenthal  v.  Erlicker  (154  Pa.  396), 

434. 

Ross   v.    Bank   of   Burlington    (1 
Aiken,  43),  558. 

v.  Bedell  (5  Duer,  462).  393,  549. 

v.  Jones  (22  Wall.  588).  384,  385. 

v.  Planters'  Bank  (5  Humph. 

335),  469. 
Rosson  v.  Carrol  (90  Tenn.  90),  411, 

487,  522. 
Rouhs  v.  Third  Nat.  Bank  (94  Tenn. 

57),  165. 

Rounds  v.  Smith  (42  111.  245).  252. 
Roundtree  v.  Baker  (52  I1L   241), 

331. 
Rounsavell  v.   Crofott    (4  Bradw. 

671),  442,  443. 
Rouvant  v.  National  Bank  (63  Tex. 

610),  264. 
Rowan  v.  Odenheimer  (5  Smedes 

&  M.  44),  469. 


Rowe  v.  Young  (2  Bligh,  391),  374, 

382,  383,  384. 
Rowland  v.  Howe  (48  Conn.  432), 

502,  507. 
Rowley  v.  National  Bank  (63  Hun, 

550),  241,  242. 
Ruble  v.  Turner  (2  Hen.  &  Munf. 

38),  135. 

Ruddell  v.  Walker  (7  Ark.  457),  398. 
Ruffin  v.  Orange  Co.  Comm'rs  (69 

N.  C.  498),  238. 
Runnels  v.  Spencer  (1  Miss.  362), 

404. 
Runner  v.  Dwiggins  (46  N.  E.  R 

580),  103. 
Runyon  v.  Montfort  (44  N.  C.  371), 

450,  496,  502. 
Rushworth  v.  Moore  (26  N.  H.  188), 

547. 
Rusk  v.  Sackett  (28  Wis.  400),  106. 

v.  Van  Nostrand  (21  Wis.  161), 

42. 
Russell  v.  Wiggan  (2  Story,  213), 

355,  361,  364,  380. 
Rutland  Bank  v.  Woodruff  (34  Vt. 

89),  360. 
Ryan  v.  Dunlap  (17  111.  40  \  154. 

v.  Farmers'  Bank  (5  Kan.  658), 
621. 

v.  Manufacturers'  Nat.  Bank  (9 
Daly,  308),  299. 

v.  Phillips  (3  Kan.  App.   704), 
282. 

S. 

Sackett's  Harbor  Bank  v.  Codd  (18 

N.  Y.  240),  76. 
Sacramento  Bank  v.  Pacific  Bank 

(56  Pac.  R  787),  562. 
Sacrider  v.  Brown  (3  McLean,  481), 

410. 

Safford  v.  First  Nat.  Bank  (61  Vt 
373),  596. 

v.  Wyckoff  (4  Hill,  472,  1  Hill, 

11),  63,  198. 
Sagory  v.  Dubois  (8  Sandf.  Ch.  466), 

95. 
Sahlien    v.  Bank    of   Lonoke    (90 

Tenn.  221),  185,  187,  303,  312. 
St.  John  v.  Homans  (8  Mo.  382),  436. 

v.  Roberts  (31  N.  Y.  441),  430, 

542. 
St.  Joseph    Ins.  Co.  v.  Hauok  (71 

Mo.  465),  66,  327. 
St.  Louis  Brewing  Ass'n  v.  Austin 

(100  Ala.  313),  612. 


TABLE   OF    CASES. 


References  are  to  pages. 


St  Louis   Nat.  Bank  v.  Flanagan 

(129  Mo.  178),  327. 
St.  Louis    Nat.     Stock    Yards   v. 

O'Reilly  (85  111.  546),  359. 
St.  Louis  School  Dist.  v.  Broadway 

Bank  (12  Mo.  App.  104),  126. 
St.  Louis  &  San    Fran.   R  Co.  v. 

Johnston  (]33  U.  S.  566),  128, 

211,  319,  614,  615. 
St.  Luke's    Church    v.  Sowles  (51 

Fed.  R  609),  624 
St.  Nicholas    Bank    v.   State  Nat. 

Bank  (128  N.  Y.  26),  295,  299, 

305. 
St.  Paul   Trust    Co.   v.  Jenks   (57 

Minn.  248),  67. 
Salem  Bank  v.  Gloucester  Bank  (17- 

Mass.  21),  170,  559. 
Saling  v.  German  Sav.  Bank  (7  N.  Y. 

Supp.  642\  640,  646. 
Salisbury  v.  First  Nat.   Bank  (37 
Neb.  872),  402,  534. 

v.  Renick  (44  Mo.  554),  335. 
Salladin  v.  Mitchell  (42  Neb.  859), 

586. 
Salmon  v.  Grosvenor  (66  Barb.  160), 

429. 
Salmon  Falls  Bank  v.  Leyser  (116 

Mo.  51),  197. 
Salt  Lake  City  v.  Hollister  (118  U.  S. 

256),  62. 
Salt  Springs  Bank  v.  Syracuse  Sav. 

Inst.  (62  Barb.  101),  270. 
Salt  Springs  Nat.  Bank  v.  Burton 

(58  N.  Y.  430),  421. 
Salter  v.  Burt  (20  Wend.  205),  438. 
Saltmark   v.    Planters'    Bank    (17 
Ala.  761),  572,  573. 

v.  Tuthill  (13  Ala.  390),  470. 
Samples  v.  Bank(l  Woods,  523),  563. 
San  Antonio  v.  Mehaffy  (96  U.  S. 

312),  63. 
San  Diego  Co.   v.  California  Nat 

Bank  (52  Fed.  R  59).  603,  616. 
San  Joaquin  Valley  Bank  v.  Bowers 

(65  Cal.  247).  117, 122. 
Sanborn  v.  Southard  (25  Me.  409), 

431. 
Sanbourne  v.  Smith  (44  Iowa,  152), 

280. 
Sanders  v.  Ochiltree  (5  Port.  73), 

438. 

Sanderson  v.  Oakley  (14  La.  373), 
445. 

v.  Reinstadler  (31  Mo.  483),  474, 
475 

v.  Sanderson  (20  Ala.  292),  539. 
Sands  v.  Matthews  (27  Ala.  399),  360. 


Sandy  River  Bank  v.  Merchants' 

Bank  (1  Biss.  146),  157. 
Sanford  v.  Norton  (17  Vt.  285),  450. 
Sanger  v.  Simpson  (8  Miss.  260).  471. 
Sargent  v.  Appleman  (6  Mass.  85), 

384. 
Sasscer  v.  Farmers'  Bank  (4  Md. 

409),  438,  471,  476. 

Sather  v.  Rogers  (10  Iowa,  231),  552. 
Saul  v.  Brand  (16  La.  Ann.  95),  551, 

553. 

Saulsbury  v.  Blandy  (53  Ga.  665), 
362. 

v.  Blandys  (65  Ga,  45),  367. 
Savage  v.  Walshe  (26  Ala.  619),  565, 

572. 
Savannah  Bank  v.  Hartridge  (73 

Ga,  223).  146,  177. 
Savings   Ass'n  v.  Kellogg  (65  Mo. 

540),  105,  107. 

Savings  Bank  v.  Benton  (2  Met, 
Ky.,  240),  150. 

v.  Caperton  (87  Ky.  306),  129, 
131. 

v.  Davis  (8  Conn.  191),  115, 118. 

v.  Holt  (58  Vt  166),  172. 

v.  Hubbard  (58  N.  H.  167),  277. 

v.  New  London  (20  Conn.  Ill), 

630. 
Savings  Institution  v.  Makin  (23 

Me.  360),  630. 

Sawyer  v.  Brownell  (13  R  I.  141), 
392,  399. 

v.  Fawners'  Bank  (88  Mass.  207), 

118. 
Sayles  v.  Bates  (15  R  L-342),  84, 104 

v.  Brown  (40  Fed.  R  8),  100. 

v.  Cox  (95  Tenn.  579),  317. 
Saylor  v.  Bushong  (100  Pa.  23),  244. 
Sayre  v.  Frick  (7  Watts  &  S.  383), 
484 

v.  Weil  (94  Ala.  466),  217,  237. 
Scattergood  v.  Finley  (20  Ga.  423), 

374,  383. 

Schaffner  v.  Ehrmann  (139  111.  109), 
201,  202,  242. 

v.  Ehrmann  (37  111.  App.  340), 

242. 
Schalucky  v.  Field  (124  III  617),  101, 

290. 
Schierenberg  v.  Stephens  (32  Mo. 

App.  814),  78. 
Schimmelspennich  v. Bayard  (1  Pet. 

264).  362. 

Schley  v.  Merritt  (37  Md.  352),  536. 
Schluter  v.  Bowery  Sav.  Bank  (117 

N.  Y.  125),  224 
Schmeid  v.  Frank  (86  Ind.  250),  532. 


TABLE   OF   CASES. 


775 


References  are  to  pages. 


Schmidt  v.  Archer  (113  Ind.  365), 

397. 
Schmittler  v.  Simon  (101  N.  Y.  554), 

372. 
Schmitz  v.  Hawkeye  Co.   (8  S.  D. 

544),  401,  533. 

Schneider  v.  Irving  Bank  (1  Dalv, 
500),  208,  262. 

v.  Schiffman  (20  Mo.  571),  402, 

534. 
Schofield  v.  Bayard  (3  Wend.  488), 

387,  430. 
Schollenberger,  Ex  parte  (96  U.  S. 

369).  51,  626. 
Schollmeier    v.    Schoendelen    (78 

Iowa,  426),  215,  223. 
Schoneman  v.  Fegley  (7  Pa.  433),  548. 
School  Dist.  v.  First  Nat.  Bank  (102 
Mass.  174),  216. 

v.  First  Nat  Bank  (61  Fed.  R. 

417),  624. 
Schoolfield  v.  Moon  (9  Heisk.  171), 

433. 
Schoyer  v.  Cresswell  (3  MacA.  5), 

634. 
Schram  v.  Cartwright  (16  Pa.  Co. 

Ct.  R.  618),  221. 
Schuler  v.  Israel  (120  U.  S.  506),  231, 

232,  240. 
Schultz  v.  Christman  (6  Mo.  App. 

338),  125. 
Schumacher  v.   Quaritius  (5  Red. 

Sur.  251),  441. 

Schuyler  Nat,  Bank  v.  Boiling  (24 
Neb.  821),  338,  339. 

v.  Bollong  (50  U.  S.  85),  623. 
Scofield  v.  State  Bank  (9  Neb.  316), 

196. 

Scott  v.  Armstrong  (146  U.  S.  499, 
36  Fed.  R  63),  581,  587. 

v.  Gilkey  (153  111.  168),  298. 

v.  Grier  (10  Pa.  103),  530,  534. 

v.  Lattimer  (89  Fed.  R.  843),  78. 

v.  National  Bank  (72  Pa.  471), 
285. 

v.  Ocean  Bank  (23  N.  Y.  289), 
211. 

v.  Pequonnock  Bank  (15  Fed. 
R.  494),  85. 

v.  Pilkington  (15  Abb.  Pr.  280), 
355. 

v.  Smith  (2  Kan.  438),  221. 
Scovil  v.  Scovil  (45  Barb.  515),  397. 

v.  Thayer  (105  U.  S.  143),  83. 
Scranton  v.  Farmers'  Bank  (24  N.  Y. 

424),  219. 
Scudder  v.  Union  Nat.  Bank  (91 

U.  S.  406),  354,  361,  366. 


Scull  v.  Mason  (43  Pa.  99),  530. 
Scale  v.  Baker  (70  Tex.  283),  128, 

129. 
Searle  v.  First  Nat.  Bank  (2  Walk, 

Pa.,  395),  190. 

Seaver  v.  Lincoln  (21  Pick.  267).  429. 
Second  Nat.  Bank  v.  Burt  (93  N.  Y. 
233),  121. 

v.  Chancellor  (9  W.  Va.  69),  546. 

v.  Cummiugs  (89  Tenn.  609),  299, 
303. 

v.  Diefendorf  (90  111.  396),  361. 

v.  (iaylord  (34  Iowa,  246),  403. 

v.  Hemingway  (34  Ohio  St.  381), 
240. 

v.  Howe  (40  Minn.  390),  172. 

v.  Maguire  (33  Ohio  St.  295),  539. 

v.  Morgan  (165  Pa.  199),  334. 

v.  Western  Nat.  Bank  (51  Md. 
128),  86,  257. 

v.  Williams  (13  Mich.  282),  224. 

v.  Wrightson  (63  Md.  81),  281. 
Secord  v.  Miller  (13  N.  Y.  55),  538. 
Security  Bank  v.  National  Bank  (67 
N.  Y.  458),  259. 

v.  Northwestern  Fuel  Co.   (58 
Minn.  141),  210,  212. 

v.  Suttgen  (29  Minn.  363),  299. 
Seeber  v.  Commercial  Nat.  Bank 

(77  Fed.  R  957),  63,  66. 
Seeberger  v.  McCormick  (178  III 
404),  60. 

v.  McCormick  (73  111.  App.  57), 

60,  70. 
Seebree  Deposit  Bank  v.  Moreland 

(96  Ky.  150),  489,  540. 
Seeley  v.  Nat.  Exchange  Bank  (78 

N.  Y.  608).  79,  114. 
Selby  v.  Brinkley  (17  S.  W.  R  479), 

539. 

Selden  v.  Equitable  Trust  Co.  (94 
U.  S.  419),  29,  71. 

v.  Washington  (17  Md.  379),  471. 
Seldner  v.  Mt.  Jackson  Nat.  Bank 

(66  Md.  488).  527. 
Seligman    v.   Charlottesville    Nat. 

Bank  (Fed.  Cas.  No.  12,642),  200. 
Seltzer  v.  Fuller  (6  Smedes  &  M. 

187),  552. 
Seneca  Nat.  Bank  v.  Neass  (3  N.  Y. 

442,  5  Denio,  329),  493,  495,  549, 

551. 
Senter  v.  Continental  Bank  (7  Mo. 

App.  532).  246. 
Sessions  v.  First  Nat.  Bank  (93  N. 

Y.  269),  196. 
Seventh  Nat  Bank  v.  Cook  (73  Pa. 

483),  244 


776 


TABLE   OF   CASES. 


References  are  to  pages. 


Seventh  Ward  Bank    v.   Hanrick 

(2  Story,  416),  516. 

Sewell  v.  Lancaster  Bank  (17  S.  & 
R  285),  91. 

v.  Russell  (3  Wend.  276),  488. 
Seymour  v.  Dunham  (24  Hun,  93), 
240. 

v.  Lumber  Co.  (58  Fed.  R  957), 
380. 

v.  Van    Slyck  (8  Wend.   403), 

404,  431. 
Shackamoxon  Bank,  In  re  (4  Pa.  Co. 

Ct.  R  194),  582. 

Shafer  v.  First  Nat.  Bank  (53  Kan. 
614),  336. 

v.  Moriarity  (46  Ind.  9),  101. 
Shaffner  v.  Edgerton  (13  Bradw. 

132),  225,  251. 
Shamburgh  v.Commagere(10  Mart., 

O.  S.,  18),  450. 
Shand  v.  Du  Buisson  (L.  R  18  Eq. 

283),  372. 
Shanklin  v.  Madison  Co.  Comm'rs 

(21  Ohio  St.  575),  280. 
Sharpe  v.  Drew  (9  Ind.  281),  512. 
Shaver  v.'  Western  Union  Tel.  Co. 

(57  N.  Y.  459),  372. 
Shaw  v.  Clark  (49  Mich.  384\  173. 

v.  Jacobs  (89  Iowa,  713),  184, 186. 

v.  MoNeil  (95  N.  C.  535),  580, 542, 
543. 

v.  Neal  (19  La.  Ann.  156),  523, 
524 

v.  Reed  (12  Pick.  132),  443,  444, 

462,  463. 

Shaylor  v.  Mix  (86  Mass.  351),  494. 
Shedd  v.  Brett  (1  Pick.  401),  412, 

413,  414,  417,  447,  448,  469. 
Sheehan  v.  Davis  (17  Ohio  St.  571), 

153. 
Shelburne  Falls  Bank  v.  Townsley 

(102  Mass.    177),  475,  494,   514, 

515. 
Shelby  v.  Judd  (24  Kan.  161),  392, 

431. 
Sheldon  v.  Horton  (43  N.  Y.  93),  535, 

537. 
Shenn  v.  Mendenhall  (23  Minn.  92), 

630. 
Shepley  v.  Bowery  Nat.  Bank  (59 

N.  Y.  485),  311. 

Shepherd  v.  Chamberlin  (8  Gray, 
225),  421. 

v.  Jonte  (14  La.  246V  410. 

v.  Hawley  (1  Conn.  367).  483. 
Sherer  v.  Easton  Bank  (33  Pa.  134), 

459,  542,  543. 
Sherley  v.  Fellowes  (9  Port  300),  393. 


Sherman  v.  Comstock  (2  McLean, 
19),  395. 

v.  Smith  (1  Black,  587),  48, 100. 
Sherry  v.  Dunn  (8  Blackf.  542),  194, 
Sherwin  v.  Brigham  (39  Ohio  St. 
137),  367,  370. 

v.  Brigham  (1  Cleve.  Law  R  22), 

370. 
Shields  v.  Niagara  Co.  Bank  (3  Hun, 

477),  206. 

Shipman  v.  Bank  of  State  (12  N.  Y. 
318),  260,  265. 

v.  Cook  (16  N.  J.  Eq.  251),  392, 

525. 

Shoemaker  v.  Mechanics'  Bank  (59 
Pa.  79),  476,  510. 

v.  Nat.  Mechanics'  Bank  (Fed. 
Cas.  No.  12,801,  1  Hughes, 
101),  67,  191. 
Shoenberger  v.  Lancaster  Sav.  Inst. 

(28  Pa.  459),  518. 

Short  v.  Blount  (99  N.  C.  49),  359. 
Shove  v.  Wiley  (18  Pick.  558),  187. 
Shrieve  v.  Duckham  (1  Litt  194), 

468. 

Shriner  v.  Kelly  (25  Pa.  61),  392, 525. 
Shryock  v.  Brashore  (11  Phila.  565), 

575,  586. 
Shunk  v.  First  Nat  Bank  (22  Ohio 

St.  508).  336. 
Shute  v.  Pacific  Bank  (136  Mass. 

487),  279,  405. 
Sibley  v.  Van  Horn  (13  Iowa,  209), 

403. 
Sice  v.  Cunningham  (1  Cow.  397), 

428,  429,  522: 

Sickels  v.  Herold  (36  N.  Y.  Supp. 
488),  240,  275,  584 

v.  Herold  (149  N.  Y.  332),  287. 
Sieger  v.  Second  Nat  Bank  (132  Pa. 

307),  536. 
Sigerson  v.  Mathews  (20  How.  496), 

536. 
Sigourney  v.  Witherell  (6  Met  553), 

542. 
Silver  Lake  Bank  v.  North  (4  Johns. 

Ch.  370),  196. 

Simmons  v.  Almy  (100  Mass.  239). 
221. 

v.  Belt  (35  Mo.  461),  447. 

v.  Cincinnati  Sav.  Soc.  (31  Ohio 
St.  457),  224 

v.  Dent  (16  Mo.  App.  288),  77. 
Simmons  Hardware  Co.  v.  Bank  of 

Greenwood  (41  S.  C.  177),  245. 
Simms  v.  Lasken  (19  Wis.  390),  477. 
Simonds  v.   Black  River  Ins.  Co. 

(Fed.  Cas.  No.  12,874),  430,  434 


TABLE   OF   OASES. 


7T7 


References  are  to  pages. 


Simonton  v.  Lanier  (71  N.  C.  498), 

330. 

Simpson  v.  Pacific  Ins.  Co.  (44  Cal. 
139),  419,  433. 

v.  Pemegewasset  Bank  (38  Atl. 
R.  1005),  205. 

v.  Turner  (5  Humph.  419),  515. 

v.  Waldby  (63  Mich.  439).  306. 

v.  White  (40  N.  H.  540),  551. 
Sims  v.  Hundley  (6  How.  1),  547, 551. 
Simson  v.  Brown  (68  N.  Y.  355),  248. 
Sinclair  v.  Johnson  (85  Ind.  527),  404. 
Siner  v.  Stearne  (155  Pa.  662),  306. 
Sioux  Falls  Bank  v.  First  Nat. 

Bank  (6  Dak.  113),  63,  592. 
Sistare  v.  Best  (88  N.  Y.  527),  635, 

636,  638. 
Sixpenny  Sav.  Bank  v.  Stuyvesant 

Bank  (Fed.  Gas.  No.  12,919  >,  618. 
Skelton  v.  Dustin  (92  111  94),  422. 
Skiles  v.  Houston  (110  Pa.  254),  240. 
Skilman  v.  Miller  (7  Bush,  428),  222. 
Skinner  v.  Deming  (2  Ind.  558),  554, 
556. 

v.  Merchants'  Bank  (4  Allen, 

290),  120,  169. 
Skohegan  Bank  v.  Cutter  (49  Me. 

315),  87. 
Slack  v.  Longshaw  (8  Ky.  Law  R 

166),  392,  427,  458,  488. 
Slaughter  v.  First  Nat.  Bank  (109 

Ala.  157),  75. 
Slaymaker  v.  Farmers'  Bank  (103 

Pa.  616),  219. 
Sleppy  v.  Bank  of  Commerce  (17 

Fed.  R.  712),  281. 
Slocomb  v.  De  Lizardi  (21  La.  Ann. 

355),  479,  484. 
Smalley  v.  Wright  (40  N.  J.  Law, 

471),  517. 
Smecles  v.  Utica  Bank  (20  Johns. 

372),  304. 

Smiley  v.  Fry  (100  N.  Y.  262),  281. 
Smith,  In  re  (17  Abb.  N.  C.  78),  641, 

643. 

Smith  v.  Barnes  (24  Ga.  442),  404, 
405. 

v.  Barstow  (2  Doug.  155),  58. 

v.  Board  (48  N.  J.  Eq.  627),  216. 

v.  Brooklyn    Sav.    Bank    (101 
N.  Y.  58  >,  640,  643,  645. 

v.  Bryan  (34  111.  364),  41. 

v.  Des  Moines  Nat.  Bank  (78  N. 
W.  R  238),  218. 

v.  Essex   Co.    Bank  (22  Barb. 
627),  300. 

v.  Exchange  Bank  (26  Ohio  St. 
141),  19a 


Smith  v.  First  Nat.  Bank  (99  Mass. 

605),  285. 
v.  First  Nat,  Bank  (45  Neb.  444), 

66,  327. 

v.  Fisher  (24  Pa.  222).  488. 
v.  Frye  (SCranch,  C.  C.  515),573. 
v.  Gibbs  (2  Smedes  &  M.  479), 

418. 

v.  Hurd  (12  Met.  371),  123. 
v.  Janes  (20  Wend.  192),  348, 

395,  433. 
v.  Lawson  (18  W.  Va.  212),  147, 

151,  155. 

v.  Ledyard  (49  Ala.  279),  364 
v.  Little  (10  N.  H.  526),  411,  462. 
v.  Londoner  (5  Cal.  365),  98. 
v.  McLean  (4  N.  C.   509),  444, 

445. 
v.  Mechanics'  Bank  (6  La.  Ann. 

610).  260,  265. 

v.  Miller  (43  N.  Y.  171),  433,  435. 
v.  Milton  (133  Mass.  369),  357, 

383. 

v.  Mosby  (9  Heisk.  501).  586. 
v.  Muncie  Nat.  Bank  (29  Ind. 

158),  375. 
v.  Northampton  Bank  (4  Gush. 

1),  88,  89. 
v.  Philadelphia  Bank  (34  Leg. 

Int.  86),  63. 
v.  Philadelphia  Nat.   Bank    (1 

Walk.,  Pa.,  318),  213. 
v.  Philbrick  (10  Gray,  252),  452, 

501. 
v.  Poillon  (87  N.  Y.  590),  462, 

512,  513,  514. 
v.  Rathbun  (22  Hun,  150),  124, 

125. 

v.  Roach  (7  B.  Mon.  17),  472. 
v.  State  (21  Ark.  294),  68. 
v.  Whiting  (12  Mass.  6),  469. 
Smyth  v.  Hawthorn  (3  Rawle,  355), 

475,  510. 
Snow  v.  Perkins  (2  Mich.  238),  386, 

467,  469. 
Snyder  v.  Gascoigne  (11  Tex.  449), 

456. 

v.  Foster  (73  Fed.  R  136),  80. 
v.  Mt.  Sterling  Bank   (94  Ky. 

231).  334. 

v.  State  Bank  (1  111.  161),  58,  341. 
Sohn  v.  Morton  (92  Ind.  170),  529. 
Solly  v.  Forbes  (2  Brod.  &  Bing.  38), 

135. 
Solomon  v.  Bates  (118  N.  C.  311). 

128,  130,  132. 
v.  Pfeister  Leather  Co.  (31  AtL 

R  602),  467. 


T78 


TABLE   OF   CASES. 


References  are  to  pages. 


Solomons  v.  Bank  of  England  (13 

East,  135),  563. 
Southern  Bank  v.  Brashears  (1  Disn. 

207),  333. 
South.  Develop.  Co.  v.  Houston  R 

Co.  (27  Fed.  R.  344),  283. 
Southern  Express  Co.  v.  Western 

R  Co.  (99  U.  S.  191),  68. 
Southern  Loan  Co.  v.  Morris  (2  Pa. 

175),  555. 
Sowles  v.  Witters  (39  Fed.  R  403), 

105,  108,  113. 
Spafford  v.   First    Nat.   Bank   (37 

Iowa,  181),  192. 
Spahr  v.  Farmers'  Bank  (94  Pa.  434), 

567. 

Spalding  v.  Andrews  (48  Pa.  411), 
359,  366. 

v.  Krutz  (1  Dill.  414),  468,  473. 
Spann  v.  Baltzell  (1  Cranch,  301), 

444. 

Sparks  v.  Farmers'  Bank  (3  Del.  Ch. 
274),  116. 

v.  State  Bank  (7  Blackf.  469), 

195. 

Spear  v.  Pratt  (2  Hill,  582),  356. 
Spearman  v.  Ward  (114  Pa.  634), 

385. 
Spence  v.  Crockett  (5  Baxt.  576). 

552 
Spencer  v.  Ballou  (18  N.  Y.  327).  486. 

v.  Bank  of  Salina  (3  Hill,  520), 
451. 

v.  Harvey  (17  Wend.  489),  538. 

v.  Sterling  (10  Mart.,  O.  S.,  88), 

510. 
Spies  v.  Gilmore  (1  N.  Y.  321),  462, 

'    463. 
Springfield  Fire  Ins.  Co.  v.  Tincher 

(30  111.  399),  396,  432. 
Springfield  Marine  Co.  v.  Peck  (102 

III  265),  221,  280. 
Spurgeon  v.  Swain  (13  Ind.  App. 

188),  358. 
Spurgin  v.  McPheeters  (42  Ind.  527), 

350. 
Squire   v.  First  Nat  Bank  (59  III 

App.  134),  151. 
Stack  v.  Beach  (74  Ind.  571),  402, 

533. 
Stacy  v.  Dane  Co.  Bank  (12  Wis. 

629),  307,  308,  309. 

Stafford  v.  Bratcher  (4  Ky.  Law  R 
996),  352. 

v.  Yates  (18  Johns.  327),    489, 

490. 
Stahl  v.  Wolfe  (6  Wkly.  Notes  Cas. 

143),  536. 


Stainback  v.  Bank  of  Virginia  (11 

Grat.  260),  355,  417,  511. 
Stallcup  v.  Nat.  Bank  of  Republic 

(15  N.  Y.  St.  R.  89).  147. 
Stam  v.  Kerr  (31  Miss.  199),  392,  525. 
Stamford    Bank    v.    Benedict   (15 

Conn.  437),  149. 
Stanley  v.  Bank  of  Mobile  (23  Ala. 

652),  477. 
v.  Farmers'  Bank  (17  Kan.  592), 

471. 
Stanton  v.  Blossom  (14  Mass.  116), 

374. 
v.  Wilkeson   (Fed.    Cas.    No. 

13,299),  113. 

v.  Wilson  (2  Hill,  153),  620. 
Staples  v.  Huron  Nat.  Bank  (66  N. 

W.  R  314),  182. 
Stapylton  v.  Cie  de  Phosphates  (88 

Fed.  R  53),  211. 
v.  Stockton  (91  Fed.  R  326),  195, 

577,  579. 
Star  Cutter  Co.  v.  Smith  (37  III  App. 

212),  282. 
Star  Fire  Ins.  Co.  v.  State  Nat.  Bank 

(60  N.  H.  442),  345. 
Starr  v.  Murchison  (1  City  Ct  R 

413),  370. 

v.  Sandford  (45  Pa.  193),  546. 
v.  Stiles  (19  Pac.  R  225),  290. 
v.  York  Nat.  Bank  (55  Pa.  364), 

213 

State,  Ex  parte  (15  Ark.  263j,  622. 
State  v.  Ashley  (1  Ark.  513),  51. 
v.  Bank  of  Charleston (2  McMuL 

439),  570. 
v.  Bank  of  Louisiana  (5  Mart, 

N.  S.,  344).  149. 
v.  Bank  of  Mansfield  (48  La. 

Ann.  1029),  71. 

v.  Bank  of  New  England  (55 
Minn.  139,  73  N.  W.  R  153), 
81,  575,  576. 
v.  Bank  of  South  Carolina  (1 

Spears,  433),  569. 
v.  Bank  of  Tennessee  (5  Baxt 

101),  563. 
v.  Banks  (12  Rich.  Law,  609), 

557. 
v.  Bard  well  (72  Miss.  535),  75, 

137. 

v.  Bartlev  (39  Neb.  353),  204. 
v.  Beach*  (43  N.  E.  R  949),  136, 

137. 

v.  Brobston  (94  Ga.  95),  240. 
v.  Caldwell  (79  Iowa,  432),  136, 

137. 
v.  Columbia  (6  Rich.  495),  71. 


TABLE   OF   CASES. 


References  are  to  pages. 


State  v.  Commercial  Bank  (6  Smedes 

&  M.  599),  569. 
v.  Commercial  Bank  (5  Smedes 

&  M.  218),  146,  569. 
v.  Commercial  Bank  (21  Miss. 

569).  569. 
v.  Commercial  Bank  (33  Miss. 

474),  569. 
v.  Commercial  Bank  (10  Ohio, 

535),  569.  570. 
v.  Commercial  State  Bank  (28 

Neb.  677),  598. 

v.  Davis  (50  How.  Pr.  447),  154 
v.  Eifert  (65  N.  W.  R.  309),  137. 
v.  Field  (49  Mo.  270),  29. 
v.  Fields  (98  Iowa,  748),  75. 
v.  First  Nat.  Bank  (2  S.  D.  568), 

336. 

v.  Fitzsimmons  (30  Mo.  236),  50. 
v.  Foster  (5  Wyo.  199).  605,  616. 
v.  Fuller  (34  Conn.  280),  75. 
v.  Gates  (67  Mo.  139),  434. 
v.  Granville  Alexandrian  Soc. 

(11  Ohio,  1),  68. 
v.  Hastings  (12  Wis.  47),  39. 
v.  How  (1  Mich.  512),  58. 
v.  Humphreys  (2  Dev.  &  B.  555), 

556. 

v.  Kelsey  (89  Mo.  623),  136. 
v.  Lehre  (7  Rich.  Law,  234),  80. 
v.  Lincoln  Sav.  Bank  (82  Tenn. 

42),  629. 
v.  Louisiana  Sav.   Co.   (12  La. 

Ann.  568),  569,  650. 
v.  Matthews  (48  N.  C.  451),  555. 
v.  Mclver  (2  S.  S.  25),  86. 
v.  Mechanics'  Bank  (35  La.  Ann. 

562),  574. 

v.  Menke  (56  Kan.  77),  75. 
v.  Midland  Sav.  Bank  (71  N.  W. 

R.  1011),  602,  616. 
v.  Morton  (27  Vt.  310),  243. 
v.  Myers  (54  Kan.  206),  136,  137. 
v.  National  Bank  (33  Md.  75), 

567. 
v.  National  Bank  (2  S.  D.  568), 

75. 
v.  New  Orleans  Gas  Co.  (2  Rob., 

La.,  529),  569. 
v.  Phoenix  Bank  (34  Conn.  205), 

47. 

v.  Presburg  (13  Mo.  342),  70. 
v.  Real  Estate   Bank  (5    Ark. 

595),  570. 

v.  Reed  (125  Mo.  43),  32. 
v.  Rusk  (21  Wis.  212),  73. 
v.  Sattley  (131  Mo.  464),  137. 
v.  Scougal  (3  S.  D.  55),  35,  36, 70. 


State  v.  Seneca  Co.  Bank  (5  Ohio  Sk 

171),  569,  570. 

v.  Shore  (70  N.  W.  R  312),  136. 
v.  Southern  Bank  (31  La.  Ann. 

519),  71. 
v.  State  Bank  (42  Neb.  896),  283, 

301. 

v.  State  Bank  (5  Baxt.  1),  612. 
v.  Stebbins  (1  Stew.  299),  34,  35, 

68. 

v.  Stimson  (24  N.  J.  Law,  9),  138. 
v.  Teak  (3  Sneed,  695),  556. 
v.  Thompson  (27  Mo.  365),  116. 
v.  Thum  (55  Pac.  R.  858),  600, 

603,  616. 
v.  Tombeckbee  Bank  (2  Stew. 

30),  569. 
v.  Union  Bank  (4  Robt.  499),  73, 

74. 
v.  Union  Stock  Yards  Bank  (70 

N.  W.  R  752),  101,  108,  585. 
v.  Vincent  (91  Mo.  662),  251. 
v.  White  (101  N.  C.  770),  75. 
v.  Williams  (8  Tex.  255),  55,  70. 
v.  Woodmansie  (1  N.  D.  246),  34, 

35. 

v.  Yetzer  (97  Iowa,  423),  136, 137. 

State  Bank,  In  re  (13  Pa.  Co.  Ct.  R 

433),  617;  (56 Minn.  119).  210, 305. 

State  Bank  v.  Aersten  (4  111.  135), 

558. 

v.  Ayers  (7  N.  J.  Law,  131),  514. 
v.  Bank  of   Capitol  (41  Barb. 

343),  304. 
v.  Brackenridge  (7  Blackf.  395), 

193. 

v.  Brown  (2  111.  106),  622. 
v.  Clark  (8  N.  C.  36),  277. 
v.  Criswell  (15  Ark.  230),  197. 
v.  Farmers'  Bank  (36  Barb.  332), 

152. 

v.  Fearing  (16  Pick.  533),  340. 
v.  Ford  (5  Ired.  692),  332. 
v.  Hennen  (4  Mart,  N.  S.,  227), 

496. 
v.  Kurd  (12  Mass.  172),  419,  443, 

445. 

v.  Kain  (1  111.  45),  206,  292. 
v.  Lindeman  (161  Pa.  199),  248. 
v.  Lockwood  (16  Ind.  306),  560. 
v.  Napier  (6  Humph.  270),  443. 
v.  Slaughter  (7  Blackf.  133),  483. 
v.  Smith  (62  Minn.  540),  136. 
v.  Smith  (18  Me.  99),  419. 
v.  Snelling  (35  Mo.  190),  571. 
v.  State  (1  Blackf.  270),  570. 
v.  Van  Horn  (4  N.  J.  Law,  382), 

563. 


780 


TABLE   OF   CASES. 


References  are  to  pages. 


State  Bank  v.  Vaughan  (36  Ma  91), 
489. 

v.  Ward  (6  Munf.  166),  559. 
State  Building  Ass'n  v.  Merchants' 

Sav.  Bank  (36  S.   W.   R  967), 

282. 

State  Nat   Bank  v.   Boettcher  (5 
Colo.  185),  255. 

v.  Flathers  (45  La.  Ann.  75),  67, 
196. 

v.  Freedman's  Bank  (2  Dill.  11), 
270,  272. 

v.  Newton  Nat.  Bank  (66  Fed 
R  691).  165. 

v.  Young  (14  Fed.  R  889),  364 
State  Savings  Ass'n  v.  Boatmen's 

Sav.  Bank  (11  Mo.   App.   292), 

246. 
State  Savings  Bank  v.  Foster  (76 

N.  W.  R  499),  94. 
State  Savings  Co.  v.   Stewart  (65 

111.  App.  361).  150. 
State  Treasurer  v.   Mann  (34  Vt. 

371),  117. 

Staylerv.  Bell  (24  Md.  183),  450,  544. 
Steamboat  v.  King  (16  How.  474), 

122. 
Steam es  v.  Lawrence  (83  Fed.  R 

738),  121. 

Stebbins  v.  Lardner  (2  S.  D.   127), 
172, 175. 

v.  Scott  (52  N.  E.  R  535),  585. 
Steckel  v.  Allentown  Bank  (93  Pa. 

376),  207. 

Stedman  v.  Eveleth  (6  Met  114),  84. 
Steel  v.  Davis  Co.  (2  G.  Greene,  469), 

404,  405. 
Steele  v.  Russell  (5  Neb.  211),  304, 

312. 
Steffe  v.  Bank  of  Conneautville  (22 

Pittsb.  L.  J.  157),  149. 
Stein  v.  Richardson   (37  L.  J.  Ch. 

369),  577. 
Steinhart  v.  National  Bank  (94  Gal. 

362),  296. 
Steinkers  v.  Loofbourrow  (54  Pac. 

R  120),  103,  585. 
Steinmetz  v.  Curry  (1  DalL  234), 

509. 

Stephens  v.  Bernays  (119  Mo.  143; 
S.  C.  ,44  Fed.  R  642),  624 

v.  Follett  (43  Fed.  R  842),  78,82. 

v.  Fox  (83  N.  Y.  313).9a 

v.  McNeil  (26  Barb.  651),  432. 

v.  Monongahela  Bank  (111  U.S. 
197),  337. 

v.  Overstolz  (43  Fed.  E.  771), 
122, 131,  133. 


Stephenson  v.  Dickson  (20  Pa.  148), 

471,  513. 
v.  Primrose  (8  Port  155),  477, 

480,  538. 
Stern  v.  Richardson  (37  L.  J.  Ch. 

369),  247. 
Sterne  v.  Atherton  (51  Pac.  R  791), 

101. 
Stetson  v.  City  Bank  (12  Ohio  St 

577),  193. 
v.  Exchange  Bank  (7  Gray,  425), 

230. 
Stevens  v.  Commercial  Ex.  Bank  (3 

Hun,  147),  258. 
Stewart  v.  Armstrong  (56  Fed.  R 

167),  151,  169. 

v.  Eden  (2  Caines,  121),  450,  518. 
v.  French  (2  Cranch,  G  C.  300), 

392,  431. 

v.  Millard  (7  Lans.  373).  460. 
v.  Smith  (17  Ohio  St  82),  432, 

436. 

Stinson  v.  Lee  (63  Miss.  113),  416. 
Stix  v.  Matthews  (63  Mo.  371),  490, 

549.  550. 
Stockdale  v.  Keyes  (79  Pa,  251),  171, 

175. 
Stockholders'  Cal.  Nat  Bank,  In  re 

(53  Fed  R  38),  113. 
Stockman  v.  Riley  (2  McCord,  398), 

431. 
Stockton  v.  Mechanics'  Sav.  Bank 

(32  N.  J.  Eq.  163),  629, 651, 652. 
Stockwell  v.  Bramble  (3  Ind.  428), 

379. 
Stoller  v.  Coates  (88  Mo.  514),  282, 

603,  609. 

Stone  v.  Dodge  (96  Mich.  514),  230. 
v.  Jennison  (70  N.  W.  R  149), 

578. 

v.  Pratt  (25  III  25),  227. 
v.  Smith  (30  Tex.  130,  70  N.  W. 

R  149),  577,  578. 
Storer  v.  Logan  (9  Mass.  55),  362, 363, 

364 

Stothart  v.  Parker  (1  Overt  260),  45a 
Stoughton  v.  Swan  (4  Cal.  213),  467. 
Stout  v.  Benoist  (39  Mo.  277),  264 
v.  Stevenson  (4  N.  J.  Law,  178), 

403. 
Stowe  v.  Bank  of  Cape  Fear  (3  Dev. 

408),  311. 
Strader  v.  Batchellor  (8  B.  Mon.  168), 

404 
Strauss  v.  Bloom  (18  La.  Ann.  48), 

321. 

v.  Tradesmen's  Nat.  Bank  (123 
N.  Y.  379),  172,  175,  233. 


TABLE   OF   CASES. 


781 


References  are  to  pages. 


Streater  v.  Bank  of  Cape  Fear  (55 

N.  C.  31),  558. 

Streissguth   v.   National  German- 
American  Bank  (43  Minn.  50), 

306. 
Stribling  v.  Bank  of  Valley  (5  Rand. 

132),  320. 
Strohecker  v.  Cohen  (1  Spears,  349), 

366. 

Strong  v.  Farmers'  Bank  (4  Mich. 
350),  560. 

v.  King  (35  III  9),  420.  454. 

v.  Riker  (16  Vt  554),  402,  533. 

v.  Southworth  (Fed.  Cas.  No. 

13,545),  112. 
Struthers  v.  Kendall  (41  Pa.  214), 

444, 
Stuart  v.  Hayden  (169  U.  S.  1,  72 

Fed.  R  402),  80. 
Stuckert  v.  Anderson  (3  Whart.  116), 

419. 
Studebaker  v.  Ryan  (46  Kan.  273), 

529. 
Studebaker  Mfg.  Co.  v.  First  Nat. 

Bank  (42  S.  W.  R  573).  298. 
Stufflebeam  v.De  Lashmutt  (83  Fed. 

R.  449),  79. 

Sturges  v.  Bank  of  Circleville  (11 
Ohio  St.  153),  152. 

v.  Burton  (8  Ohio  St.  215),  126. 

v.  Fourth  Nat.  Bank  (75  III  595), 
362. 

v.  Keith  (57  III  451),  285. 
Sturgis  v.  Rogers  (26  Ind.  1),  620. 
Stuyvesant  Bank  v.  National  Me- 
chanics' Bank  (7  Lang.  197),  657. 

658. 
Suffolk  Bank  v.  Lincoln  Bank  (3 

Mason,  1),  557,  559. 
Sullivan  v.  Lewiston  Sav.  Inst  (56 

Me.  507),  645. 

Sumner  v.  Bowen  (2  Wis.  524),  548. 
Sunderlin  v.  Mecosta  Sav.  Bank  (74 

N.  W.  R  478),  601. 
Susquehanna  Valley  Bank  v.Loomis 

(85  N.  Y.  207),  393. 
Sussex  Bank  v.  Baldwin  (17  N.  J. 

Law,  487),  513. 
Sutcliffe  v.  McDowell  (2  Nott  & 

McC.  251),  458,  461. 
Svendsen  v.  State  Bank  (64  Minn. 

40),  242. 
Swan  v.  Hodges  (3  Head,  251),  420, 

539. 
Swartwout  v.  Mechanics'  Bank  (5 

Denio,  555),  216. 
Sweeney  v.  Easter  (1  Wall  166),  208, 

297,  315. 


Swentzel  v.  Penn  Bank  (147  Pa.  140), 

122 
Swift  v.  Beers  (3  Denio,  70).  554 

v.  Whitney  (20  111.  144),  279, 405, 

v.  Williams  (68  Md.  236),  218. 
Swope  v.  Ross  (40  Pa.  186),  375. 
Sykes  v.  First  Nat.  Bank  (2  S.  D. 
242),  287. 

v.  Halloway  (81  Fed.  R  432).  81. 

v.  People  (132  III  32),  59. 
Sylvester  v.  Crohan  (138  N.  Y.  494), 
453.     . 

v.  Downer  (18  Vt  32),  403. 

v.  Staples  (44  Me.  496),  375. 
Syracuse  Bank  v.  Davis  (16  Barb. 

188),  59. 
Syracuse  Co.  v.  Collins  (57  N.  Y. 

641),  458,  461. 

T. 

Taber  v.  Cannon  (6  Met.  456),  383. 
Taft  v.  Bowker  (132  Mass.  277),  644 

v.  Quinsigamond  Bank  (52  N. 

E.  R.  387),  211. 
Taggart    v.   First    Nat.   Bank    (12 

Wash.  538),  359. 

Talbot  v.  First  Nat.  Bank  (76  N.  W. 
R  626),  185. 

v.  Gay  (18  Pick.  534),  403. 

v.  National  Bank  of  Commerce 

(129  Mass.  67),  448. 
Talcott  v.  First  Nat  Bank  (53  Kan. 

480),  208.  290. 
Taliafero  v.  First  Nat  Bank  (71  Md. 

200),  187. 
Talladega  Ins.  Co.  v.  Landers  (43 

Ala.  115).  554. 

Talmage  v.  Pell  (7  N.  Y.  328),  190, 
197. 

v.  Third  Nat.  Bank  (27  Hun,  61, 

97  N.  Y.  531),  627. 
Talman  v.  Rochester  Bank  (18  Barb, 

123),  191,  195,  199. 
Tardy  v.  Boyd  (26  Grat  631),  544 
Tarlton  v.  Miller  (1  111.  39),  452. 
Tate  v.  Bates  (118  N.  C.  287),  130, 132. 

v.  Hilbert  (2  Ves.  Jr.  Ill),  224 

v.  Sullivan  (30  Md.  464),  451. 
Tatum  v.  Bowner  (27  Miss.  760),  400. 
Taunton   Bank    v.   Richardson   (5 

Pick.  436),  532,  534 
Tay  v.  Concord  Sav.  Bank  (60  N.  H. 

277),  648. 
Taylor  v.  Bank  of  Illinois  (7  T.  R 

Mon.  576),  349,  393,  491,  494,  495, 

506. 


782 


TABLE    OF   CASES. 


References  are  to  pages. 


Taylor  v.  Cook  (14  Iowa,  500),  559, 

563. 
v.  Davidson  (2  Cranch,  C.  C. 

434),  413. 
v..  Empire  State  Bank  (66  Hun, 

538),  636. 
v.  Miami  Ex.  Co.  (6  Ohio,  177), 

189. 
v.  Sip  (30  N.  J.  Law,  284),  260, 

425. 
v.  Snyder  (3  Denio,  145),  452, 462, 

463,  500. 
v.  Wilson  (11  Met.  44),  348,  432, 

434. 

v.  Young  (3  Watts,  339),  485. 
Teconic  Bank  v.  Johnson  (21  Me. 

426),  234,  534. 
v.  Stackpole  (41  Me,  321),  467, 

548. 
Tefft  v.  North  River  Bank  (14  N.  Y. 

Supp.  8),  582. 
Tel  ford  Co.  v.  Garhab  (13  Atl.  R 

90),  66. 

Terbell  v.  Jones  (15  Wis.  253),  473. 
Terhune  v.  Bank  of  Bergen  Co.  (34 

N.  J.  Eq.  667),  614. 
Terrell  v.  Branch  Bank  (12  Ala.  502). 

181. 

Terry  v.  Anderson  (95  U.  S.  628),  113. 
v.  Little  (101  U.  S.  116),  106, 107. 
v.  Martin  (10  S.  C.  263),  106, 108. 
v.  Sisson  (125  Mass.  560),  223. 
v.  Tubman  (92  U.  S.  156),  108, 

113,  561. 
Tete  v.  Farmers'  Bank  (4  Brewst. 

308),  90,  91. 
Teutonia  Nat.  Bank  v.  Loeb  (27  La. 

Ann.  110),  329. 
Tevis  v.  Randall  (6  Cal.  632),  411. 

v.  Wood  (5  Cal.  393).  471. 
Thacher  v.  State  Bank  (5  Sandf.  121), 

48,  147,  157,  205,  206. 
Thaeker  v.  West  Reserve  Bank  (19 

Mich.  196),  50. 
Thatcher  v.  Goff  (13  La.  360),  550. 

v.  Mills  (14  Tex.  13),  382. 
Thayer  v.  Peck  (84  111.  74),  391. 
Thebus  v.  Smiley  (110  111.  316),  105, 

107. 
Third  Nat.  Bank  v.  Allen  (59  Mo. 

310),  270. 
v.  Central  Nat  Bank  (76  Hun, 

475),  271. 

v.  Harrison  (10  Fed.  R  243,  3 
McCrary,  316),  182,  234,  626. 
v.  Miller  (90  Pa,  241),  336. 
v.  Teal  (5  Fed.  R  503),  625. 
v.  Vicksburg  (61  Miss.  112),  306. 


Thomas  v.  City  Nat.  Bank  (40  Neb. 

501),  199. 

v.  Dakin  (22  Wend,  76),  58,  620. 
v.  Farmers'  Bank  (46  Md.  43), 

52,  567. 
v.  International   Bank  (46  III 

App.  461),  277. 
v.  Marsh  (2  La.  Ann.  353),  503, 

508. 

v.  Mayo  (56  Me.  40),  532. 
v.  Richmond  (12  Wall.  349),  55, 

60,  555,  556,  557. 
v.  Thomas  (7  Wis.  476),  375. 
v.  Todd(6  Hill,  340',  342. 
Thomaston  Bank  v.  Stimpson  (21 

Me.  195),  194,  195. 

Thompson  v.  Bank  of  British  North 
America  (82  N.  Y.  8),  226, 
248. 

v.  British  North  American 
Bank  (45  N.  Y.  Super.  Ct  1), 
389,  433. 

v.  Cummings  (2  Leigh,  321),  374. 
v.  German  Ins.  Co.  (77  Fed.  R 

258),  114. 

v.  Greeley  (107  Mo.  577).  631, 63& 
v.  Hynds  (15  Utah,  389),  120. 
v.  McKee  (5  Dak.  172),  159. 
v,  Meisser  (108  111.  359),  102, 10a 
v.  Pool  (70  Fed.  R  725),  594, 624. 
v.  Riggs  (5  Wall.  663),  238. 
v.  St.  Nicholas  Nat.  Bank  (146 

U.  S.  240),  67. 

v.  Schaetzl  (2  S.  D.  395),  624 
v.  Sioux  Falls  Bank  (150  U.  S. 

231),  592. 
v.  State  Bank  (3  Hill,  S.  C.,  77), 

304. 

v.  Williams  (14  Cal.  160),  167. 
Thorn  v.  Rice  (15  Me.  263),  520. 
Thornburg  v.  Evans  (23  W.  Va.  325), 

422. 
Thornton  v.  Exchange  Nat.  Bank 

(71  Mo.  221),  67,  197. 
v.  Lane  (11  Ga.  459),  561. 
v.  Stoddert  (1  Cranch,  C.  C. 

534),  399,  438. 

v.  Wynn  (12  Wheat.  183),  541. 
Thorp  v.  Craig  (10  Iowa,  461),  386. 

v.  Peck  (28  Vt.  127),  421. 
Throop  Grain  Cleaner  Co.  v.  Smith 

(110  N.  Y.  83),  245,  372. 
Thruston  v.  Wolfborough  Bank  (18 

N.  H.  391),  56a 
Thurman  v.  Van  Brunt  (19  Barb. 

409),  377. 

Thweat  v.  Bank  of  Hopkinsville  (81 
Ky.  1),  194 


TABLE   OF   CASES. 


783 


References  are  to  pages. 


Tickner  v.  Roberts  (11  La.  114),  545. 
Tiernan   v.   Commercial  Bank    (7 

How.,  Miss.,  648),  808. 
Tiffany  v.   State  Bank   (18  Wall 

409),  334. 
Tifft  v.  Quaker  City  Bank   (8  Pa. 

Co.  Ct.  R.  606),  167. 
Tilden   v.  Bernard  (43  Mich.  376), 

179. 
Tillman  v.  Wheeler  (17  Johns.  326), 

402. 
Timberlake  v.  First  Nat.  Bank  (43 

Fed.  R.  231),  .333,  339. 
Timms  v.   Delisle  (5  Blackf.  447), 

474. 
Tinkham  v.  Hevworth  (31  111.  519), 

621. 
Tishimingo  Sav.  Inst.  v.  Buchanan 

(60  Miss.  496),  330,  635. 
Titus  v.  Mechanics'  Nat.  Bank  (35 

N.  J.  Law,  588),  294,  306. 
Titn-  -.  Scantling  (4  Blackf.  89),  57. 
Tol  ey      Manuf.  Nat.  Bank  (9  R.  L 

*#>)  230. 
Tobi.i  k.  Manhattan  Bank  (26  N.  Y. 

14),  646. 
Todd  v.  Edwards  (7  Bush,  89),  393. 

v.  Kentucky  Bank  (3  Bush,  626), 
383. 

v.  Neal  (49  Ala.  266),  385,  409, 

476,  542,  544. 
Toothaker  v.  Cornwall  (3  Cal.  144), 

438,  509. 
Tootle  v.  First  Nat.  Bank  (6  Wash. 

181),  63. 
Toronto  Bank  v.  Hunter  (4  Bosw. 

646),  379. 

Torrey  v.  Foss  (40  Me.  74).  399. 
Tousey  v.  Brown  (1  Biss.  81),  361. 
Tower  v.  Appleton  Bank  (85  Mass. 
387),  564. 

v.  Durell  (9  Mass.  332),  539. 
Town  Council  v.  Union  Nat.  Bank 

(22  S.  R.  291),  63. 

Townsend  v.  Heer  Dry  Goods  Co. 
(85  Mo.  503),  443,  446. 

v.  Lorain  Bank  (2  Ohio  St.  345), 
467,  468,  470,  545. 

v.  Quid  (31  N.  Y.  Supp.  29),  476. 

v.  Smith  (13  N.  J.  Eq.  350),  72. 

v.  Williams  (117  N.  C.  330),  128. 
Townsley  v.  Springer  (1  La.  122), 
512. 

v.  Sumrall  (2  Pet.  170),  349,  363, 

366,  408,  547,  551. 
Townson  v.  Havre  de  Grace  Bank 

(6  Har.  &  J.  47),  115. 
Tracy  v.  Tallmage  (14  N.  Y.  162),  55. 


Traders'  Nat.  Bank  v.  Chipman  (164 

U.  S.  347),  75. 
Tradesmen's    Bank    v.    Mei'ritt  (1 

Paige.  302).  274,  277. 
Tradesmen's  Nat.  Bank  v.  Bank  of 
Commerce  (39  N.  Y.  Supp. 
554\  167. 

v.  Third  Nat.  Bank  (66  Pa.  435), 

346. 
Trasnell  v.  Farmers'  Bank  (11  Ky. 

Law  R.  900),  225,  226,  261. 
Trasher  v.  Everhardt  (3  Gill  &  J. 

234),  58. 
Treble    v.    Bank    of    Grenada    (2 

Smedes  &  M.  523),  343. 
Tredeck  v.  Wendell  (1  N.  H.  40), 

419. 

Trego  v.  Lowry  (8  Neb.  238),  377. 
Tremont  Nat.  Bank,  Ex  parte  (2 

Low.  409),  540. 
Trenholm  v.  Comm.  Nat.  Bank  (88 

Fed.  R.  323),  570. 
Trent  Tile  Co.  v.  Fort  Dearborn  Nat. 

Bank  (54  N.  J.  Law,  38).  370, 599. 
Trenton  Banking  Co.  v.  Woodruff 

(2  N.  J.  Eq.  117;,  195. 
Trezevant  v.  Bank  of  Tennessee  (1 

Rob.,  La.,  465),  51. 
Triggs  v.  Newnham  (I  C.  &  P.  631), 

420. 

Triplett  v.  Hunt  (3  Dana,  126),  487. 
Tripp  v.  Curtenius  (36  Mich.  494), 

281. 
Troy  City  Bank  v.  Lauman  (19  N.  Y. 

477),  383. 
Trowbridge  v.  Scudder  (U  Cush.  83), 

60. 
True  v.  Collins  (85  Mass.  438),  487, 

492. 
Trumbower  v.  Ivey  (2  Pa.  Co.  Ct. 

R.  470),  357. 
Trunkey  v.  Crosby  (33  Minn.  464), 

319. 
Trust    Co.   v.   National    Bank   (91 

Tenn.  336),  232. 

Trustees  v.  Pace  (15  Ga.  486),  220. 
Tuckerman  v.  Hartwell  (3  Me.  153), 

383,  388. 
Tulley  v.  Citizens'  State  Bank  (18 

Ind.  App.  240),  150. 
Tunesma  v.  Schuttler  (114  111.  156), 

106. 
Tunno  v.  Lague  (2  Johns.  Cas.  1), 

464,  488,  524. 
Tunstall  v.  Walker  (2  Smedes  &  M. 

638),  499. 
Turn  bull  v.  Maddox  (68  Md.  579), 

541. 


784: 


TABLE   OF   CASES. 


References  are  to  pages. 


Turner  v.  Bank  of  Fox  Lake  (3 

Keyes,  425),  299. 
v.  First  Nat  Bank  (78  Ind.  19), 

194. 
v.  First  Nat   Bank   (26  Iowa, 

562),  592,  594,  595. 
v.  Patten  (49  Ala.  406),  524 
Tuttle  v.  Nat  Bank  of  Republic  (48 

111.  App.  481),  198. 
Twenty-Sixth  Ward  Bank  v.  Stearns 

(148  N.  Y.  515),  175,  181. 
Tyler  v.  Stack  (103  Mich.  268),  381. 
v.  Waddington  (58  Conn.  375), 

403. 

v.  Young  (130  Pa.  143),  392, 431. 
Tyrie  v.  Rives  (57  Ala.  173),  409. 
Tyson  v.  Oliver  (43  Ala.  455),  501, 

505,  506. 

v.  State  Bank  (6  Blackf.  225), 
200,  306. 

u. 

Ueland  v.  Haughan  (73  N.  W,  R 

169),  103. 

Ulrich  v.  Hower  (156  Pa.  414),  357. 
v.  National  Bank  (36  Pac.  R 

500),  289. 
Ulster  Co.   Bank  v.   McFarlan  (3 

Denio,  553),  362. 
v.  McFarlan  (5  Hill,  432),  363, 

365. 
Underbill    v.    Poughkeepsie   Sav. 

Bank  (32  Hun,  432),  649. 
Union  Bank  v.  Bagley  (10  Rob.,  La., 

45),  151. 
v.  Campbell   (4  Humph.  392), 

176. 

v.  Coster  (3  N.  Y.  203),  361,  365. 
v.  Denere  (17  La.  234),  51. 
v.  Ellicott  (6  Gill  &  J.  363),  574, 

591. 

v.  Ezell  (10  Humph.  385),  431. 
v.  Fonteneau  (12  Rob.,  La,,  120), 

478.  511. 

v.  Fowkles  (2  Sneed,  555),  549. 
v.  Govan  (10  Smedes  &  M.  333), 

502,  544. 

v.  Grimshaw  (15  La.  321),  489. 
v.  Humphreys  (48  Me.  172),  551. 
v.  Hunt  (1  Mo.  App.  42),  189. 
v.  Hyde  (6  Wheat  572),  408, 530, 

54a 
v  Johnson  (9  Gill  &  J.  297),  213, 

320,  321. 

v.  Jones  (4  La.  Ann.  220),  151. 
v.  Knapp  (3  Pick.  96),  205,  290. 


Union  Bank  v.  Laird  (2  Wheat.  390), 

87,  90. 

v.  McDonough  (5  La.  63),  80. 
v.  McDonough  (15  La.  25),  572. 
v.  Middlebrook  (33  Conn.  95), 

547. 

v.  Morgan  (2  La.  Ann.  418),  417. 
v.  Parkhill  (1  Fla,  666),  326. 
v.  Planters'  Bank  (9  Gill  &  J. 

439),  290. 
v.  Ridgeley  (1  H.  &  G.  324),  115, 

116. 
v.  Robertson  (19  La.  Ann.  72), 

404,  523. 

v.  Shea  (57  Minn.  180),  363. 
v.  Solee  (2  Strobh.  390),  27a 
v.  Wando  Mfg.  Co.  (17  S.  C.  339), 

176. 

v.  Warren  (4  Sneed,  167),  558. 
v.  Willis  (8  Met.  504),  413. 
Union  Banking  Co.,  In  re  (12  Phila. 

469),  576. 

v.  Gillings  (45  Md.  181),  170. 
Union  Manuf.  Co.  v.  Rocky  Mount- 
ain Bank  (2  Colo.  248),  278. 
Union  Nat.  Bank  v.  First  Nat  Bank 

(45  Ohio  St.  236),  152. 
v.  Hill  (49  S.  W.  R  1012).  131. 
v.  Louisville  R  Co.  (145  III  208), 

332,  338. 
v.  Miller  (15  Fed.  R  703),  622, 

623. 
v.  Oceana  Nat   Bank    (80  111. 

212),  225. 

v.  Rowan  (23  S.  C.  339),  198. 
v.  Sixth  Nat.  Bank  (43  N.  Y. 

452),  321. 
Union  Pacific  R.  Co.  v.  Chicago, 

etc.  R  Co.  (163  U.  S.  564).  66. 
Union  Stock  Yards  Bank  v.  Gilles- 
pie  (137  U.  S.  411),  216,  217, 
219,  230. 

v.  Stearns  (15  Wend.  314),  50. 
Union  Stock  Yards  Nat  Bank  v. 
Moore  (79  Fed.  R  705),  220. 
v.  Dumond  (156  III  501),  204. 
Union  Trust  Co.  v.  Illinois  Midland 

Co.  (117  U.  S.  434),  62. 
Union  town  Bank  v.  Mackey  (140 

U.  S.  220),  384. 
United  German  Bank  v.  Katz  (57 

Md.  128),  635,  636. 
United  Society  v.  Underwood  (9 

Bush,  609),  219,  230,  285. 
United  States  v.  Allen  (47  Fed.  R 

696).  137,  139,  141. 
v,  Allis(73  Fed.  R  165),  139, 140, 
141,  142,  275,  276. 


TABLE   OF   CASES. 


785 


References  are  to  pages. 


United  States  v.  American  Ex.  Nat. 

Bank  (70  Fed.  R  232),  300. 
v.  Bank  of  United   States    (5 

How.  383).  385. 
v.  Barker  (Fed.  Gas.  No.  14,519, 

4  Wash.  C.  C.  464),  465,  471, 

510,  511,  519.  523. 
v.  Barker  (12  Wheat.  559),  472, 

510,  514. 

v.  Barry  (36  Fed.  R  246),  116. 
v.  Bartow  (10  Fed.  R  874).  139. 
v.  Booker  (80  Fed.  R  376),  139. 
v.  Britton  (108  U.  S.  199),  143, 

144. 

v.  Buskey  (38  Fed.  R  99),  143. 
v.  Cadwallader  (59  Fed.  R  677), 

143. 
v.  Church  (5  Utah,  361,  136  U. 

S.  1),  572,  583. 

v.  City  Bank  (21  How.  356),  153. 
v.  Cook  Co.  Nat.  Bank  (9  Biss. 

55),  73. 

v.  Eno  (56  Fed.  R  218).  143. 
v.  Eye  (49  Fed.  R  853),  139. 
v.  French  (57  Fed.  R  382),  143. 
v.  Graves  (53  Fed.  R  634),  140, 

141. 
v.  Harper  (33  Fed.  R  471),  139, 

141,  143,  144. 

v.  Hughitt  (45  Fed.  R  47).  139. 
v.  Jewett  (84  Fed.  R  142),  597. 
v.  Johnson  (Fed.  Cas.  No  15,483), 

165. 

v.  Kenney  (90  Fed.  R  257),  144. 
v.  KHOX  (102  U.  S.  422),  102,  111. 
v.  Lee  (12  Fed.  R  816).  143. 
v.  Means  (42  Fed.  R  599),  139. 
v.  Metropolis  Bank  (15  Pet.  377), 

381. 
v.  Monongahela   Bridge    Co. 

(Fed.  Cas,  No.  15.796),  556. 
v.  National  Bank  (73  Fed.  R 

379),  218,  220. 
v.  National  Ex.  Bank  (45  Fed.  R 

163),  267,  273. 
v.  Northway  (120  U.  S.  327),  143, 

597. 

v.  Peters  (87  Fed.  R  984),  206. 
v.  Potter  (56  Fed.  R  97),  139, 140, 

145. 
v.  Southern  Pacific  Co.  (63  Fed. 

R  281),  626. 

v.  Taintor  (11  Blatchf.  374),  144. 
v.  Van  Auken  (96  U.  S.  366),  556. 
v.  Voorhees  (9  Fed.  R  143),  143. 
v.  Warner  (26  Fed.  R  616),  144. 
v.  White  (19  Fed.  R  723).  557. 
v.  Wilson  (106  U.  S.  620),  557. 

50 


United  States  v.  Yontsey  (91  Fed. 

R  864),  141. 

United  States  Bank  v.   Bank    of 
Georgia  (10  Wheat.  333),  377. 

v.  Daniels  (12  Pet.  32),  408. 

v.  Devaux  (5  Cranch,  85),  624 

v.  Goddard  (Fed.  Cas.  No.  6,973), 
304. 

v.  Hatch  (6  Pet.  250),  384. 

v.  McAllister  (9  Pa.  475),  233, 
278. 

v.  Merle  (2  Rob.,  La.,  117),  512. 

v.  Sill  (5  Conn.  106),  558,  559. 

v.  Stearns  (15  Wend.  314),  50. 
United  States  Nat.  Bank  v.  First 

Nat,  Bank  (79  Fed.  R  296),  178. 
United  States  Nat.  Bank  v.  Wester- 

velt  (75  N.  W.  R  857),  304. 
United  States  Trust  Co.  v.  Fire  Ins. 

Co.  (18  N.  Y.  199),  48,  100. 
Upham  v.   Clute  (105  Mich.  350), 

356. 
Upton  v.  National  Bank  (120  Mass. 

153),  195. 

Utica  Ins.  Co.  v.  Cadwell  (3  Wend. 
296),  555. 

v.  Kip  (8  Cow.  20),  55. 

v.  Scott  (19  Johns.  1),  60,  6& 

Y. 

Vail  v.  Newark  Sav.  Inst.  (32  N.  J. 

Eq.  627),  607,  651. 

Valk  v.  Bank  of  State  (1  McMul.  Eq. 
414),  486. 

v.  Galliard  (4  Strobh.  99),  483. 
Valle  v.  Cerre  (36  Mo.  575),  362. 
Van  Alen  v.  American  Nat.  Bank 

(52  N.  Y.  1),  218,  603. 
Van  Allen,  In  re  (37  Barb.  225),  240, 

584,  586. 
Van  Allen  v.  Assessors  (3  Wall  578), 

52. 
Van  Alstyne  v.  Sorley  (32  Tex.  518), 

375. 
Van  Antwerp  v.Hulburd  (8  Blatchf. 

282),  624, 
Van  Ardsdale  v.  Board  man  (3  How. 

Pr.  60),  380. 
Van  Atta  v.  State  Bank  (9  Ohio  St. 

27),  327,  335. 
Van  Brunt  v.  Vaughan  (47  Iowa, 

145),  490. 
Van  Campen,  In  re  (Fed.  Cas.  No. 

16,835),  49,  143. 
Van  Dyck  v.  McQuade  (45  N.  Y. 

Super.  Ct.  620),  125,  230. 


786 


TABLE    OF   CASES. 


References  are  to  pages. 


Van  Dyck  v.  McQuade  (85  N.  Y. 

616),  230,  633,  651,  653. 
Van  Hoesen    v.   Van    Alstyne    (3 

Wend.  75),  432. 
Van  Horn  v.  Whitlock  (26  Wend, 

43),  101. 
Van  Leuven  v.  First  Nat.  Bank  (54 

N.  Y.  671),  192. 
Van  Norden  v.  Buckley  (5  CaL  283), 

539. 
Van  Steenwyck  v.  Sackett  (17  Wis. 

645),  42,  106. 
Van  Vacter  v.  Flack  (1  Smedes  & 

M.  393),  350. 
Van  Vechten  v.  Pruyn  (9  How.  Pr. 

222,  13  N.  Y.  549),  474. 
Van  Wart  v.  Smith  (1  Wend.  219), 

392.  525. 
Van  Wenke  Gin  Co.  v.  Citizens' 

Bank  (89  Tex.  147),  234. 
Van  Wert  Nat.  Bank  v.  First  Nat 

Bank  (6  Ohio  Cir.  Ct.  R.  1 30),  271. 
Vance  v.  Collins  (6  Cal.  435),  400. 
Vansands  v.  Bank  (26  Conn.  144),  89. 
Vanstrum  v.  Liljengren  (37  Minn. 

191),  356. 
Vantrol  v.  McCulloch  (2  Hilt  272), 

425. 
Varner  v.  Nobleborough  (2  Me.  121), 

351. 

Varsey  v.  Reynolds  (5  Russ.  12),  247. 
Veasy  v.  Graham  (17  Ga.  99),  172. 
Veazie  Bank  v.  Fenno  (8  Wall  533), 
44 

v.  Paulk  (40  Me.  109),  335. 

v.  Wiun  (40  Me.  60),  396, 432,  434 
Veeder  v.  Mudgett  (95  N.  Y.  285),  78. 
Venango  Nat.  Bank  v.  Taylor  (56 

Pa.  14),  230,  587. 
Venner  v.  Cox  (35  S.  W.  R.  769),  602, 

609.  615. 

Verdes  v.  Verdes  (63  Vt  38),  427,  429. 
Vermont  Marble  Co.  v.  Mann  (36  Vt 

697),  359. 

Vickey  v.  State  Sav.  Ass'n  (21  Fed. 
.     R.  773),  209. 
Viets  v.  Union  Nat  Bank  (101  N.  Y. 

563),  213,  241,  243,  290,  291. 
Virginia  v.  Turner  (1  Cranch,  C.  C. 

261),  349. 
Voight  v.  Lewis  (Fed.  Cas.  No.  16,989), 

23a 

Voltz  v.  Blackmar  (64  N.  Y.  440),  181. 
v.  National  Bank  (158  III  532), 

62. 
Von  Phul  v.  Sloan  (2  Rob.,  La,,  148), 

362. 
Voorhees  v.  Atlee  (29  Iowa,  49),  530. 


Vose  v.  Grant  (15  Mass.  505),  132. 
Voss  v.  German  American  Bank  (83 

III  599),  234 
Vowell  v.  Patton  (2  Cranch,  C.  C. 

312),  473. 
Vreeland  v.  Hyde  (2  N.  Y.  Super.  Ct 

429),  42& 

W. 

Wachsmuth    v.    Merchants'   Nat 

Bank  (96  Mich.  426),  154 
Wachusett    Nat    Bank   v.    Fair- 
brother  (148  Mass.  181),  480. 
Wade  v.  New  Orleans  Banking  Co. 

(8  Rob.,  La.,  140),  558. 
Wads  worth  v.  Hocking  (61  III  App. 

156),  J 13,  289. 

Wagner  v.  Cook  (167  Pa  259),  434 
v.  Howard  Sav.  Inst  (52  N.  J. 

Law,  225).  648. 

v.  Kenner  (2  Rob.,  La.,  120),  438. 
Wakefield   Bank  v.   Truesdell  (55 

Barb.  602),  151,  152. 
Walden   Nat   Bank  v.  Birch  (130 

N.  Y.  221),  66. 
Walford  v.  Andrews  (29  Minn.  250), 

530. 
Walker  v.  Bank  of  Augusta  (3  Ga. 

486),  474 

v.  Laverty  (6  Munf.  487),  542. 
v.  Lide  (1  Rich.  Law,  249),  358, 

381. 
v.  Manhattan  Bank  (25  Fed.  R. 

247),  230. 
v.  Manhattan  "Bank  (130  U.  S. 

267),  286. 

v.  Popper  (2  Utah,  96),  530. 
v.  Rogers  (40  111.  278),  459,  541. 
v.  St.  Louis  Nat  Bank  (5  Mo. 

App.  214),  170. 
v»  State  Bank  (13  Barb.  936,9 

N.  Y.  582),  382,  383. 
v.  State  Bank  (8  Mo.  704),  469. 
v.  Stetson  (14  Ohio  St.  89),  479, 

492,  494,  496,  497i 
v.  Tunstall  (3  How.,  Miss.,  259), 

498. 
v.  United  States  (106  U.  S.  413), 

55. 

v.  Walker  (7  Ark.  542),  538. 
v.  Windsor  Nat  Bank  (56  Fed. 

R.  76),  623. 
Wall  v.  Emigrant  Sav.  Bank  (64 

Hun,  249),  646,  647,  648. 
Wallace  v.  Agry  (4  Mason,  336),  356, 
389,  391,  424,  467. 


TABLE   OF   CASES. 


787 


References  are  to  pages. 


Wallace  v.  Bacon  (86  Fed.  R  553), 

79. 

v.  Connel  (13  Pet.  136),  397. 
v.  Crilley  (46  Wis.  577),  447. 
v.  Exchange  Bank  (126  Ind. 

265),  149. 
v.  Hood  (89  Fed.  R  11),  79,  189, 

595. 
v.  Lowell  Institution  (7  Gray, 

134),  648. 
v.  Savings  Bank  (89  Tenn.  630). 

121,  124. 
v.  Stone  (107   Mich.  190),  319, 

603,  610,  616. 
Walmsley  v.  Acton  (44  Barb.  312), 

469,  550. 
Wain  v.  Bank  of  North  America  (8 

S.  &  R  89),  89. 

Walsh  v.  Blatchley  (6  Wis.  422),  356. 
v.  Bowery  Sav.  Bank  (7  N.  Y. 

Supp.  669),  644. 
v.  Dart  (23  Wis.  334),  424. 
v.  Nat.  Broadway  Bank  (33  N. 

Y.  Supp.  998),  288. 
Walters  v.  Brown  (15  Md.  285),  510. 
v.  Galveston  R  Co.  (1  White  & 

W.  §  757).  356. 
v.  Munroe  (17  Md.  154),  539. 
v.  Swallow  (6  Whart.  446),  540. 
Walton  v.  Henderson  (Smith,  168), 

463. 

v.  Mandeville(56Iowa,597),358. 
Walworth  v.  Seaver  (30  Vt.  728), 

475. 
Wamesit  Bank  v.  Buttrick  (11  Gray, 

387),  490. 
Wamsley  v.  Rivers  (34  Iowa,  463), 

550. 
Ward  v.  Allen  (2  Met.  53).  359. 

v.  Griswold  Co.  (16  Conn.  593), 

97. 
v.  Johnson  (5  Bradw.  30),  629, 

630. 
v.  Johnson  (95  111.  215),  63,  198, 

237,  283,  651. 

v.  Perrin  (54  Barb.  89),  502. 
v.  Smith  (7  Wall  447),  295,  296. 
Wardens  v.  Moore  (1  Ind.  289),  352. 
Warder  v.  Tucker  (7  Mass.  449),  374. 
Wards  v.  Sparks  (53  Ark.  519',  424. 
Ware  v.  Macon  City  Bank  (59  Ga. 

840),  373. 
Warhus   v.  Bowery  Sav.  Bank  (5 

Duer,  67),  639. 

Waring  v.  Betts  (90  Va.  46),  413, 419. 
Warner  v.  Briscoe  (12  La.  472),  549. 
v.  Callender  (20  Ohio  St.  190), 
112. 


Warner  v.  Citizens'  Bank  (6  S.  D. 

152),  426,  427,  433. 
v.  Commonwealth  (1  Pa.  154), 

350. 
v.  De  Witt  Co.  Bank  (4  Bradw. 

305).  67. 
v.  Fourth  Nat  Bank  (115  N.  Y. 

318. 
v.  Pennoyer  (91   Fed.   R  987), 

134. 
Warren  v.  Fake  (19  How.  Pr.  430), 

125,  583. 
v.  Gilman  (17  Me.  360),  152,  468, 

475,  515. 
v.  Robinson  (57  Pac.   R  287), 

124,  132. 

v.  Shook  (91  U.  S.  704),  29,  71. 
Warren  Bank  v.  Suffolk  Bank  (10 

Gush.  582),  187,  304. 
Warrensburg  Ass'n  v.  Zoll  (83  Mo. 

94),  589. 

Washer  v.  White  (16  Ind.  136),  542. 
Washington    Bank    v.    Lewis    (22 

Pick.  24),  182. 
Washington  Nat.  Bank  v.  Averell 

(2  App.  D.  C.  470),  157. 
v.  Eckels  (57  Fed.  R  870),  74, 

113,  592,  593. 

v.  Pierce  (6  Wash.  491),  173. 
Wasson  v.  Hawkins  (59  Fed.  R  233), 

603,  614,  615. 

v.  Lamb  (120  Ind.  514),  205. 
Watch  Co.,  In  re  (89  Hun,  196), 

328. 
Waterloo  Milling  Co.  v.  Kuenster 

(158  111.  259).  307. 
Waters  v.  Bank  of  Georgia  (R  M. 

Charlt.  193),  558. 
v.  Petrovic  (19  La.  584),  409. 
Watervliet  Bank  v.  White  (1  Denio, 

608),  296. 
Watkins  v.  Crouch  (5  Leigh,  522), 

445. 
v.  National  Bank  (51  Kan.  254), 

•565. 
Watrous  v.  Holbrook  (39  Tex.  572), 

353. 
Watson  v.  Bennett  (12  Barb.  196), 

154 

v  Hart  (6  Gratt  633),  402,  533. 
v.  Phoenix  Bank  (8  Met  217), 

275.  287,  28a 
v.  Templeton  (11  La.  Ann.  137), 

486. 

v.  Watson  (69  Vt  243\  644. 
Watterson  v.  Masterson  (15  Wash. 

511),  108,  585. 
Watts  v.  Christie  (11  Beav.  546),  331. 


788 


TABLE   OF   CASES. 


References  are  to  pages. 


Waxahachie  Bank  v.  Vickery  (26 

S.  W.  R  876),  149. 
Way  v.  Butterworth  (106  Mass.  75), 
50,  442. 

v.  Towle  (155  Mass.  374),  348. 

v.  Tuskegee  Ins.  Co.  (34  Ala,  58), 

205. 
Waynesville  Bank  v.  Irons  (8  Fed. 

R.  1),  182. 

Wear  v.  Lee  (87  Mo.  358),  433. 
Weaver  v.  Emigrant  Sav.  Bank  (17 
Abb.  N.  C.  82),  642. 

v.  Penn  (27  La.  Ann.  129;,  518, 

519. 

Webb  v.  Mears  (45  Pa.  222),  353,  388. 
Webber  v.  Gotthold  (28  N.  Y.  Super. 

Ct.  763),  492. 
Weber  v.  Spokane  Nat  Bank  (64 

Fed.  R  208).  66. 
Webster  v.  Howe  Machine  Co.  (54 
Conn.  394),  385. 

v.  State  Bank  (4  Ark.  423),  330. 
Weckler  v.  First  Nat.  Bank  (42  Md. 

581),  62,  190. 

Weed,  In  re  (11  Blatch.  243),  338. 
Weed  v.  Snow  (3  McLean,  265),  554. 
Weedsport  Bank  v.  Park  Bank  (41 
N.  Y.  561),  236. 

v.  Park  Bank  (2  Robt.  418),  320. 
Weeks  v.  Pryor  (27  Barb.  79),  429. 
Weems  v.  Bank  of  Maryland  (15 

Md.  231),  552. 
Wegner  v.  Second  Ward  Sav.  Bank 

(76  Wis.  242),  646. 
Weinstein  v.  National  Bank  (69  Tex. 

38),  265. 

Weiser  v.  Dennison  (10  N.  Y.  68),  266. 
Weld  v.  Eliot  Sav.  Bank  (158  Mass. 

339),  649. 

Welles  v.  Larrabee  (36  Fed.  R.  866). 
83. 

v.  Stout  (38  Fed.  R  807),   105, 

109,113. 
Wells  v.  Brigham  (6  Gush.  6),  350. 

v.  Graves  (41  Fed.  R  459),  122, 
135,  571. 

v.  Jackson  (6  Blackf.  40),  533. 
Wells,  Fargo  &    Co.  v.   Northern 

Pac.  Ry.  Co.  (23  Fed.  R  469),  31. 
Welsh  v.  German  American  Bank 

(73  N.  Y.  424),  265,  267. 
Wetnple  v.  Dangerfield  (2  Smedes 

&  M.  445).  512. 
Wendell  v.  Washington  Bank  (5 

Cow.  161),  557. 
Werk  v.  Mad  River  Valley  Bank 

(8  Ohio  St  301),  433. 
Wesson  v.  Garrison  (8  La.  136),  417. 


West  v.  Elmira  Bank  (20  Hun,  408), 
207. 

v.  St.  Paul  Nat.  Bank  (54  Minn. 

466),  304,  312. 
West  Branch  Bank  v.  Feltmer  (3 

Pa.  399),  521. 
West  River  Bank  v.  Taylor  (7  Bosw. 

466;  34  N.  Y.  128),  475.  487,  488, 

489,  514.  515. 

West  St.  Louis  Sav.  Bank  v.  Shaw- 
nee  Co.  Bank  (95  U.  S.  557), 

165,  166. 
Western  Bank  v.  Mills  (7  Gush.  539), 

66. 
Western  Ins.  Co.,  In  re  (38  111.  289), 

600. 
Western  Mfg.  Co.  v.  Toole  (11  Pac. 

R  119).  351. 
Western  Nat.  Bank  v.  Armstrong 

(152  U.  S.  346),  149,  151, 168, 169. 
Western  Reserve  Bank  v.  Mclntire 

(40  Ohio  St.  528  >,  48. 
Western  Scraper  Co.  vi  Sadilek  (69 

N.  W.  R  765),  305. 
Westervelt   v.  Mohrenstecker   (76 

Fed.  R.  118),  116. 
Westfall  v.  Farwell  (13  Wis.  504), 

474,  477,  486. 
Westfield  Bank  v.  Cornen  (37  N.  Y. 

320),  173. 
Westphal  v.  Ludlow  (6  Fed.  R.  348), 

392. 

Weston  v.  Myers  (33  III  424),  555. 
Wetherell  v.  O'Brien  (140  III  146), 

284 
Wethey  v.  Andrews  (3  Hill,  582), 

429. 
Wetumpka  R.  Co.  v.  Bingham  (5 

Ala.  657),  351,  352. 
Whaley  v.  Houston  (12  La.  Ann. 

585),  355. 
Wheat  v.  Bank  of  Louisville  (5  S. 

W.  R  305),  151,  160. 
Wheatley  v.  State  (12  CaL  92),  356, 

Wheaton  v.  Wilmarth  (13  Met  422), 

470. 
Wheeler  v.  Frontier  Bank  (23  Me. 

308),  48. 

v.  Maillot  (20  La.  Ann.  75),  484 
v.  Miller  (90  N.  Y.  353),  104, 105, 

107,  109. 
v.  Webster  (1  E.  D.  Smith,  1), 

353,  356. 

Wherry  v.  Hale  (77  Mo.  20),  68,  195. 
Wheton  v.  Mears  (11  Met  563),  403. 
Whetstone  v.  Bank  of  Montgomery 
(9  Ala.  875),  66. 


TABLE   OF   CASES. 


789 


References  are  to  pages. 


Whipple  v.  Walker  (2  Thomp.  &  C. 

456),  298. 
Whitaker  v.  Morrison  (Branch,  25), 

543. 

White  v.  Commonwealth  Nat.  Bank 
(Fed.  Cas.  No.  17,544),  285, 
286. 
v.  Continental  Bank  (64  N.  Y. 

316),  377. 

v.  Dienger  (25  S.  W.  R  666),  358. 
v.  Engelhard  (2  Smedes  &  M. 

38),  547. 
v.  Franklin  Bank  (22  Pick.  181), 

55,  62. 

v.  How  (3  McLean,  111),  126. 
v.  Keith  (99  Ala.  668),  545. 
v.  Knox  (111  U.  S.  784).  594. 
v.  National  Bank  (102  U.  S.  658), 

297. 
v.  Springfield  Inst  (134  Masa 

232),  214. 
v.  Stoddard  (11  Gray,  258),  439, 

517. 
v.  Third  Nat.   Bank  (4  Wkly. 

Law  Bui.  791).  200. 
v.  Weaver  (41  III  409),  533. 
v.  Wilkinson  (10  La.  Ann.  394), 

452,  501. 
White  Mountain  Bank,  In  re  (46 

N.  H.  143),  590. 
Whitehall  Bank  v.  Tisdale  (18  Hun, 

151),  158. 
Whiting  v.  City  Bank  (77  N.  Y.  363), 

320. 
v.  Wellington  (10  Fed.  R  810), 

637. 

Whitman  v.  Cox  (23  Me.  335),  573. 
Whitney  v.  Brattleboro  Bank  (55 

Vt.  154),  285. 

v.  Butler  (118  U.  S.  655),  80. 
v.  Eliot  Nat.  Bank  (137  Mass. 

354),  372. 
v.  First  Nat  Bank  (50  Vt  388), 

287. 
v.  South  Paris  Mfg.  Co.  (39  Ma 

316),  527. 
Whitney  Arms  Co.  v.  Barlow  (63 

N.  Y.  62),  63,  66. 
Whitridge  v.  Rider  (22  Md.   548), 

454,  513,  538. 
Whittemore  v.  AmoskeagNatBank 

(134  U.  S.  527),  623. 
Whitten  v.  Wright  (34  Mich.  92), 

525. 
Whittier  v.  Collins  (15  R  L  44),  535, 

537,  538. 

Whittington  v.  Farmers'  Bank  (5 
Har.  &  J.  489),  238,  550,  621. 


Whitwell  v.  Johnson  (17  Mass.  449), 

443,  445,  449,  453. 
Wickersham  v.  Crittenden  (93  CaL 

17),  117. 
Wickham  v.  Hull  (60  Fed.  R  326), 

84,  100. 
Wiggins  v.  Stevens  (53  N.  Y.  Supp. 

90),  604. 

Wilber  v.  Selden  (6  Cow.  162),  548. 
Wilcox  v.  Mitchell  (4  How.,  Miss., 

273),  502. 
Wild  v.  Gorham  (10  Mass.  336),  187. 

v.  Passamaquoddy  Bank  (3 
Mason,  505),  152,  258,  389. 

v.  Van    Valkenburgh    (7   Cal. 

166),  448. 
Wilder  v.  Union  Nat  Bank  (9  Biss. 

178),  623. 
Wildes  v.  Savage  (1  Story,  22),  352, 

363. 
Wiley  v.  Starbuck  (44  Ind.  298), 

335,  336,  337. 
Wilkens  v.   Commercial  Bank  (6 

How.,  Miss.,  217),  483. 
Wilkinson  v.  Dodd  (41  N.  J.  Eq.  566), 

130,  632,  634,  638. 
Willard  v.  Dubois  (29  111.  48),  72, 

560. 
Willets  v.  Paine  (43  III  432),  238, 

425,  436. 
Willett  v.  Farmers'  Sav.  Bank  (77 

N.  W.  R  519),  190. 
Williams  v.  American  Nat  Bank 
(85  Fed.  R  376),  63,  67,  81. 

v.  Bank  of  United  States  (2  Pet 
96),  463,  473,  497,  508,  522. 

v.  Bartlett  (4  Lea,  620),  461. 

v.  Brailsford  (25  Md.  126),  479. 

v.  Cox  (37  S.  W.  R  282),  615. 

v.  Dorrier  (135  Pa.  445),  166. 

v.  Drexel  (14  Md.  566),  377. 

v.  Germaine  (7  B.  &  C.  468),  387. 

v.  Granger  (4  Day,  444),  403. 

v.  Halliard  (14  Atl.  R  880. 38  N. 
J.  Eq.  373),  125,  135,  162. 

v.  Importers'  and  Traders'  Nat 
Bank  (44  111.  App.  295),  636. 

v.  Irwin  (3  Dev.  &  B.  74).  403. 

v.  Jones  (77  Ala.  294),  29a 

v.  Matthews  (3  Cow.  252),  467, 
500,  516. 

v.  McDonald  (43  N.  J.  Eq.  397), 
632. 

v.  McKay  (46  N.  J.  Eq.  25,  46  N. 
J.  Eq.  409),  631,  632,  633, 
634,  635. 

v.  Montgomery  (148  N.  Y.  512), 
92. 


790 


TABLE   OF   CASES. 


References  are  to  pages. 


Williams  v.  National  Bank  (70  Md. 
843),  185. 

v.  Patterson    (2  McCord,  132), 
548. 

v.  Planters'  Bank  (12  Rob.,  La., 
125),  591. 

v.  Probst  (10  Watts,  111),  430. 

v.  Putnam  (14  N.  H.  540),  386. 

v.  Riley  (34  N.  J.  Eq.  898),  631. 

v.  Rogers  (14  Bush,  776),  204. 

v.  State  (23  Tex.  264),  45,  70. 

v.  Union  Bank  (21  Tenn.  339),  50. 

v.  Wade  (1  Met.  82),  386. 

v.  Winans  (14  N.  J.  Law,  339), 

358. 
Williamson  v.  Turner  (2  Bay,  410), 

410. 
Williamsport  Gas  Co.  v.  Pinkerton 

(95  Pa.  62),  295,  397. 
Willis  v.  Greene  (5  Hill,  232),  484 
Wilson  v.  Bank  (7  AtL  R  145),  164, 
182. 

v.  Bank  of  Lexington  (72  N.  C. 
621),  563. 

v.  Book  (13  Wash.  676),  101. 

v.  Brett  (11  M.  &  W.  113),  122. 

v.  Clements  (3  Mass.  1),  367. 

v.  Coburn  (85  Neb.  530),  615. 

v.  Dawson  (52  Ind.  513),  234. 

v.  First  Nat.  Bank  (1  Wyo.  108), 
123. 

v.  Isbell  (45  Ala.  142).  376,  384. 

v.  Pauley  (72  Fed.  R  129),  168. 

v.  Richard  (28  Minn.  337;,  55a 

v.  Senier  (14  Wis.  380),  430,  439, 
458,  483. 

v.  Spencer  (1  Rand.  76),  556. 

v.  Tisson  (12  Ind.  285),  572,  57a 
Wilson  Co.  v.  Third  Nat.  Bank  (103 

U.S.  770 ),622. 

Wiltz  v.  Peters  (4  La.  Ann.  339),  93. 
Winans  v.  Davis  (18  N.  J.  Law,  276), 

447. 
Winchester     v.     Winchester     (4 

Humph.  51),  546. 
Wind  v.  Fifth  Nat.  Bank  (39  Mo. 

App.  72),  265. 
Windham  Bank  v.  Norton  (22  Conn. 

213),  426,  427,  430. 

Wing  v.  Beach  (31  III  App.  78),  388. 
Wingate  v.  Mechanics'  Bank  (10 

Pa.  104),  304,  306,  311.  31& 
Winn  v.  Levy  (2  How.,  Miss.,  902), 

543. 
Winslow  v.  Harriman  Iron  Co.  (42 

&  W.  R.  698),  174,  602. 
Winson  v.  Lafayette  Co.  Bank  (18 

Mo.  App.  665),  153. 


Winstandley  v.  Second  Nat.  Bank 

(13  Ind.  App.  544),  603,  605,  612. 
Winston  v.  Kelly  (33  Tex.  854),  431. 
Winter  v.  Baldwin  (89  Ala.  483),  93. 

v.  Bank  of  New  York  (2  Caines, 
337),  214 

v.  Cox  (41  Ala.  207),  391. 

v.  Drury  (5  N.  Y.  525),  372. 
Winterbottom  v.  Wright  (10  M.  & 

W.  109),  250. 
Wintermute  v.  Post  (24  N.  J.  Law, 

420),  371. 
Winters  v.  Armstrong  (37  Fed.  R 

508),  78. 
Winterset  Nat.  Bank  v.  Eyre  (52 

Iowa,  114),  334 
Winton  v.  Little  (94  Pa.  64),  151, 

161,  165,  190. 
Wiseman  v.  Chiappella  (23  How. 

368),  355,  385,  417,  447,  448. 
Wiswell  v.  Starr  (48  Me.  401),  561, 

571,  583. 
Witeford  v.   Burckmeyer  (1  Gill, 

127),  508. 
Withers  v.  Lafayette  Co.  Bank  (67 

Mo.  App.  115),  164 
Witters  v.  Sowles  (32  Fed.  R.  767), 
77,  80,  84,  135. 

v.  Sowles  (32  Fed.  R.  130),  108. 

v.  Sowles  (61  Vt  365),  624 
Wittich  v.  First  Nat  Bank  (20  Fla. 

843),  411. 
Wogan  v.  Thompson  (9  La.  Ann. 

300),  415. 

Wolf  v.  Bureau  (1  Mart.,  N.  S.,  162), 
148. 

v.  Lauman  (30  Mo.  575),  468. 

v.  National  Bank  (178  111.  85). 
592 

v.  Simmons  (23  S.  R  586),  129. 
Wolfe  v.  Jewett  (10  La.  384),  453, 

467. 
Wolverton  v.  Exchange  Nat.  Bank 

(11  Wash.  94),  334 
Wood  v.  American  Ins.  Co.  (7  How., 
Miss.,  609),  552. 

v.  Boylston  Bank (129  Mass.  358', 
216,  220,  231,  329. 

v.  Callaghan  (61  Mich.  402),  476, 
486  487. 

v.  Corl  (4  Met  203),  504 

v.  Dummer  (3  Mason,  308),  95, 
98,  562,  584 

v.  Duvall  (9  Leigh,  6),  404 

v.  Merchants'  Trust  Co.  (41  III. 
267),  234  252,  295. 

v.  Merchants'  Sav.  Co.  (41  III. 
267),  234,  252,  295. 


TABLE    OF    CASES. 


791 


References  are  to  pages. 


Wood  v.  People's  Nat.  Bank  (83  Pa. 
57),  196.     . 

v.  Pugh  (7  Ohio,  488),  388. 

v.  Steele  (6  Wall.  80).  406. 
Wood  River    Bank  v.   First  Nat 

Bank  (36  Neb.  744),  295, 309, 348, 

411. 
Wopdbury  v.  Crum  (1  Biss.  284),  538, 

539. 
Woodin  v.  Foster  (16  Barb.  146),  443. 

v.  Fraser  (38  N.  Y.  Super.  Ct. 

190)..  432. 
Woodman  v.  Eastman  (10  N.  H. 

359),  538. 

Woodruff  v.  Hensel  (5  Colo.  App. 
103),  372. 

v.  Merchants'  Bank  (25  Wend. 
673,  6  Hill,  174),  454. 

v.  Plant  (41  Conn.  344),  433. 

v.  Trapnall  (10  How.  205),  44, 

555 

Woods  v.  Milford  Sav.  Inst.  (58  N. 
H.  184),  222. 

v.  Nield  (44  Pa.  86),  492. 
Woodson  v.  Moody  (4  Humph.  303), 

403. 

Woodward  v.  Central  Bank  (4  Ga. 
323),  590. 

v.  Commission  Co.  (43  Minn. 
260),  361,  363. 

v.  Ellsworth  (4  Colo.  580),  596. 
Woolen   v.  New  York    Bank    (12 

Blatchf.  359),  299,  304 
Wooley  v.  Lyon  (117  III  244),  385, 

386,  492,  496. 
Worcester  Bank  v.  Wells  (8  Met. 

107),  354. 
Worcester  Nat,  Bank  v.  Chieney  (87 

111.  602),  196. 
Worden  v.  Mitchell  (7  Wis.  161), 

522,  535. 
Workingmen's  Banking  Co.  v.  Rau- 

tenberg  (103  111.  460),  67,  327. 
Worley  v.  Waldron  (3  Sneed,  548), 

444,  550. 
Worth  v.  Piedmont  Bank  (28  S.  E. 

R.  488),  103,  108. 
Wright  v.  Andrews  (70  Me.  86),  538. 

v.  Dyer  (48  Mo.  525),  403. 

v.  First  Nat.  Bank  (Fed.  Cas. 
No.  18,078),  339. 

v.  Liessenfeld  (93  CaL  90),  534. 

v.  Merchants'  Nat.  Bank  (1  Flip. 

568),  592. 
Wyckoff  v.    Andrews    (50   N.   Y. 

Super.  Ct.  196),  540. 
Wykoff  v.  Irvine  (6  Minn.  496),  344. 
Wylie  v.  Brice  (70  N.  C.  422),  381. 


Wylie  v.  Northampton  Nat.  Bank 

(119U.  S.  631 ),  199,  286. 
v.  Northampton  Nat.  Bank  (15 

Fed.  R.  496),  199. 
Wyman  v.  Adams  (12   Cush.   210), 

456. 
v.  Citizens'  Bank  (29  Fed.   R. 

734),  67. 
v.  Colorado  Nat.  Bank  (5  Colo. 

30),  316. 
Y.  Hallowell  Bank  (14  Mass.  58), 

170,  568. 

Y. 

Yakima   Nat.  Bank    v.  Knipe  (6 

Wash.  348),  50. 
Yancey  v.  Littlejohn  (9  N.  C.  525), 

511. 

Yardley  v.  Clothier  (49  Fed.  R.  337), 
240. 

v.  Clothier  (51  Fed.  R  506),  587. 

v.  Dickson  (47  Fed.  R.  835).  624. 

v.  Philler  (167  U.  S.  344),  580, 660. 

v.  Philler  (62  Fed.  R.  645),  580. 

v.  Philler  (58  Fed.  B.  746),  580, 

654. 
Yeager  v.  Farwell  (13  Wall.  6),  540, 

541. 

Year  Book  (30-31  Edw.  I),  241. 
Yeaton  v.  Berney  (62  111.  61).  398. 
Yerkes  v.  National  Bank  (69  N.  Y. 

382),  192,  200,  344. 
York  Bank  v.  Asbury  (1  Biss.  230), 

340. 
Young  v.  Bryan  (6  Wheat.  146),  411. 

v.  Durgin  (15  Gray,  264),  492. 

v.  Hughes  (12  Smedes  &  M.  93), 
72. 

v.  Hudson  (99  Mo.  102),  621. 

v.  Lehman  (63  Ala.  519),  365. 

v.  Pattison  (11  Rob.,  La.,  7),  552. 

z. 

Zantsingers  v.  Gunton  (19  Wall.  32), 

194,  195. 

Zebley  v.  Voisin  (7  Pa.  527),  378. 
Zeile  v.  German  Sav.  Inst.  (4  Mo. 

App.  401),  233. 
Zeugner  v.  Best  (44  N.  Y.  Super.  Ct. 

393),  639. 
Zimmerman  v.  Miller  (2  Penny.  226), 

638. 

^-'nn  v.'Mendell  (9  W.  Va.  580),  630. 
Zi  mer  v.  National  Bank  (54  I1L 

App.  602),  658. 


INDEX. 


References  are  to  pages. 
ACCEPTANCE  — 

of  bond  of  officer,  presumed,  117. 

of  check,  see  CERTIFIED  AND  ACCEPTED  CHECKS. 

of  commercial  paper,  in  full,  347-385. 

paper  requiring  presentation  for  acceptance,  347-349. 

bills  of  exchange  payable  at  sight,  or  so  many  days  after  sight,  or 

so  many  days  after  demand,  must  be  presented,  349. 
if  not  presented  for  acceptance,  drawer  and  indorsers  discharged, 

525. 

paper  not  requiring  presentation  for,  351-353. 
checks,  unless  post-dated,  need  not  be  presented  for,  348. 
bills  of  exchange  payable  at  fixed  time  or  on  demand  need  not  be 

presented  for,  349. 
orders  payable  out  of  a  particular  fund  or  upon  contingency  are  not 

bills  of  exchange  and  need  no  presentation  for,  349,  350. 
municipal  orders  or  warrants  need  no  presentation  for,  350. 
bill  drawn  by  partner  on  his  firm  needs  no  presentation  for,  351. 

by  agent  on  his  principal  needs  no  presentation  for,  351. 
by  officer  upon  his  corporation  needs  no  presentation 

for,  352. 

by  drawer  upon  himself  needs  no  presentation  for,  352. 
no  consideration  required  for,  on  bills  and  checks,  358. 
of  non-negotiable  order  requires  consideration,  358. 
waiver  of,  express  waiver  on  bill,  353. 

by  notification  of  drawer  to  drawee  not  to  pay,  353. 
by  parol,  353. 

by  parol,  indorser  must  assent  to  bind  him,  353. 
by  drawer  by  notification  to  drawee,  353. 
by  acceptor  waiving  acceptance,  353. 
does  not  dispense  with  demand  of  payment,  385. 
does  not  dispense  with  notice  of  non-payment,  385,  526. 
governed  by  law  of  place  for  acceptance,  354. 
presentment  for,  sufficiency  of,  355. 

should  be  personal  to  drawee  or  at  dwelling-house 

or  place  of  business,  355.    See  DEMAND. 
drawee's  change  of  residence,  463. 
person  presenting  for,  should  have  bill,  355. 

presentation  for,  should  be  within  reasonable  time,  355.    See  DE- 
MAND. 

should  be  before  maturity,  355. 
of  sight  bills,  or  demand  bills,  or  so  many  days  after 

sight  or  demand,  356. 
such  bills  may  be  negotiated,  356. 

if  improperly  presented,  refusal  to  accept  cures  defects,  413,  419. 
form  of,  in  full,  356-370. 
written  acceptance  under  statutes,  356. 
checks  are  within  statutes,  356. 


794:  INDEX. 

References  are  to  pages. 

ACCEPTANCE  (continued)— 

written  acceptance,  form  of,  356,  357. 

estoppel  to  claim,  359,  note  1. 

oral  acceptance,  valid  unless  forbidden  by  statute,  358. 
implied,  359,  360. 

by  retention  of  instrument,  359. 
by  dealing  with  instrument,  360. 
promise  to  pay  bill,  358. 

inures  to  all  holders,  359, 361. 

promise  to  accept  by  bank,  when  not  binding,  244 
promise  to  accept  bill  as  acceptance,  360. 

may  be  oral  or  written,  360. 
letters  of  credit,  or  authority  to  draw,  361-363. 
promise  or  authority,  inures  to  all  holders  who  gave  credit  to  au- 
thority or  promise,  361. 
proof  of  promise  to  accept,  363. 
if  promise  written,  writing  sole  evidence,  364. 
promise  by  telegraph,  364. 
promise  to  accept  or  authority,  revocation  of,  364,  369. 

revoked  by  actual  revocation,  869. 
by  delay,  367,  369. 
by  exhaustion,  369. 

promise  to  accept  or  authority,  construction  of,  365. 
promise  to  accept  conditional  on  bills  of  lading,  365. 

receipt  of  goods  immaterial,  360,  365, 

note  1. 

promise  to  pay  existing  bill,  366. 
bill  must  conform  to  promise  or  authority,  367,  368. 
promise  or  authority  must  be  acted  upon  within  reasonable  time,  367. 
promise  to  accept,  defenses  to,  369,  370. 

arrangements  between  drawer  and  promisor  do 

not  affect,  370. 

revocation  of,  not  permitted  after  delivery  of  acceptance,  370. 
drawee  not  bound  except  by,  371. 

exceptions  to  rule,  372,  373. 
if  acceptance  refused,  notice  must  be  given,  374,  389,  466. 

no  presentment  for  payment  necessary,  889, 

390. 

but  as  to  bill  not  requiring  acceptance,  quaere,  390. 
notice  on  paper  not  requiring  acceptance,  374,  472. 
if  acceptance  refused  and  notice  not  given,  prior  parties  released,  525. 
contract  of,  and  effect  of,  375. 

acceptor  becomes  principal  debtor  as  to  holder,  375. 
between  drawer  and  acceptor  rule  different,  376. 
admissions  by,  377. 

genuineness  of  drawer's  signature,  377. 
genuineness  of  no  other  signature,  377. 

acceptor  compelling  repayment,  378.    See  CERTIFIED  CHECKS. 
acceptor,  prima  facie  liable  to  drawer  for  amount  of  bill,  378. 
no  demand  necessary  as  to  acceptor,  388,  389. 
absolutely  liable  to  holder,  379. 
measure  of  acceptor's  liability,  380. 
conditional  and  variant  acceptances,  380,  381. 

binding  when  condition  performed,  381. 
must  be  notified  to  drawer  and  indorser,  382. 
acceptance  by  person  other  than  drawee,  383. 
date  of,  presumption  as  to,  383. 
discharge  of  parties  to  accepted  bill,  383-385. 

by  conditional  acceptance  unless  notified,  383. 


INDEX.  795 

References  are  to  pages. 

ACCEPTANCE  (continued)  — 

discharge  by  acceptance  not  according  to  tenor  of  bill,  384. 
by  extension  of  time  to  acceptor,  384. 
by  release  of  one  joint  acceptor,  385. 
may  be  made  payable  at  particular  place,  388,  433,  434. 
accepted  bill  must  be  presented  for  payment,  388. 

if  payable  at  particular  place  must  be  there 
for  payment,  or  demand  made  there,  389, 
433,  434. 
acceptor's  change  of  residence,  463. 

ACCEPTANCE  SUPRA  PROTEST  — 
form  of,  387. 
engagement  of,  387. 

need  not  be  notified  to  drawer  and  indorser,  387. 
acceptor  supra  protest  should  notify  the  party  for  when  he  accepts, 

387. 

presumed  to  accept  for  drawer,  387. 
bill  must  be  presented  at  maturity  to  drawee,  387,  390. 
measure  of  recovery  if  paid,  388. 

ACCOMMODATED  PARTIES  TO  COMMERCIAL  PAPER  (see  GUAR- 
ANTORS) — 
drawer  or  indorser  not  entitled  to  demand  and  notice,  393,  399,  400, 

401. 

indorser  of  check  not  entitled  to  demand  and  notice,  396. 
irregular  indorser  not  entitled  to  demand  and  notice,  402. 

varying  rule  as  to  irregular  indorser,  402. 
parol  evidence  to  show  contract  of  irregular  indorser,  402,  531-534. 

ACCOMMODATION  — 

bank  cannot  lend  credit  for  accommodation,  199,  200. 
savings  bank  no  power  to  become  surety,  635. 

ACCOMMODATION  PARTIES  TO  COMMERCIAL  PAPER— 

drawer  and  regular  indorser  entitled  to  demand  and  notice,  392, 399. 
irregular  indorser  of  note  not  entitled  to  demand  and  notice,  394. 
irregular  indorser  of  bill  entitled  to  demand  and  notice,  395,  402. 
drawer  of  check  entitled  to  demand  and  notice  if  injured,  396. 
maker  of  note  or  acceptor  of  bill  not  entitled  to  demand,  397,  399. 

ACCOUNT  — 

bank  books,  whether  an  account  stated,  208. 

bank  book  returned  to  depositor  an  account  stated,  288. 

ACTION— 

upon  stock  subscription,  96,  98. 

upon  statutory  liability  of  stockholders,  99,  104-107,  634,  635. 

.  in  national  banks,  110-114 

upon  liability  of  officers,  brought  by  bank,  119,  120, 121,  631-634, 
for  negligence,  121,  122. 

in  national  banks,  134. 
brought  by  receiver,  125. 

in  national  banks,  134. 
brought  by  stockholders,  123,  124. 

in  national  banks,  134. 
brought  by  creditors,  130,  131,  59a 
upon  statutory  liability  of  officers  for  debts,  125,  126. 
upon  liability  of  officers  to  creditors  for  negligence.  128,  129. 

in  national  banks,  134. 
for  deposit  in  insolvent  bank,  126-128, 
in  national  bank,  134,  593. 


796  INDEX. 

References  are  to  pages. 

ACTION  (continued)  — 

by  drawer  for  refusal  to  honor  check,  241-243. 

history  and  development  of  this  action,  17-19. 
by  holder  of  check  for  dishonoring  check,  243-250. 
upon  general  deposit,  287,  288. 
upon  special  deposit,  285,  286. 
by  interpleader  of  bank,  289. 
by  owner  of  collection  against  bank  for  negligence,  302. 

against  correspondent  bank,  308. 

against  notary,  308. 

for  proceeds  of  collection,  315,  621. 
by  bank  for  overpayment  or  money  wrongly  paid,  266,  269,  270,  273, 

277. 

for  usury,  335. 

for  lost  or  mutilated  bank  notes,  558,  559. 
for  illegal  bank  notes,  556. 
for  forfeiture  of  charter,  571,  650. 
for  receiver,  582,  591,  650. 
against  savings  bank,  649,  650. 

ADMINISTRATOR  (see  PERSONAL  REPRESENTATIVE)  — 
liability  upon  shares  of  stock,  see  STOCKHOLDERS. 
demand  of  payment  by  administrator,  439. 
demand  of  payment  upon  administrator,  440,  441. 
service  of  notice  by  administrator,  517. 
service  of  notice  upon  administrator,  517-519. 
survival  of  action  upon  official  neglect  against  administrator,  see 

OFFICERS. 
survival  of  statutory  liability  against,  see  STOCKHOLDERS. 

ADMISSIONS  (see  OFFICERS)  — 
by  acceptance,  see  ACCEPTANCE. 
by  officers  or  agents  of  bank,  169-171. 
are  binding  when  part  of  res  gestce,  169. 
are  binding  when  within  scope  of  the  agent's  authority,  170. 
indorsement  of  amount  for  which  discounted  upon  note  as  an  ad- 
mission of  the  bank,  621. 

AGENCY  (see  OFFICERS  OF  BANK;  CLEARING  AGENT)  — 
confused  with  bailment  and  trust,  18. 
importance  in  banking  law,  19. 
agent's  act  purely  ultra  vires  may  be  ratified,  60,  62,  63,  148,  160, 

notes  2  and  3,  167. 
forbidden  by  positive  rule  of  law  cannot  be  ratified,  60, 

63,  148. 

bank  may  appoint  agent  without  seal,  115. 
agency  for  bank  may  arise  by  estoppel,  115. 
liability  of  officer  to  bank  is  that  of  agent  to  principal,  119. 
extent  of  agent's  authority,  145,  146. 
admissions  by  agent,  see  ADMISSIONS. 

agent's  power  as  affected  by  customary  course  of  action,  159, 160. 
agent's  powers  where  agency  general,  155. 
agent  with  interest  adverse  to  principal,  161-164,  177-183. 
deposits  by  agent,  216-218,  220. 

if  paper  payable  at  bank,  bank  not  holder's  agent,  295. 
bank's  liability  for  agents  in  collecting,  306. 

whether  correspondent  bank  agent  of  owner  of  collection,  306,  307. 
whether  bank  liable  for  notary  as  agent,  308,  309. 
agent's  commission  as  usury,  332. 
bills  of  agent  on  principal  need  no  acceptance,  351. 


INDEX.  79  T 

References  are  to  pages. 

AGENCY  (continued)  — 

demand  of  payment  upon  agent  for  his  principal,  416,  417. 

death  of  agent  of  holder  excuses  delay  in  demand,  439. 

service  of  notice  of  non-payment  by  agent,  474,  475,  note  19,  487, 489, 

515. 

service  of  notice  of  non-payment  upon  agent,  481-483,  503. 
waiver  of  acceptance  or  demand  or  notice  by  agent,  527,  540. 

AGENT  OF  STOCKHOLDERS  (see  NATIONAL  BANKS)  — 
statutes  as  to,  696-699. 
is  officer  of  the  United  States,  597. 
may  sue  in  or  remove  suit  to  federal  court,  624 
indictable  under  laws  of  United  States,  597. 
payment  of  stockholders  who  have  paid  assessment,  598, 
when  stockholders  succeed  to  assets,  598. 

ALTERATION  (see  FORGED  PAPER)  — 

by  officer  without  authority  as  a  spoliation  by  a  stranger,  156. 

APPROPRIATION  OR  APPLICATION  OF  DEPOSIT  (see  DEPOSITS). 

ASSIGNEES  FOR  CREDITORS  (see  RECEIVERS)  — 

succeed  to  all  bank's  rights  and  can  enforce  them,  125. 

though    bank    declared    dissolved    by- 
statute.  125. 

can  sue  officers  for  negligence  in  managing  bank,  125. 
service  of  notice  of  non-payment  upon,  485. 

ASSIGNMENT  (see  BILLS  OF  EXCHANGE;  CHECKS)  — 
check  not  an  assignment,  245. 

bill  of  exchange  drawn  generally  not  an  assignment,  245. 
when  check  or  bill  of-  exchange  becomes  an  assignment  of  deposit, 

245. 

exceptional  rule,  245-253,  576,  note  7. 

where  deposit  cannot  be  appropriated  as  against  assignment,  232. 
of  deposit  in  savings  bank,  644. 

ASSIGNMENT  FOR  CREDITORS  (see  INSOLVENCY)  — 

banks  may  make,  with  preference  unless  forbidden,  149, 193,  574, 577. 
power  of  directors  to  make  assignment,  149,  574. 
president  cannot  make,  150. 

ATTACHMENT  (see  GARNISHMENT)  — 

no  court  has  power  to  issue  attachment  against  national  bank,  595, 

596,  628. 

of  stock  subscription,  97. 
upon  statutory  liability,  99. 
of  deposit,  220-222,  232,  644.    . 
of  special  deposit,  319. 
of  collectible  paper,  319. 
of  proceeds  of  collection.  818,  319. 
when  deposit  cannot  be  appropriated  as  against  attachment,  233, 

B. 

BAILMENTS  (see  QUASI-CONTRACT)  — 
older  than  agency  or  trust,  15. 
confused  with  agency  and  trust,  18. 

collection  to  be  made  by  bank  is  a  bailment,  17,  208-213,  293. 
deposit  was  originally  a  bailment,  16. 


793  INDEX. 

References  are  to  pages. 

BANK  (see  BANKING  POWERS;  CORPORATE  BANKS;  NATIONAL  BANKS; 

PRIVATE  BANKS)  — 
classification  of  banks,  26-28. 
definition  of  bank  and  banker,  28-33,  35. 
loan  company  not  a  bank,  29.  31. 
trust  company  receiving  deposits  not  a  bank,  32. 
trust  company  as  a  bank.  41,  note  4. 
money  changer  includes  banker,  29. 
right  of  private  banking,  33-39. 
formation  of  banks,  39-47. 
partnership  for  banking,  39. 
limited  partnership  for  banking,  40. 
joint-stock  company  for  banking,  40. 
corporate  bank,  41-45.    See  CORPORATE  BANKS. 
constitutional  provisions,  30,  33,  34 
constitutional  restrictions,  30,  35,  41,  note  4. 
state  governments  have  power  to  charter,  41.    See  STATE  BANKS. 
congress  power  to  charter  national  banks,  41. 
bank  may  be  chartered  by  general  law  or  special  act,  41,  45. 
delegation  of  power  to  charter  banks,  45. 
conditional  grant  of  charter  requires  performance,  45. 
word  "  corporation  "  need  not  be  used  in  special  act,  45. 
de  facto  banking  corporations,  see  DE  FACTO  CORPORATIONS. 
irregularities  in  forming  corporation,  46. 
name  of  corporation.  46. 

state  bank  cannot  call  itself  national,  46,  note  4,  703. 
identity  of  name  forbidden,  46. 

no  pow'er  in  one  state  to  charter  corporation  for  another  state,  46. 
necessity  for  subscription  of  whole  capital,  46. 
whether  subscription  may  be  paid  in  money  or  property,  47. 
conversion  of  state  into  national  bank,  47,  675. 
charter  of  bank  becomes  a  contract.  41,  48. 
ultra  vires  acts  of  bank,  see  UNLAWFUL  BANKING. 
legislative  regulation  of  banking,  see  LEGISLATIVE  REGULATION, 
banks  of  issue,  see  NATIONAL  BANKS;  STATE  BANKS. 
jurisdiction  of  courts  over  banks,  see  JURISDICTION. 
powers  of  banks,  see  BANKING  POWERS. 
officers  of  banks,  see  OFFICERS. 
dissolution  of  banks,  see  DISSOLUTION. 
insolvency  of  banks,  see  INSOLVENCY. 

banking  acts  must  be  done  at  bank's  place  of  business,  157,  344,  682. 
notice  to  a  bank,  see  NOTICE. 
banking  customs  and  usages,  see  CUSTOMS. 
deposits  in  banks,  see  DEPOSITS. 
collections  by  bank,  see  COLLECTIONS. 

BANK  BILLS  (see  CIRCULATING  NOTES). 
BANK  BOOKS  (see  BOOKS  OF  BANK). 
BANK  NOTES  (see  CIRCULATING  NOTES). 

BANKING  POWERS  (see  NATIONAL  BANKS;  SAVINGS  BANKS)— 
meaning  of  the  term,  27-33. 
under  revenue  statutes,  29. 

under  constitutional  and  statutory  restrictions,  30. 
under  charters,  31. 

under  penal  and  forfeiture  statutes,  33. 
in  constitutions,  30,  35. 


INDEX.  799 

References  are  to  pages. 

BANKING  POWERS  (continued)  — 

express  company  with  banking  powers,  32. 

company  issuing  negotiable  due-bills,  32. 

trust  companies  with  banking  powers,  33,  41,  note  4 

power  to  make  by-laws,  48. 

power  to  create  lien  on  its  own  shares,  49,  189. 

power  to  maintain  branches,  51. 

powers  of  a  bank  result  from  statute  or  custom,  188. 

powers  may  be  proven  by  custom,  188. 

may  be  prohibited  by  statutory  implication,  188. 
bank  dealing  in  its  own  stock,  188,  189. 
bank's  lien  upon  its  own  shares,  189. 
bank's  loaning  upon  its  own  shares,  190. 
bank  cannot  become  stockholder  in  another  corporation,  190,  191. 

unless  necessary  to  preserve  a  security,  190. 
bank  cannot  subscribe  for  stock  in  another  corporation,  190. 
engage  in  buying  and  selling  stocks,  190. 
buy  or  sell  merchandise  unless  to  preserve  security, 

191,  192. 

bank  may  take  charge  of  shipment.  191. 
bank  not  liable  where  it  collects  draft  on  shipment,  191. 

on  its  representation  as  to  goods  forwarded,  192. 
bank  to  preserve  debt  may  receive  merchandise  or  chattel  mort- 
gage, 192. 

or  assignment,  192,  193. 
acquire  elevator  stored  with  grain,  192. 
bank  may  hold  escrows  and  securities,  193. 
may  have  savings  department,  193. 

may  hold  real  property  only  as  permitted  by  statute,  193-195. 
statute  as  to  bank's  holding  real  property  is  binding  in  another  state, 

193,  note  1. 
bank's  power  to  maintain  office  buildings,  194  and  note  3. 

power  to  purchase  real  property  at  its  own  sale,  194, 195. 
power  as  to  mortgages  on  realty,  195-197. 
bank  may  mortgage  its  real  property,  197. 

may  cash  checks  upon  other  banks,  344. 

may  purchase  negotiable  paper,  197,  198,  344 

whether  power  to  discount  implies  power  to  purchase,  69,  197. 

may  transfer  or  sell  paper,  198. 

may  buy  and  sell  negotiable  bonds,  344 

may  issue  its  promissory  note,  198. 

may  borrow  money,  198,  199. 

may  issue  certificates  of  deposit,  199,  279,  554 

cannot  lend  its  credit,  199,  200. 

may  guarantee  or  indorse  paper  transferred  by  it,  199, 

may  receive  special  deposits,  199,  287. 

may  make  loans  for  customers,  344    See  191,  note  1. 

may  undertake  collections,  200. 

may  make  exchanges  of  government  bonds,  344 

may  issue  letters  of  credit,  344. 

may  issue  drafts  which  circulate  as  money,  555. 

bank  notes  unless  forbidden.  554  and  note  4 
bank's  power  to  receive  deposits  does  not  give  power  to  issue  bank 

notes,  554 

powers  of  natural  bank,  see  NATIONAL  BANKS. 
powers  of  savings  banks,  see  SAVINGS  BANKS. 

BANKRUPTCY  (see  INSOLVENCY). 


800  INDEX. 

References  are  to  pagea. 

BILLS  OF  CREDIT  — 

states  may  not  issue  bills  of  credit,  36.  note  3,  42. 

may  incorporate  bank  to  issue  bills  of  credit,  42,  555,  558. 

may  be  sole  stockholder  in  such  bank,  42. 
are  now  suppressed  by  state  bank  tax,  43. 

BILLS  OF  EXCHANGE  (see  ACCEPTANCE;  DEMAND;  NOTICE  OF  NON- 
PAYMENT) — 

drawn  generally,  not  assignments,  245. 

paper  requiring  presentation  for  acceptance,  347-349. 

notice  of  non-acceptance  necessary,  466. 

paper  not  requiring  presentation  for  acceptance,  351-353. 

if  presented  for  acceptance,  notice  of  non-acceptance  necessary,  374, 
466. 

waiver  of  acceptance,  see  ACCEPTANCE. 

acceptance  of  bill  supra  protest,  see  ACCEPTANCE  SUPRA  PROTEST. 

discharge  of  parties  to  accepted  bill,  see  ACCEPTANCE. 

accommodation  drawer  and  indorser,  see  ACCOMMODATION  PARTIES. 

drawer  and  indorser  accommodated,  see  ACCOMMODATED  PARTIES. 

guaranty  of  bill,  see  GUARANTORS. 

irregular  indorsers  of  bill,  see  IRREGULAR  INDORSEMENT. 

bills  of  exchange  must  be  demanded  at  maturity,  423,  426. 

sight  bills  or  bills  after  sight  or  demand  may  go  into  circulation  be- 
fore demand.  423. 

acceptance  may  go  into  circulation,  423. 

maturity  of  bills  of  exchange,  427.    See  DAYS  OF  GRACE, 

bills  indorsed  overdue,  430,  431. 

place  of  demand  upon  bills,  441-453. 

excuses  for  failure  to  demand,  455-465. 

when  drawer  or  indorser  entitled  to  notice,  465,  466. 

notice  of  non-payment  necessary  where  due  diligence  to  make  de- 
mand and  failure,  466. 

form  and  manner  of  notice,  see  NOTICE  OF  NON-PAYMENT. 

excuses  for  failure  to  give  notice,  521-525. 

waiver  of  demand  and  notice,  525-545. 

lost  bills  of  exchange,  see  LOST  PAPER. 

forged  bills  of  exchange,  see  FORGED  PAPER. 

altered  bills  of  exchange,  see  FORGED  PAPER. 

BILLS  OF  LADING  (see  COLLECTIONS)  — 

bank  may  hold,  to  secure  debt,  191,  192.    See  Addendum, 
bank  has  lien  upon  bill  of  lading  for  advances,  328.   See  Addendum, 
even  though  it  may  charge  draft  back,  328. 
promise  to  accept  draft  accompanied  by,  365. 
immaterial  that  goods  were  received,  360,  365,  note  1. 
bank  may  deliver  bill  of  lading  upon  acceptance,  299.    See  Adden- 
dum. 

rule  where  bill  of  lading  to  order  of  drawer,  299. 
bank  by  collecting  draft  not  liable  as  seller  of  goods,  191.    See  Ad- 
dendum, 
bank  not  liable  for  representation  as  to  goods  forwarded,  191, 192. 

BOND  — 

bank's  power  to  take  bonds  from  officers,  116. 

needs  not  conform  to  law,  116. 

needs  not  be  signed  by  officer.  117. 

binding  whether  signed  by  officer  before  or  after  entry  upon  office, 

117. 

acceptance  by  bank  presumed,  117. 
liability  upon  bond,  see  OFFICERS. 


INDEX.  8Ul 

References  are  to  pagea. 

BOOKS  OF  BANK  — 

prima  facie  correct,  208,  292  and  note  14,  292. 
admissible  with  suppletory  oath  if  original  entry,  208. 
admissible  against  bank  if  not  books  of  original  entry,  whether  ad- 
missible against  officers  without  suppletory  oath,  141. 
controlling  evidence  as  to  stockholders,  80. 
stockholder  not  bound  if  he  directed  proper  entry,  80. 
stockholders  by  estoppel  through  the  books  of  bank,  83. 
collusive  transfers,  80,  81. 
unrecorded  transfers,  85-89. 
stockholder's  right  of  access  to,  93. 
effect  of  state  statute  upon  national  banks,  93. 
entries  in  books  explainable  by  proof  of  usage,  239. 
not  conclusive  as  to  fact  of  special  deposit,  283. 

BOOK-KEEPER  — 

receipt  of  deposit  by,  157. 

demand  upon  book-keeper  at  place  of  business,  417. 

notice  served  upon  book-keeper  at  place  of  business,  478. 

BORROWING  — 

power  of  banks  to  borrow  money,  198,  199. 

BRANCH  BANKS  — 

power  of  bank  to  maintain  branches,  51. 

manager  of  a  branch  bank,  powers  of,  155. 

conversion  of  state  bank  with  branches  into  national  bank,  676. 

BROKER  — 

savings  bank  not  a,  29. 

BUSINESS  HOURS  (see  DEMAND;  NOTICE  OF  NON-PAYMENT). 

BY-LAWS  — 

power  of  bank  as  to.  48. 

creating  lien  upon  stock  by,  49. 

how  far  binding  upon  customers  of  bank,  146. 

of  savings  banks,  part  of  contract  of  deposit,  639. 

c. 

CAPITAL  STOCK  (see  SHARES;  STOCKHOLDERS). 

CASHIER  (see  OFFICERS)  — 

liability  of  cashier  as  officer,  see  OFFICERS. 
criminal  liability  of  cashier  as  officer,  see  CRIMES. 
failing  to  notify  maker  of  note,  120. 
cashier  holding  stock  not  personally  liable,  83,  note  5. 
indorsement  to  cashier  indorsement  to  bank,  620. 

may  be  sued  upon  by  bank,  620,  621. 
powers  of  cashier,  151-154. 
is  general  executive  officer  of  bank,  151. 
is  not  agent  of  board  of  directors,  152. 
may  issue  checks  of  bank,  152. 

certify  checks  upon  bank,  258. 

receive  deposits,  205,  206. 

transfer  stock,  152. 

extend  time  of  payment,  152. 

bind  bank  by  his  statements,  152. 
by  his  admissions,  169. 

51 


802  INDEX. 

References  are  to  pages. 

CASHIER  (cont'nued)  — 

may  transfer  bank's  paper,  152. 
employ  counsel,  153. 
acknowledge  deed,  153. 
cannot  transfer  judgment,  153. 

convey  real  estate,  153. 

make  contracts  out  of  his  usual  authority,  153. 

release  bank's  claims,  154. 

purchase  other  than  bankable  paper,  154 

make  accommodation  acceptances,  154. 

give  indemnity  bond,  154. 

powers  varied  by  ratification  or  course  of  dealing,  154. 
power  as  to  agreeing  to  make  loans,  191,  note  1. 
power  as  to  allowing  overdrafts,  275. 
notice  of  non-payment  to  bank  may  be  directed  to  cashier,  479,  note 

23. 

cashier  of  savings  bank  has  not  same  powers  as  other  cashiers,  637. 
may  properly  be  served  with  garnishment,  620. 
may  make  answer  thereto,  620. 
clerk  acting  for  cashier,  see  CLERK.  • 

CERTIFICATE  OF  PROTEST  (see  PROTEST). 

CERTIFICATES 'OF  DEPOSIT  — 

are  of  two  kinds,  demand  and  time,  280. 

banks,  state  and  national,  may  issue  certificates  of  deposit,  199,  279, 

554. 

payment  of  certificates  in  violation  of  injunction,  221,  note  4 
may  be  set  off  against  bank's  claim,  241. 
forged  as  to  indorser's  name,  266. 
overdue  not  negotiable,  272.  280,  281. 

lost  unindorsed  or  overdue  recoverable  without  security,  272,  280. 
do  not  draw  interest  except  by  agreement,  274 
draw  interest  from  demand,  275. 

or  suspension  of  bank,  275. 
bringing  suit  upon,  a  demand,  275. 
claiming  a  set-off,  a  demand,  275. 
sometimes  forbidden  by  statute,  279. 
but  deposit  recoverable  as  a  loan,  279. 
issued  without  consideration,  void,  279. 

except  in  hands  of  bonafide  holder,  279. 
are  negotiable,  279. 

indorser  upon,  is  indorser  of  promissory  note,  280,  405. 
demand  upon  indorser  of  certificate  of  deposit,  405. 
must  be  delivered  up  upon  payment,  280. 
are  payable  at  bank,  280. 
forged  indorsement  of,  payment  upon,  280. 
draw  interest  though  overdue,  281. 

suit  may  be  brought  upon,  without  demand,  280,  note  14,  288. 
when  document  is  a  certificate  of  deposit,  281. 
figures  governed  by  body  of  certificate,  281. 
remedy  at  law  generally,  288. 
limitation  of  actions  upon,  290. 

certificate  can  be  overcome  only  by  convincing  evidence,  292. 
not  entitled  to  priority  in  assets  of  insolvent  bank,  600. 

CERTIFIED  AND  ACCEPTED  CHECKS  (see  CHECKS;  FORGED  PAPER> 
wrongful  certification  as  a  crime,  145. 
statute  as  to  national  banks,  670,  671,  689. 
accepted  and  certified  checks  in  full,  243,  255-259. 


INDEX.  803 

References  are  to  pages. 

CERTIFIED  AND  ACCEPTED  CHECKS  (continued)  — 

if  check  certified  to  payee  or  holder,  drawer  discharged,  255,  295, 

note  3. 

if  check  certified  to  drawer,  drawer  not  discharged,  256. 
certification  granted  to  drawer  may  be  revoked,  256. 
except  to  an  indorsee  for  value,  256. 
transferee   without  indorsement  not  protected,  257, 

note  5. 
certification  to  drawee  or  holder  cannot  properly  be  revoked,  257. 

is  payment,  295,  note  3. 

but  there  is  much  authority  contra,  257,  262,  263,  264. 
president,  cashier,  board  of  directors  or  paying  teller  may  certify, 

258. 

form  of  certification  when  written,  258,  356. 
oral  certification  or  acceptance,  243,  258.  356-358. 
certification  where  drawer  has  no  funds,  258. 
certification  of  forged  or  altered  paper,  259,  262-271. 
certification  warrants  drawer's  signature,  259. 

does  not  warrant  indorsements  or  amount,  259,  266. 
bank  liable  upon  alteration  after  certification  if  negligent,  259. 
certified  check  good  until  demanded,  259. 
bank's  set-off  against  certified  check,  259. 
check  certified  to  fictitious  payee,  259. 
certified  check  not  revocable  by  drawer,  261. 
certification  of  forged  paper,  266-270. 
bank  liable  if  it  misleads  holder,  268. 
certifying  check  does  not  create  special  deposit,  282. 
collecting  bank  may  take  its  own  certified  check,  298. 
certified  checks  may  go  into  circulation,  432,  note  6. 
demand  upon  certified  checks,  437. 
not  entitled  to  priority  in  assets  of  insolvent  bank,  600. 

CHARTER  (see  CORPORATE  BANKS)  — 
of  bank,  is  a  contract,  51. 

may  be  changed  as  to  statutory  liability  by  imposing  it,  101. 
statutory  liability  cannot  be  repealed,  99. 
statutory  liability  a  (/Mast-contract,  20,  99. 
congress  power  to  charter  national  banks,  41,  48. 
special  charters  forbidden,  45. 

CHECKS  (see  CERTIFIED  AND  ACCEPTED  CHECKS;  DEMAND;  NOTICE  OF 
NON-PAYMENT)  — 

cashier  may  issue  checks  of  bank,  152. 

bank's  power  to  cash  checks  upon  other  banks,  344 

bank  cannot  payout  partnership  funds  on  check  of  one  partner,  217. 

checks  of  agent  upon  deposit  by  agent,  216-218. 

death  of  depositor,  effect  upon  checks  outstanding,  223-229. 

if  check  accepted  or  certified,  death  has  no  effect,  223. 

if  check  unaccepted,  death  revokes,  224. 
^       exceptional  rule  in  certain  states,  225-229. 

in  those  states  checks  revoked  if  unpresented,  225-229.  ,j 

insolvency  of  depositor  revokes  checks  unaccepted,  229,  230. 
except  in  certain  states  where  holder  can  sue,  230. 

liability  of  bank  to  depositor  for  dishonoring  check,  241-243. 

depositor  may  sue  for  deposit,  241. 

depositor  may  sue  for  damages.  241.' 

history  and  development  of  this  action,  17-19. 

is  a  survival  of  the  law  of  bailment,  17-19. 

damages  recoverable  in  this  action,  242. 


804  INDEX. 

References  are  to  pages. 

CHECKS  (continued)  — 

bank  not  liable  to  holder  of  unaccepted  check,  243-245. 

acceptance  of  checks,  see  CERTIFIED  AND  ACCEPTED  CHECKS 

check  not  an  assignment,  245. 

unless  so  made  by  agreement,  245. 

exceptional  rule  that  bank  is  liable  to  holder  of  check,  245-253. 

necessary  under  the  rule  that  check  be  presented,  246. 

unfortunate  results  of  this  rule,  228,  note  26,  229,  note  2, 233,  note  22, 
586,  note  13. 

confusing  effect  upon  law  in  Illinois,  250,  note  30. 

must  be  paid  in  order  of  presentation,  254. 

bank  must  pay  as  directed  by  depositor,  255,  note  5. 

checks  payable  to  fictitious  payees,  see  FICTITIOUS  PAYEES. 

date  upon  checks,  260. 

if  without  date,  payable  upon  demand,  260. 

post-dated  check  is  bill  of  exchange,  261. 

may  be  revoked  prior  to  acceptance,  261. 

in  some  states  revocable  prior  to  presentation,  262. 

unless  against  bonaflde  holders,  228,  note  26. 

bank  paying  revoked  check  liable  to  depositor,  262. 

liable  to  payee,  262. 

payment  of  forged  or  altered  checks,  262-271.    See  FORGED  PAPER, 

bank  cannot  charge  forged  check  to  depositor,  265. 

lost  checks  if  negotiable  in  form  pass  title  to  bona  fide  holder,  272. 
bank  may  charge  to  depositor,  when,  272. 
not  negotiable  in  form,  governed  by  rules  as  to  forged 
paper,  272. 

overpayment  of  check  may  be  recovered  by  bank,  273. 

partial  payment  of  check  cannot  be  required,  237,  note  7,  255,  436, 
note  28. 

payment  to  wrong  person  recoverable  by  bank,  273. 
but  not  if  payee  without  fault.  273. 

depositor  cannot  recover  from  one  to  whom  check  wrongly  paid,  273. 

payee  of  check  cannot  recover  from  one  to  whom  check  wrongly 
paid,  273. 

payment  of  genuine  check  to  payee  final,  274. 

checks  over  drawing  deposit,  see  OVERDRAFTS. 

check  may  be  taken  by  collecting  bank  for  a  collection  if  it  use  due 
diligence  as  to  cashing  the  check,  299,  303,  note  7. 

what  is  due  diligence  in  cashing  check  taken  for  collection,  434, 435. 

no  presentment  for  acceptance  needed  upon  checks,  unless  post- 
dated, 348,  349. 

if  acceptance  of  check  refused,  notice  must  be  given,  389. 

if  acceptance  refused,  check  needs  no  presentment  for  payment, 
389,  390. 

drawer  not  notified,  released  only  to  extent  of  his  injury,  387,  395, 
435. 

must  have  had  credit  to  amount  of  check  when  bank  failed,  436,  437. 

partial  payment  of  check  cannot  be  enforced,  but  bank  may  bind 
itself  to  make  partial  payment,  237,  note  7. 

accommodation  parties  to  checks,  see  ACCOMMODATION  PARTIES. 

accommodated  parties  to  checks,  see  ACCOMMODATED  PARTIES. 

indorser  of  check  released  by  failure  to  demand  unless  accommo- 
dated by  check,  396. 

payment  of  checks  must  be  demanded  next  day  if  in  same  place, 
432. 

check  may  be  forwarded  upon  next  day,  432. 

may  be  deposited  in  bank  on  next  day,  433. 


INDEX.  805 

References  are  to  pages. 

CHECKS  (continued)  — 

loss  of  check  excuses  resulting  delay,  434 
depreciation  in  money  deposited  as  loss  to  drawer,  436. 
checks  by  banks  upon  other  banks  are  checks,  348,  437. 

may  be  put  into  circulation.  432,  note  6. 

insolvency  of  bank  or  assignment  of  drawer  excuse  for  lack  of  de- 
mand upon  check.  458,  461. 
checks  as  set-off,  587. 

presented  checks  as  set-off,  when  check  an  assignment,  586. 
effect  of  assignment  for  creditors  upon  checks,  576,  note  9. 
when  overdue  so  as  to  admit  defenses,  433,  note  8. 
whether  they  may  go  into  circulation,  432,  note  6. 

CIRCULATING  NOTES  (see  NATIONAL  BANKS)  — 

power  of  legislature  to  prohibit  foreign  bank  notes,  76. 

bank  notes  received  as  money  are  general  deposit  of  money  in  bank, 

205. 

power  of  banks  to  issue  circulating  notes,  554,  note  4,  555,  556. 
power  of  national  banks,  see  NATIONAL  BANKS. 
state  may  incorporate  bank  to  issue  bills  of  credit,  36,  note  3,  42, 555, 

556. 

notes  of  private  banker  depend  upon  statutory  prohibition,  554. 
notes  of  corporation  depend  upon  grant  of  power,  554 
right  of  state  to  restrict  power  to  bsue  circulating  notes,  33-35. 
right  of  state  to  make  such  power  a  franchise,  33,  35. 
certificates  of  deposit  not  circulating  notes,  554. 
power  to  receive  deposits  does  not  give  power  to  issue  circulating 

notes,  554. 
insurance  company,  canal  company  or  loan  company  has  no  power 

to  issue  circulating  notes.  554,  555. 
army  sutler  issuing  notes,  555. 
drafts  to  circulate  as  money  not  notes,  555. 
notes  not  to  be  returned  for  a  period,  555. 
municipal  corporations  have  no  power  to  issue,  555. 
must  be  an  intent  to  violate  act  against  illegal  notes,  556. 
recovery  may  be  had  on  illegal  notes,  556. 

where  parties  are  not  in  pari  delicto,  556. 

state  bank  tax  suppresses  circulating  notes  of  state  banks,  44,  557. 
state  bank  tax  statute,  44,  note  1. 
instances  of  statutes  to  compel  state  banks  to  maintain  their  notes 

at  par,  557. 
pass  by  delivery,  557. 
if  lost,  recovery  may  be  had,  when,  558. 
if  destroyed,  recovery  may  be  had,  when,  558. 
if  half  of  note  lost,  recovery  may  be  had,  558,  559. 
worn-out  notes  may  be  recovered  for,  559. 
illegal  notes  binding  in  hands  of  bonafide  holder,  559. 
payment  of  notes  must  be  in  specie,  559. 
interest  must  be  paid  from  demand,  560. 
agreement  with  third  person  to  redeem  notes,  561. 
partners'  liability  on  notes,  561. 
stockholders'  liability  for  notes  of  bank,  561. 

payment  of  note,  whether  a  discharge,  563. 
liability  survives  dissolution  of  bank,  561. 
iirectors'  liability  upon  notes,  562,  563. 
remedies  against  bank  upon  notes,  562,  563. 
statute  of  limitations  upon,  runs  from  demand,  563. 
suspension  dispenses  with  demand.  563. 
when  demand  should  be  proven,  563. 
parties  to  actions  against  stockholders,  563. 


806  INDEX. 

References  are  to  pages. 

CIRCULATING  NOTES  (continued)  — 

description  of  notes  in  pleading,  563,  564. 

illegal  organization  of  bank  no  defense  upon,  564. 

for  stockholders'  liability,  see  STOCKHOLDERS. 

notes  of  insolvent  banks,  590. 

sometimes  holders  given  preference  on  assets,  590. 

notes,  how  far  a  set-off,  590,  591. 

extent  of  recovery,  590. 

transferred,  whether  a  set-off  against  assignee  or  receiver,  590. 

CLEARING  AGENT  (see  CLEARING-HOUSE;  — 
rights  and  duties  of,  657,  658. 
recovery  by  clearing  agent  upon  check  paid  for  his  principal,  658, 

notes  1  and  2. 

whether  entitled  to  a  lien  for  payments  made  after  notice  of  insolv- 
ency, 660,  661. 

CLEARING-HOUSE  — 

presentment  of  paper  for  payment  through,  is  due  diligence,  299. 
notice  not  necessary  upon  clearing-house  dishonor,  but  demand 

should  be  made  directly  from  bank,  471,  note  47. 
nature  of  clearing-house,  654. 

may  sue  as  a  voluntary  association,  654,  note  1,  655,  note  1. 
it  is  not  a  bank,  but  is  a  voluntary  association,  654,  note  1,  655,  note  1. 
certificates  of  clearing-house  are  negotiable,  655,  note  1. 

whether  they  are  currency,  557,  655,  683. 

national  bank  act  makes  them  part  of  lawful  money  reserve,  683. 

whether  taxable  under  state  bank  tax,  557,  655. 
rule  of,  in  regard  to  indorsements,  see  Addendum, 
rules  of,  bind  only  members,  656. 
mutual  credits  revocable  under  this  rule,  656. 
rule  in  particular  jurisdiction,  656. 
effect  or  rule  upon  payment  of  forged  paper,  271. 
settlements  through,  when  not  binding,  236,  note  7,  658,  659. 
do  not  inure  to  customers  of  banks,  658. 
lien  of  clearing-house,  660,  661. 

does  not  give  right  to  a  preference  after  notice  of  insolvency, 
660.  661. 

CLERK— 

acting  for  cashier,  powers  of,  155. 
powers  of,  in  savings  bank,  637,  638. 

COLLATERALS  (see  LOANS)  — 

for  bills  of  lading  as,  see  Addendum;  BILLS  OF  LADING. 

COLLECTIONS  — 

the  duty  enjoined  by  acceptance  of  collection  a  gram-contract,  17, 

294. 

modifying  special  agreements  or  stipulations,  must  be  proven,  294. 
it  is  a  bailment  defined  by  custom,  17,  293. 
contract  need  not  be  proven,  simply  the  relation,  294. 
confused  with  agency  and  trust,  18,  293. 
power  of  bank  to  undertake  collections,  200. 
deposit  of  collectible  paper  with  bank,  208-213. 
bank  may  either  discount  or  hold  and  collect,  294 
transaction  may  be  a  purchase.  208. 

deposit  of  paper  on  another  bank  or  person  a  bailment,  208,  210-212. 
contrary  rule  held  in  some  jurisdictions.  211. 
when  paper  collected  it  becomes  a  general  deposit,  209,  301. 
action  on  case  does  not  lie  for  proceeds  properly  credited,  621. 


INDEX.  807 

References  are  to  pages. 

COLLECTIONS  (continued)  — 

unless  a  different  agreement,  express  or  arising  from  course  of  deal- 
ing, 209,  301. 
deposit  and  credit  of  paper  on  same  bank  is  payment,  209. 

relation  that  of  depositor,  294. 
collection  is  complete  when  credits  are  given  between  banks,  210, 

300,  note  2. 
bank  cannot  by  contract  limit  its  own  negligence,  294,  305,  note  5. 

640,  645. 

collection  duty  governed  by  law  of  state  where  to  be  made,  295. 
if  paper  made  payable  at  bank,  bank  not  holder's  agent,  295. 
but  holder  may  make  bank  at  which  payable  his  bailee,  295. 
in  such  case  bank  held  to  all  duties  of  collecting  agent,  295. 
if  bank  made  agent  has  funds  and  does  not  credit  it  is  liable,  296. 
but  may  revoke  credit  before  communication,  296*—- 
bank  may  pay  out  of  general  deposit  paper  payable  at  bank,  296. 
if  it  does  not  credit  the  deposit  upon  a  collection  taken  by  it,  it 

makes  the  paper  its  own,  296. 
except  where  bank  has  no  right  to  pay,  296. 
power  to  collect  may  be  revoked,  296. 

is  revoked  by  injunction,  296. 

by  insolvency  of  bank,  297. 

if  bank  insolvent  when  it  took  collection,  power  not  granted,  297. 
bank  has  lien  on  proceeds  of  collection,  if  general  deposit.  297. 

particular  agreement  or  course  of  dealing  prevents  lien.  297. 
correspondent  bank  has  no  lien  on  proceeds  where  it  has  notice  of 

the  fielder's  ownership,  297,  298. 
banks  cannot  control  the  indorsement  on  paper,  316. 
indorsement  for  collection  is  notice,  208,  297,  316. 

for  collection  and  credit  is  notice,  297,  316. 
for  account  is  notice.  297,  316. 
for  credit  is  notice,  297. 
general  indorsement  is  not  notice,  209,  297. 
correspondent  bank  without  notice  may  hold  lien  for  its  claim 

against  remitting  bank,  298. 
if  it  has  one  by  agreement  or  has  given  credit  to  the  remitting 

bank  on  the  strength  of  the  particular  paper,  298,  316. 
authority  of  collecting  bank,  298. 

collecting  bank  can  take  nothing  but  money  except  at  its  risk,  298. 
under  custom  may  take  its  own  certificate  of  deposit,  298,  303. 
without  custom  may  take  its  own  certified  check,  298. 
collecting  bank  may  take  check  if  it  use  due  diligence  in  collecting 

the  check,  299,  303,  note  7. 
when  it  shows  due  diligence,  434,  435. 

presentment  of  collection  through  clearing-house  due  diligence,  299. 
owner  may  waive  bank's  negligence  and  claim  what  it  received, 

299,  301. 

bank  may  surrender  bill  of  lading  if  draft  accepted,  299.    See  Ad- 
dendum, 
bank's  power  to  employ  agents  for  owner,  305,  306. 

varying  rule  as  to  this  matter,  299,  306. 

bank  has  no  power  to  employ  attorney  for  owner  or  bring  suit,  299. 
bank  must  employ  attorney  if  so  instructed,  303. 
liability  of  bank  upon  collection,  300. 

bank  collecting  liable  to  person  from  whom  it  wrongly  collects,  300. 
not  liable  where  it  collected  as  agent  and  has  paid 

over  proceeds,  300,  note  1.    See  Addendum, 
liable  to  person  for  whom  it  collects  for  proceeds, 
301. 


808  INDEX. 

References  are  to  pages. 

COLLECTIONS  (continued)— 

bank  collecting  may  correct  mistake  if  it  has  not  paid  over,  800, 

note  1. 
collection  is  paid  when  proceeds  received  by  collecting  agent,  300, 

note  2. 

duty  of  bank  in  collecting,  302. 
bank  must  follow  instructions  given,  294 

may  follow  customs  of  business,  303,  304,  note  16. 
if  no  demand  made,  bank  makes  paper  its  own,  303. 
bank  must  present  at  proper  time  for  acceptance  and  payment,  302, 

303. 

ascertain  residence  of  party  liable,  303. 
liable  if  accepted  in  wrong  name,  304,  note  16. 
cannot  defer  holder's  claim  to  its  own,  30-1. 
drawer  is  presumed  solvent  if  bank  does  not  present  and  protest 

paper,  303. 

——bank  must  give  notice  of  non-acceptance  or  non-payment,  804. 
fire  at  bank  no  excuse,  304,  note  16. 
bank  must  notify  all  indorsers,  304,  note  17. 

present  at  bank  where  payable,  304. 
if  paper  indorsed  generally,  bank  may  so  indorse,  304. 
correspondent  bank  liable  as  transmitting  bank  is  liable,  805. 
bank  employing  as  its  agent  bank  where  paper  payable  is  negligent. 

305. 
negligent  for  sending  paper  directly  to  bank  where  payable, 

305. 

liable  for  failure  in  ordinary  care  in  selecting  agent,  305. 
varying  rule  as  to  bank's  liability  for  correspondent  bank's  defaults, 

18,  308,  309. 

bank  not  liable  where  owner  selected  and  treated  with  correspond- 
ent, 315.  note  4. 
varying  rule  as  to  whether  bank  liable  for  its  notary's  defaults,  308, 

309. 

bank  using  its  own  notary,  309. 
waiver  of  bank's  negligence  by  holder,  309. 
acceptance  by  holder  of  something  else  than  money,  309. 
withdrawal  of  collection  not  .a  waiver.  309. 
actions  for  negligence  in  collecting,  310-313. 
owner  of  collection  must  sue  first  bank  where  that  bank  liable  for 

its  correspondent's  defaults,  310. 
owner  of  collection  cannot  sue  correspondent  bank,  310. 

may  sue  correspondent  bank  where  the  first 

bank  is  not  liable  for  it,  310. 

the  first  bank  may  also  sue  correspondent,  308,  note  32. 
only  the  existence  of  the  relation  and  the  duty  needs  be  alleged,  810. 
contract,  unless  special,  need  not  be  shown,  310. 
damage  must  be  shown,  311. 
presumption  of  solvency  of  drawers,  303. 

proof  as  to  solvency  of  parties  released  and  insolvency  of  those  re- 
maining liable,  311. 

no  consideration  needs  be  averred,  311. 
loss  of  paper  raises  a  presumption  of  negligence,  811. 
delivery  to  bank  at  which  payable  must  be  averred  to  have  resulted 

in  loss  of  the  paper  or  amount,  311. 
insolvency  of  parties  released  provable  in  mitigation  of  damages, 

311. 
for  negligence  as  to  check,  its  collectibility  should  be  shown,  812. 

insolvency  of  drawer  should  appear,  312. 


INDEX.  809 

References  are  to  pages. 

COLLECTIONS  (continued)  — 

possession  of  collateral  provable  in  mitigation  of  damages,  312. 

return  of  nulla  bona  or  general  reputation  proves  insolvency,  813. 

payments  after  negligence  occurred  provable  in  mitigation,  312. 

measure  of  recovery  for  paper  a  total  loss  is  face  value,  313. 

rule  does  not  apply  to  non-negotiable  paper,  313. 

rights  in  proceeds  of  collection,  313-325. 

form  of  indorsement  not  material  between  bank  and  depositor,  315. 

actual  agreement  governs,  315. 

paper  deposited  for  credit,  proceeds  of  collection  belong  to  depositor 

until  final  crediting  in  first  bank,  315. 
owner  may  claim  it  against  the  whole  world,  315. 

except  as  against  correspondent  bank  with  lien,  315. 
deposit  for  credit  does  not  pass  title  even  in  states  which  hold  such 
deposit  an  absolute  sale  of  the  paper,  where  owner  treated  with 
correspondent  bank,  315,  note  4. 
primary  bank  has  lien  if  proceeds  would  become  a  general  deposit, 

316. 

has  lien  for  credit  given  on  the  paper,  316. 
garnishment  of  proceeds  of  paper,  318.  . 

uncollected  paper  cannot  be  garnished,  318. 
proceeds  received  and  credited  may  be  garnished,  319. 
proceeds  as  a  special  deposit  in  primary  bank,  319. 
proceeds  of  collection  deposited  with  insolvent  bank,  319. 
primary  bank  having  received  proceeds  must  credit  or  pay  over,  320. 
unless  enjoined,  garnished  or  proceeds  claimed  by  true  owner, 

320. 

may  recover  from  holder  if  it  pays  supposed  proceeds  by  mis- 
take. 320. 

may  revoke  credit  mistakenly  given,  320. 
depreciation  in  medium  of  payment  falls  on  bank  holding  proceeds, 

321. 

proceeds  as  between  banks.  321. 
secondary  bank  crediting  primary  bank  by  mistake  may  recover, 

321. 

cannot  cut  off  owner's  claim,  321. 
bound  by  injunction  against  primary  bank,  321, 

note  8. 
proceeds  of  collection,  a  general  deposit  not  entitled  to- priority  in 

insolvent  bank,  600. 
improperly  credited  as  a  general  deposit  have 

priority,  609. 
varying  holdings  as  to  proceeds  of  collections, 

609-614 
where  owner  may  claim  priority  in  primary  bank,  610,  611. 

may  claim  priority  in  secondary  bank,  611,  612. 
proceeds  of  collection  where  paper  deposited  in  insolvent  bank,  615. 
varying  holdings  as  to,  615,  616. 

COMITY  (see  CONFLICT  OP  LAWS). 

COMPTROLLER  OF  THE  CURRENCY  — 
bureau  of.  663. 
office  of,  663. 
bond  and  oath  of,  663. 
deputy  of,  663. 
clerks  of,  663. 
seal  of,  664. 
cannot  be  interested  in  national  bank,  664 


810  INDEX. 

References  are  to  pages. 

COMPTROLLER  OF  THE  CURRENCY  (continued)  — 

enjoining  comptroller,  665,  701. 

examination  prior  to  incorporation,  678. 

certificate  of  authority,  679. 

certificate  is  conclusive,  78. 

reports  to,  690. 

returns  to,  691. 

appointment  of  receivers  by,  695. 

appointment  presumed  to  be  by  secretary  of  treasury,  592. 

power  over  national  banks,  74. 

power  to  appoint  receiver,  74,  591,  695s 
for  failure  to  redeem  notes,  74,  695. 
or  upon  insolvency,  74,  591,  695. 

power  to  permit  increase  or  decrease  of  national  bank's  capital,  77, 

statute  as  to  increase  or  decrease,  672,  673,  687,  688. 

certificate  of  increase  or  decrease  conclusive,  78  and  note  4. 

cannot  grant  certificate  of  increase  after  insolvency,  78,  note  7. 

no  increase  until  certificate  issued,  78. 

until  certificate  issued  bank  is  trustee  for  increase  paid,  78. 

if  increase  not  allowed  no  subscription  is  made,  78. 

determines  amount  of  assessment  upon  stockholders  if  bank  insolv- 
ent, 107. 

assessment  is  conclusive,  110,  112. 

may  make  second  assessment  up  to  full  liability,  112,  note  11. 

receiver  may  bring  suit  against  officers  without  order  from,  134, 
593,  note  14,  594. 

decision  as  to  insolvency  conclusive,  112,  note  16,  592. 

CONFLICT  OF  LAWS  — 

as  to  private  banking,  56,  57. 

as  to  partnerships,  40. 

power  of  one  state  to  charter  bank  for  another  state,  46. 

legislature  has  power  to  forbid  foreign  banks  doing  business  in  state, 

75, 76. 

can  prohibit  foreign  bank  notes,  76. 

state  statutes  as  to  foreign  banks  do  not  affect  national  banks,  75. 
state  regulations  of  national  banks,  71,  74 
conveyances  prohibited  by  state  law  are  prohibited  to  national 

banks,  74. 

national  bank  not  governed  by  state.statute  as  to  transfers,  85. 
national  bank  needs  not  file  agent's  name  under  state  law,  75. 
state  may  define  act  of  national  banker  as  a  crime,  75,  notes  4  and  5, 

142,  336. 
usury  statute  against  national  banks  exclusive  of  state  legislation, 

75,  335,  336. 
corporation  forbidden  by  state  statute  to  set  up  usury  may  do  so 

under  national  bank  act,  338. 
taxation  of  national  banks  by  state,  51-53. 
national  bank  bound  by  state  law  as  to  inspection  of  books,  93. 
statutory  liability  may  be  enforced  in  another  state,  100. 
special  remedy  will  not  be  given  in  another  state,  100. 
federal  court  will  not  apply  state  statute  as  to  filing  state  reports, 

73,  620. 

collection  governed  by  law  of  state  where  collection  to  be  made,  295. 
acceptance  governed  by  law  of  place  for  acceptance,  354. 
demand  and  notice  governed  by  law  where  instrument  payable,  385, 

386. 
form  of  certificate  of  protest  governed  by  the  law  where  protest 

made,  545. 


INDEX.  811 

References  are  to  pages. 

CONFLICT  OF  LAWS  (continued)  — 

admissibility  of  certificate  as  evidence  governed  by  law  of  place  of 

trial,  546. 
law  giving  preference  to  savings  bank  does  not  apply  to  national 

banks,  618. 

state  statute  as  to  service  governs  federal  court,  51,  note  5. 
state  statute  as  to  banks  holding  real  property  binding  in  another 

state,  193,  note  1. 
law  governing  performance  of  contract  governs  rate  of  interest,  330. 

CONSIDERATION  — 

for  reception  of  special  deposit,  199. 

for  assumption  of  duty  of  collection,  18,  310,  note  7. 

for  acceptance  of  negotiable  paper,  358. 

non-negotiable  paper,  358. 
for  promise  to  pay  existing  bill,  366. 
for  promise  to  accept  existing  bill,  361-363. 
for  waiver  of  demand  and  notice  before  maturity,  535,  536. 

after  maturity,  540. 

illegal  notes  as  a  consideration  for  a  contract,  58,  note  1,  556. 

for  a  guaranty,  328. 

CONSOLIDATION  OF  CORPORATIONS  (see  REORGANIZATION). 

CONSTITUTIONS  — 

provisions  in  regard  to  banking,  30,  33.  34. 

provisions  requiring  banking  laws  to  be  adopted  by  popular  vote,  41r 

note  4 
latter  provisions  do  not  apply  to  crimes,  137. 

CONTRACT  — 

charter  of  bank  as  a  contract,  48. 
statutory  liability  of  stockholders  as  a  contract,  98,  99. 
duty  of  banker  to  honor  check,  whether  a,  17. 
duty  of  collection,  whether  a,  17. 

CONVERSION  - 

by  national  bank  of  its  own  shares,  189. 
whether  trover  lies,  189. 
of  state  into  national  banks,  47,  675. 
of  gold  banks  into  national,  675,  676. 

CORPORATE  BANKS  (see  DE  FACTO  BANKS;  NATIONAL  BANKS;  SAV- 
INGS BANKS)  — 
classification  of  banks,  26,  28. 
definition  of  term  "  bank,"  27-33,  41,  note  4 
joint-stock  company  may  amount  to  a  corporation,  40. 
formation  of  corporate  banks,  41-45. 
in  states  and  territories  legislature  power  to  charter,  41. 
constitutional  restrictions  upon,  30,  33,  84,  41,  note  4 
state  may  incorporate  bank  to  issue  bills  of  credit,  42,  555,  556. 
state  may  charter  banks  by  general  law  or  special  charter,  41,  45. 
special  charters  forbidden,  41,  45. 

banks  irregularly  formed  may  be  made  regular  by  legislation,  59. 
such  legislation  is  not  special,  59. 
congress  has  power  to  charter  national  banks,  41. 
delegation  of  power  to  charter,  45. 
conditional  grant  of  charter  requires  performance,  45. 


812  INDEX. 


CORPORATE  BANKS  (continued)  — 

the  word  '•  corporation  "  need  not  to  be  used  in  act,  45. 

de  facto  banks,  46. 

irregularities  in  formation  to  be  objected  only  by  the  state,  48. 

provisions  for  name,  46. 

same  name  forbidden  to  more  than  one  bank,  46. 

whole  capital  must  be  subscribed,  46. 

payment  of  capital  stock,  how  made,  46,  47. 

state  banks  cannot  call  themselves  national,  46,  note  4,  703. 

certificate  of  incorporation  evidence  of  due  incorporation,  47. 

not  the  only  evidence,  47. 

conversion  of  state  into  national  banks,  47,  675. 
conversion  of  state  bank  with  branches,  676. 
conversion  of  gold  bank  into  national  bank,  675. 
conversion  of  banks  in  District  of  Columbia,  48. 
old  board  of  directors  may  act  after  conversion,  47. 
non-voting  stock  cannot  vote  on  conversion,  47. 
national  bank  succeeds  to  all  property  of  converted  bank,  48. 

which  succeeds  may  be  sued,  48. 

charter  of  bank  becomes  a  contract  alterable  only  by  authority,  48. 
power  of  corporate  bank  as  to  branches,  51. 
powers  of  bank,  see  BANKING  POWERS. 
power  to  create  lien  on  its  own  stock,  see  LIEN. 
state  bank  tax  suppressing  state  banks  of  issue,  44,  557. 
proof  of  corporate  existence,  49,  50. 
in  quo  warranto,  49. 
in  collateral  proceedings,  49. 

by  certificate,  49,  50. 

proof  of  user,  49. 

general  reputation,  49. 

under  statutes,  50,  note  8. 
corporate  existence  illegal,  50. 
illegal  corporations,  see  UNLAWFUL  BANKING. 

formed  under  unconstitutional  law,  58. 

liability  of  corporators  of  illegal  corporation,  see  PARTNERSHIP. 
acts  of  officers,  see  OFFICERS. 

legislative  regulation  of  banks,  see  LEGISLATIVE  REGULATION. 
license  taxes  upon  banks  must  be  reasonable,  72. 
state  banks  of  issue,  deposit  of  funds,  73.   See  STATE  BANK  TAX. 
examiners  of  state  banks,  74 
stockholders  of  bank,  see  STOCKHOLDERS. 
shares  of  stock,  see  STOCK. 
dissolution  of  banks,  see  DISSOLUTION. 
forfeiture  of  charter,  see  DISSOLUTION. 
insolvency  of  banks,  see  INSOLVENCY. 
receivers  of  banks,  see  RECEIVERS. 

CORRESPONDENT  BANK  — 

liability  of  collecting  bank  for  its  correspondents,  see  COLLECTIONS. 
right  of  correspondent  bank  to  proceeds  of  collection,  see  COLLEC- 
TIONS. 

COSTS  — 

in  creditors'  actions  against  bank  and  officers,  595. 

COUPONS  (see  INTEREST  COUPONS). 
COURTS  (see  JURISDICTIONX 


INDEX. 

References  are  to  pages. 

CREDITORS  — 

right  to  sue  in  equity  upon  stock  subscription,  97. 

directors  for  false  representations,  126-128. 

for  receiving  deposits  in  insolvent  bank.  129. 

130,  134. 

stockholders  for  statutory  liability,  103,  108. 
to  enforce  statutory  liability  in  national  banks,  103, 118, 

594. 

to  enforce  claims  of  bank  against  officers,  130, 181. 
to  enforce  bank's  claim   against  officers  in  national 

banks,  134,  593. 

costs  in  creditors'  action  against  national  bank,  595. 
cannot  set  up  usury  even  if  judgment  creditors,  339. 
for  priorities  among,  see  PRIORITIES. 
who  are  general  creditors,  599-602,  603  and  note  10. 

CRIMES  — 

unlawful  banking  as  a  crime,  70. 

whether  offenses  at  common  law  or  under  statute,  135, 1361 

receipt  of  deposit  in  insolvent  bank,  136. 

exception  where  depositor  indebted  to  bank,  136. 

deposit  needs  not  be  made  in  banking  room,  136. 
knowledge  of  insolvency  an  element,  136. 

dispensed  with  by  one  statute,  137. 

fraud  in  selling  draft  knowing  bank  insolvent,  137. 
statutes  as  to  crime  do  not  need  popular  approval,  137. 
false  returns  and  reports  as  crimes,  137,  138. 
conversion  of  bank  bills,  138. 
wrongful  overdraft  as  a  crime,  138. 
false  returns  by  national  bank  officers,  138. 

require  two  intents,  138. 
overdrafts  returned  as  loans,  140. 
false  entries  in  national  banks,  143. 
statutes  as  to  false  returns  and  false  entries,  689. 
embezzlement  and  misapplication  of  funds  of  national  banks,  14& 

statute  as  to,  689. 
wrongfully  certifying  check,  145. 

statute  as  to  certifying  in  national  banks,  670,  671,  689. 
forgery  of  note  to  deceive  examiner,  145. 
wrongful  issuance  of  bank  notes  of  national  banks,  681. 
imitation  of  national  bank  notes,  681. 
mutilation  of  national  bank  notes,  682. 
offenses  by  national  bank  officers,  687,  689. 
agent  of  stockholders  indictable  as  officer  of  United  States,  597. 

CURRENCY  (see  LEGAL  TENDER)  — 

evils  of  a  fluctuating,  43,  note  5,  44,  note  2,  321,  332,  341,  436,  557,  562, 

563,  590,  591. 

bank  notes  as  currency,  see  CIRCULATING  NOTES;  NATIONAL  BANKS. 
bank  notes  as  legal  tender,  see  NATIONAL  BANKS;  LEGAL  TENDER. 
clearing-house  certificates  as,  557,  655,  683. 

CUSTOMS  AND  USAGES  — 

the  foundation  of  the  customary  duty  of  bank  in  collecting,  17,  1&. 

the  foundation  of  depositor's  right  against  bank,  16, 17. 

help  to  define  authority  of  officers,  145,  146. 

help  to  define  powers  of  the  bank,  188. 

have  lai-ge  influence  in  banking  law,  21, 184 

must  be  lawful,  184. 


INDEX. 

References  are  to  pages. 

CUSTOMS  AND  USAGES  (continued)  — 

cannot  abolish  days  of  grace  given  by  statute,  184. 

cannot  increase  legal  rate  of  interest,  185. 

cannot  create  a  legal  tender,  238,  note  22. 

must  be  reasonable,  185. 

must  be  known  to  party  to  be  charged,  186,  188. 

bank  is  bound  by  its  own  usages,  187. 

cannot  abrogate  without  notice,  187. 
change  of  usage  does  not  affect  one  without  notice,  188. 
notice  or  knowledge  may  be  actual  or  constructive,  187. 
constructive  notice  from  notoriety,  187. 
customs  of  bank  apply  to  those  who  make  or  indorse  paper  payable 

at  bank,  187,  note  7.  453. 
usage  of  bank  as  to  demand,  453. 

demand  without  presence  of  paper  demanded,  417,  note  2,  419, 
note  12,  454. 

demand  upon  paper  due  Sunday,  438. 

a  part  of  contract  upon  paper  payable  at  bank,  453. 

unless  contrary  to  law,  454. 

as  to  days  of  grace,  454.    See  DAYS  OF  GRACE. 
usage  of  bank  as  to  notice  of  non-payment,  187,  519,  520. 

who  bound  by  the  usage,  187,  520. 
usages  as  to  mailing  notices,  520. 
usage  of  bank  as  to  collections,  298. 

may  act  according  to  established  customs,  303,  304,  note  16. 

may  take  its  own  certificate  of  deposit,  298. 
holidays  by  custom,  438,  453. 
Saturday  a  half  holiday,  453. 

D. 

DAMAGES  — 

for  dishonoring  check,  see  DEPOSITS. 
for  failing  in  collection,  see  COLLECTIONS, 

DAYS  OF  GRACE  — 

custom  may  abolish  where  not  created  by  statute,  184,  454. 

checks  not  entitled  to  days  of  grace,  432. 

post-dated  checks  entitled  to  grace.  432. 

demand  bills  not  entitled  to  days  of  grace,  427. 

bills  of  exchange  at  or  after  sight  or  due  after  date  entitled  to  grace, 

427. 

promissory  notes  entitled  to  grace,  428. 
acceptances  entitled  to  grace,  427. 
usage  to  make  demand  upon  first  day  of  grace,  454. 

to  make  demand  upon  paper  maturing  Sunday  upon  Monday, 

454. 
to  give  notice  upon  next  day  after  fourth  day  of  grace,  520. 

DEATH  — 

effect  upon  check  outstanding.  223-229. 

liability  of  officer  survives,  123. 

liability  of  stockholder  survives,  see  STOCKHOLDERS. 

effect  upon  demand,  439-441. 

agent's  death  excusing  delay,  439. 

effect  upon  notice,  517-519. 

agent's  death  excusing  delay,  517. 

of  notary,  see  PROTEST. 


INDEX.  815 

References  are  to  pages. 

DE  FACTO  CORPORATIONS  — 
banks  irregularly  organized,  46. 
irregular  organization  curable  by  legislative  act,  59. 
irregularities  cannot  be  urged  collaterally,  59. 

unless  the  act  not  done  was  a  condition  precedent,  59. 
cannot  be  a  bank  de  facto  unless  a  de  jure  bank  was  possible,  58. 
a  bank  formed  under  an  unconstitutional  law  is  not  de  facto,  58. 
but  it  has  been  held  that  debtor  cannot  make  objection,  58, 
note  1. 

DE  FACTO  JOINT-STOCK  COMPANY  — 

if  joint-stock  company  not  properly  formed  it  is  a  general  partner- 
ship, 40. 
gucere,  whether  it  might  not  become  a  corporation,  40. 

DE  FACTO  NOTARY  — 

may  make  demand  and  protest,  409. 

DE  FACTO  OFFICERS  — 
acts  bind  bank,  115,  116. 

DEMAND  (see  ACCEPTANCE;  WAIVER)  — 

presentation  for  payment  of  collectible  paper  in  full,  885-465. 

is  governed  by  law  of  place  of  demand,  which  is  where  payable,  385, 

386. 

rules  for  ascertaining  where  paper  payable,  386. 
necessary  of  accepted  bill  as  to  drawer.  388,  390. 

indorser,  388,  390. 
acceptor  supra  protest,  387,  390. 
iinless  payable  at  particular  place,  388. 
waiver  of  acceptance  does  not  dispense  with  demand,  388. 
no  demand  necessary  as  to  acceptor,  388,  397. 

if  paper  payable  at  particular  place,  demand  must  be  there,  388, 389. 
if  paper  not  there  or  demand  there,  drawer  and  indorser  released, 

388,  389. 
interest  stops  as  to  acceptor, 

388. 

if  accepted  check  drawer  not  already  released,  released  only  to  ex- 
tent of  his  injury,  387,  389. 

if  acceptance  refused,  no  demand  necessary  on  bill  or  check,  389, 390. 
notice  must  be  given  drawer  and  indorser  of 

bill,  389. 

quaere  as  to  bill  not  requiring  acceptance,  389. 
demand  of  payment  of  bill  necessary  to  drawer  and  indorser,  390. 
notice  is  necessary  wherever  demand  is  necessary,  391. 
demand  not  made  or  excused  releases  drawer  and  indorser  of  bill, 

391,  525. 

if  new  paper  given  reserving  rights,  it  is  not  binding.  525,  note  1. 
original  claim  to  extent  of  bill  extinguished,  392,  525. 
if  paper  were  security,  indorser  entitled  to  credit  on  debt,  395,  525. 
accommodation  drawer  and  indorser  of  bill  entitled  to  demand,  392. 
if  drawer  or  indorser  accommodated,  no  demand  necessary,  393. 
irregular  indorsers  of  bill,  whether  entitled  to  demand,  394. 

contrary  rule  in  certain  jurisdictions,  395. 
drawer  of  check  entitled  to  demand,  but  released  only  to  extent  of 

his  injury,  395. 
indorser  of  check,  unless  accommodated  or  irregular,  released  by 

want  of  demand,  396. 
accommodation  drawer  of  check  released  to  extent  of  his  injury, 


816  INDEX. 

References  are  to  pages. 

DEMAND  (continued)  — 

maker  of  note  not  entitled  to  claim  demand,  397. 
regular  indorser  of  note  entitled,  398. 
time  of  demand  upon  demand  notes,  398. 
demand  must  be  made  upon  maturity  of  note,  398, 
indorsers  after  maturity  entitled  to  demand,  399. 
accommodation  maker  not  entitled,  399. 

indorser  entitled,  399. 

indorser  accommodated  not  entitled  to  demand,  399,  400. 
guarantors  are  not  entitled  to  demand  and  notice,  403. 

unless  they  have  stipulated  therefor,  403. 
who  are  guarantors,  400-403. 

form  of  express  guaranty,  400. 
guaranty  by  parol,  401. 
irregular  indorsers  are  guarantors,  402. 

varying  rule  as  to  irregular  indorsers,  402. 

parol  evidence  to  show  irregular  indorser  a  guarantor,  402. 
guaranty  by  waiver,  express  or  implied,  525-545. 
drawers  and  indorsers  of  non-negotiable  instruments,  404. 
municipal  orders  require  no  demand  as  against  indorser,  405. 
certificates  of  deposit,  demand  upon,  as  to  indorser,  405. 
forged  paper,  no  demand  necessary  as  to  indorser,  406. 
altered  paper,  demand  upon,  406. 
stolen  paper,  demand  upon,  407. 
sufficiency  of  demand,  407. 

foreign  bill  of  exchange,  demand  must  be  by  notary,  408. 
must  be  regularly  protested,  408. 
test  of  whether  or  not  bill  foreign,  408. 
who  may  act  as  notary,  409. 
de  facto  notary,  409. 

notary's  protest  must  be  upon  his  own  demand,  410. 
protest  by  notary's  clerk  or  deputy,  410. 
notary  is  holder's  agent,  411. 
foreign,  bills  where  sued  upon  for  non-payment  must  show  protest 

for  non-acceptance  and  for  non-payment,  411,  note  26. 
domestic  paper,  demand  upon  by  holder  or  his  agent,  411. 

evidence  as  to  agency,  411,  412.  . 

demand  must  be  upon  maker  or  drawee  or  his  agent,  413. 
absolute  refusal  to  accept  or  pay  cures  defects  in  demand,  413,  419. 
joint  obligors,  demand  upon  each,  414. 
partnerships,  demand  upon  either  partner,  414. 

after  dissolution  rule  is  the  same,  414,  415. 
agency  to  receive  demand,  416,  417. 
demand  at  place  of  business  on  clerk,  417. 
demand  at  place  of  business,  when  closed  not  necessary,  417. 
demand  at  bank,  417. 

manner  of  presenting  for  payment,  417-419. 
paper  must  be  with  the  one  who  presents,  417. 
demand  by  bank  according  to  custom  without  presenting  paper, 

417,  note  2,  419,  note  12. 
demand  through  mail  not  sufficient,  418. 

unless  payment  is  refused,  419. 

refusal  of  payment  cures  defects  in  manner  of  demand,  419. 
hour  of  demand,  419-423. 

must  be  during  business  hours  at  a  place  of  business,  420. 

at  bank  good  after  business  hours  if  any  one  there  to  answer,. 
420,  421. 

must  be  at  reasonable  hour  at  dwelling-house,  422. 


INDEX.  817 

References  are  to  pages. 

DEMAND  (continued)  — 
day  of  demand,  423-441. 

upon  bills  of  exchange,  423-427. 

must  be  on  day  of  maturity,  423,  426. 

circulation  of  sight  or  demand  bills,  or  bills  so  many  days  after 
sight  423,  424,  note  7. 

circulation  of  acceptances,  423,  426. 

maturity  of  bills  of  exchange,  426,  427. 

of  acceptances,  426,  427. 
premature  demand,  427. 

by  agreement  releases  indorser  not  consenting,  427. 
demand  notes  must  be  demanded  within  a  reasonable  time,  427. 

statutes  fixing  maturity,  427. 

what  is  reasonable  time,  428. 

circumstances  excusing  demand  on  demand  notes,  429,  430. 

delays  in  postoffice,  430. 

delays  through  loss  of  paper,  430. 
notes  or  bills  indorsed  overdue,  demand  must  be  in  reasonable  time, 

430,  431. 

demand  upon  checks,  432. 
checks  must  be  presented  within  a  reasonable  time,  432. 

which  is  next  day,  or  forwarded  on  next  day,  432. 

may  be  deposited  in  bank  on  next  day,  432. 
delay  through  loss  of  check,  434. 
check  taken  in  payment,  rule  as  to,  434,  435. 

drawer  of  check,  when  injured,  436. 

failure  of  bank  with  funds  an  injury,  436,  437. 

loss  of  secret  equity  between  drawer  and  payee  not  an  injury, 
436. 

depreciation  in  money  deposited,  436. 
checks  drawn  by  banks,  348,  437. 

may  be  put  into  circulation,  432,  note  6. 
certified  checks  may  be  put  into  circulation,  432,  note  6. 
when  certified  checks  must  be  demanded,  437. 
holidays  as  affecting  demand,  437-439. 
death  of  holder  excuses  delay,  439. 
sickness  excuses  delay,  439. 

personal  representative  of  deceased  holder  must  demand,  439. 
death  of  agent  of  holder  excuses  delay,  439. 
death  of  maker,  drawee  or  acceptor  excuses  delay,  440. 
demand  must  be  on  personal  representative,  if  one,  440. 
if  no  personal  representative,  demand  should  be  at  dwelling-house 

of  deceased,  440,  441. 
place  of  demand,  441-453. 
paper  payable  at  particular  place,  demand  only  at  that  place,  443, 444 

if  paper  at  that  place  at  maturity  demand  is  made,  443,  444. 

whether  paper  should  be  there  or  demand  made  when  no  tender 

of  payment  was  made,  443,  note  10. 

paper  payable  at  more  than  one  place,  as  at  any  bank,  442. 
acceptance  payable  at  particular  place,  433,  444. 
place  agreed  upon  by  parties,  445. 
place  designated  by  indorser,  446,  451,  note  26. 
paper  not  payable  at  particular  place,  446-451. 
demand  should  be  personal  or  at  dwelling-house  or  place  of  busi- 
ness, 446. 

if  personal  demand  made,  hour  and  place  is  immaterial,  446. 
either  dwelling-house  or  place  of  business  may  be  chosen  for  a  de- 
•  mand  constructively  personal,  447. 


818  INDEX. 

References  are  to  pages. 

DEMAND  (continued)  — 

if  place  of  business  closed,  or  residence  closed,  demand  is  complete, 

448,  450. 

demand  at  place  of  business,  how  made,  448,  449. 
demand  at  residence,  how  made,  449. 
demand  where  two  residences.  450,  498-500. 
how  made  if  residence  closed,  450. 
if  residence  changed  to  another  state  no  demand  necessaiy,  450, 452, 

462. 

if  residence  at  date  of  making  paper  was  out  of  state,  demand  is  nec- 
essary, 452,  462,  note  7,  463. 

if  change  in  same  state  demand  necessary,  450,  note  21. 
duty  of  holder  to  communicate  knowledge  to  his  agent,  450,  451. 
or  agent  to  take  notice  of  addresses  on  paper,  451. 
demand  where  residence  or  place  of  business  unknown,  451. 

question  of  reasonable  diligence,  451. 
cautious  in  making  inquiries,  451. 
inquiries  of  parties  to  paper,  503-507. 
presumptions  as  to  residence  of  maker,  452. 
residence  of  drawee  stated  in  bill  place  of  demand,  452. 
if  no  residence  ascertained,  bill  is  dishonored  and  notice  should  be 

given,  453. 

holder  diligent  if  he  acts  on  his  reasonable  belief,  453. 
customs  and  usages  as  affecting  demand,  453,  455. 
excuses  for  failure  to  demand,  455, 465. 
demand  dispensed  with  by  statute,  456. 
inclemency  of  weather,  456. 
injunction,  456,  461. 
fraud  in  indorser,  457. 
estoppel,  457. 
insolvency  of  bank  or  assignment  of  drawer,  excuse  as  to  check, 

458, 461. 
failure  to  provide  funds,  excuse  as  to  drawer,  459. 

not  an  excuse  as  to  indorser,  459. 
no  reasonable  expectation  on  drawer's  part  that  draft  would  be 

honored,  460. 

direction  of  drawer  to  drawee  not  to  pay.  461. 
if  funds  provided  demand  necessary,  461. 
if  demand  excused  as  to  drawer,  notice  to  indorser  necessary,  460, 

note  12,  461. 

absconding  of  maker  or  drawee  or  acceptor,  463. 
not  an  excuse  as  to  paper  payable  at  particular  place,  463,  .note  4 
removal  of  particular  place  of  business  where  payable,  462. 
disease  or  pestilence,  464. 
war  or  interdiction  of  commerce,  464,  465. 
infancy  of  maker  not  an  excuse,  456. 
suit  pending  not  an  excuse,  456. 
insolvency  of  maker  or  drawee  no  excuse,  457,  458. 
change  of  residence  not  an  excuse,  462. 
unless  change  out  of  state,  452,  462. 
nor  where  paper  payable  at  particular  place,  462. 
if  absence  temporary,  demand  at  residence  or  place  of  business,  462. 
rule  is  same  as  to  joint  makers,  463. 
acceptor's  change  of  residence,  463. 
drawee's  change  of  residence,  463. 

DEPOSITS  (see  CHECKS;  SAVINGS  BANKS;  SPECIAL  DEPOSITS)  — 
historical  development  of  deposit,  16,  17. 
classification  of  banks  as  banks  of  deposit,  27,  28. 


INDEX.  819 

References  are  to  pages. 

DEPOSITS  (contimied)  — 

trust  company  receiving,  not  a  bank,  41,  note  4, 

depositors  as  creditors,  see  CREDITORS. 

deposit  in  insolvent  bank,  liability  of  officers  for,  see  OFFICERS. 

deposit  in  insolvent  bank  as  crime,  see  CRIMES. 

bank  may  select  its  depositors,  205. 

either  general  or  special,  203. 

special  deposits,  see  SPECIAL  DEPOSITS. 

general  deposits  are  subject  to  check,  204 

certificates  of  deposit,  see  CERTIFICATES  OF  DEPOSIT. 

nature  of  relation  upon  a  general  deposit,  16,  17,  201-204 

creates  a  debt,  201. 

creates  also  a  (jMcm-contract  between  bank  and  depositor,  16, 17,  201. 

bank  notes  received  as  money  are  a  general  deposit  of  money,  205. 

Confederate  notes  not  money  deposited,  238,  note  22. 

when  deposit  is  made,  205,  207. 

whether  must  be  made  at  banking  house,  see  CRIMES. 

president,  cashier  or  tellers  may  receive,  205,  206. 

money  must  reach  bank,  205,  note  1. 

must  have  been  intention  to  make,  207. 

entries  in  books  prima  facie  correct,  208. 

may  be  contradicted,  208. 
deposit  of  collectible  paper,  see  COLLECTIONS. 
ownership  of  deposit,  213-215.    See  SAVINGS  BANKS. 
presumed  to  belong  to  depositor,  213. 
true  owner  may  claim  fund,  213. 
transfer  of  deposit,  643,  644. 

bank  must  after  notice  respect  true  owner's  rights,  214 
must  rectify  mistakes,  214 
may  have  interpleader,  289. 
deposit  in  another's  name  not  a  transfer,  205,  214 

may  be  orally  assigned  or  a  trust  declared,  214,  215,  642, 
gifts  of  deposit,  644. 

bank  must  respect  liens  on  deposit,  215,  221. 
deposit  may  be  made  collateral.  328. 
partnership  deposits  cannot  be  paid  on  check  of  one  partner,  217. 

bank  may  defend  if  money  went  for  partner- 
ship purposes,  217,  note  15. 
trust  funds  as  a  deposit.  215-220. 

notice  to  bank  of  trust  character,  215,  216. 
deposit  by  agent,  216-218. 
deposit  by  husband  and  wife,  219. 
deposit  by  corporate  agent.  220. 
governmental  deposits,  220. 

attachment  and  garnishment  of  deposit,  220-222,  644 
payments  in  violation  of  injunction,  221,  note  4 
misnomer  in  garnishment,  222. 
death  of  depositor,  effect  upon  checks,  223-229. 
if  check  accepted,  death  immaterial,  223. 
if  check  unaccepted,  death  destroys  check,  224 
rule  in  states  where  check  an  assignment,  223. 
insolvency  of  depositor,  229,  230. 

payments  good  until  notice  to  the  bank,  229. 
rule  in  states  where  check  an  assignment,  230. 
application  of  deposit  by  bank  to  its  own  claim,  230. 
form  of  claim  immaterial,  230. 

bank  cannot  appropriate  deposit  not  belonging  to  depositor,  280, 
unless  it  gave  credit  upon  deposit,  230. 


820  INDEX. 

References  are  to  pages. 

DEPOSITS  (continued)  — 

bank  may  apply  deposit  on  claim  against  true  owner,  231. 
cannot  apply  if  claim  secured,  231. 

if  claim  not  matured,  232. 

unless  depositor  insolvent,  232. 

cannot  apply  individual  deposit  on  partnership  debt,  231. 
when  cannot  apply  as  against  attachment,  232. 

or  assignment,  232. 
no  duty  to  apply  as  to  third  parties,  233-235. 

exceptional  rule  in  Pennsylvania,  234.  note  4. 
if  bank  insolvent  surety  entitled  to  deposit.  234,  note  2. 

case  of  non-residence,  235,  note  8. 

application  by  bank  to  claim  If  another  payable  at  bank,  235. 
payment  upon  such  application  final  except  under  clear- 
ing-house rule.  235,  236,  note  7. 
payment  of  deposit,  236-239,  645-649. 
in  savings  bank,  see  SAVINGS  BANK. 
by  remittances,  236. 
when  bank  may  refuse,  237,  255. 
bank  may  refuse  to  pay  part  of  check,  237,  note  7,  255,  436, 

note  28. 

cannot  dispute  depositor's  title,  238. 
must  pay  in  current  funds,  238. 
custom  cannot  make  legal  tender,  238,  note  22. 
depositor's  right  of  set-off  for  his  deposit,  239-241. 

debt  must  be  matured  unless  bank  insolvent,  240. 
set-off  for  firm  deposit  against  his  own  debt,  240,  note  5. 
setoff  not  affected  by  appointment  of  receiver  or  as- 
signee, 240. 

certificates  of  deposit  as  set-off,  see  CERTIFICATES  OF  DEPOSIT. 
depositor's  right  of  set-olf,  if  waived,  cannot  be  revived,  241. 
liability  of  bank  for  dishonoring  check,  241-250. 
to  depositor  for  deposit,  241. 
necessary  to  allege  check  indorsed,  241,  note  6. 
to  depositor  for  damages,  241. 
substantial  damages  may  be  recovered,  242. 
remote  damages  may  not,  242. 
to  holder  of  check,  none,  243. 
unless  check  accepted,  243. 
acceptance  of  check,  243.    See  ACCEPTANCE. 
promise  to  accept,  when  not  binding,  244. 
to  holder,  exceptional  rule,  245-253. 
unfortunate  results  of  this  rule,  225,  228,  note  26, 
229,  note  2,  233,  note  22,  250,  note  30, 586,  note  13. 
unfortunate  confusion  in  law  of  Illinois,  250,  note 

30. 

order  of  paying  checks  must  be  in  order  of  presentation,  254. 
bank  must  pay  as  directed,  255,  note  5. 
certified  and  accepted  check,  see  CERTIFIED  CHECKS. 
forged  and  altered  checks,  see  FORGED  PAPER. 
lost  checks,  see  LOST  PAPER. 
overpayment  of  check  may  be  recovered,  273. 
payment  to  wrong  person  may  be  recovered,  273. 
not  if  payee  without  fault,  273. 
depositor  cannot  recover  from  person  to  whom  wrongly  paid, 

273. 

nor  can  payee  recover  from  person,  273. 
or  from  bank,  273. 


INDEX.  821 

References  are  to  pages. 

DEPOSITS  (continued)  — 

payment  of  genuine  check  or  note  payable  at  bank  is  final,  274 
interest  on  deposits,  see  INTEREST. 
overdrawing  deposit,  see  OVERDRAFTS. 
special  deposits,  see  SPECIAL  DEPOSITS. 
actions  upon  deposit,  287-293. 
demand  necessary,  287. 
unless  bank's  contract  illegal,  287. 
or  bank  suspended  payment,  287. 
or  stated  account,  288. 

or  notified  depositor  that  it  refuses  to  pay,  287. 
or  claims  deposit  as  its  own  or  another's,  288. 
or  an  overpayment  has  been  allowed  to  bank  by  mistake, 

288. 

right  of  action  not  lost  by  suing  one  who  wrongly  received  de- 
posit. 288. 

nor  by  proving  claim  before  receiver,  288. 
if  deposit  attached,  bank  entitled  to  a  stay,  288. 
remedy  is  at  law  on  general  deposit,  288. 
upon  certificates  of  deposit,  see  CERTIFICATES  OP  DEPOSIT. 
parties  to  actions  upon  deposit,  288,  289. 
depositor  if  true  owner  must  sue,  288. 
true  owner  may  sue,  288,  289. 
agent  may  sue  "for  deposit  as  agent,  289. 
trustee  may  sue,  289. 

joint  deposit  must  be  sued  for  by  depositors  jointly,  289. 
bank  may  have  interpleader.  289. 

bank  should  give  notice  to  depositor  if  suit  by  third  party,  289. 
limitations  upon  actions  for  deposit,  290,  291. 
presumptions  and  burden  of  proof,  291,  293. 
as  to  payment,  291. 
as  to  mistake  in  books,  291. 
as  to  indorsement,  291. 
as  to  check  revoked,  291. 
by  receipt  of  cashier,  292. 
books  of  bank  as  evidence,  208,  292,  and  note  14 

DIRECTORS  (see  DE  FACTO  OFFICERS:  OFFICERS)  — 

forbidden  loan  to,  may  be  recovered,  62,  note  3,  327,  341. 

cannot  release  subscriber  to  stock,  79,  note  1. 

have  power  to  declare  dividends,  114. 

may  collect  surplus  before  declaring  dividend,  114 

may  hold  stockholder's  stock  dividend  for  debt  to  bank,  114 

generally  select  officers  other  than  themselves,  116. 

must  be  selected  as  provided  by  charter,  114. 

may  fix  salaries,  117. 

hold  all  the  corporate  power,  115, 148. 

may  be  paid  for  services  beyond  salary,  when,  118. 

may  act  at  general  or  special  meeting,  118. 

notice  need  not  be  given  of  fixed  or  stated  meetings,  118. 

nor  of  customary  special  meetings,  118,  note  2. 
board  not  required  to  keep  written  record,  119. 
quorum  necessary  to  act,  119. 

unless  custom  otherwise,  119. 

may  resign  though  elected  until  successor  qualified,  119. 
cannot  act  where  personally  involved,  119. 
liability  for  official  acts  to  bank,  see  OFFICERS. 
liability  to  stockholders,  see  OFFICERS. 
liability  to  creditors,  see  OFFICERS. 


822  INDEX. 

References  are  to  pages. 

DIRECTORS  (continued)  — 

notice  to  bank  through  director's  knowledge,  see  NOTICE. 

must  act  as  a  board,  148. 

acting  individually  unless  specially  authorized  not  officers,  148, note  2. 

only  board  of  directors  can  allow  overdrafts,  275. 

liability  for  notes  of  bank,  562. 

directors'  liability  in  forfeiting  charter  of  national  bank,  570,  702. 

liability  as  officers,  see  OFFICERS. 

DISCHARGE  — 

of  drawer  by  failure  to  present  for  acceptance,  see  ACCEPTANCE. 
of  indorser  by  failure  to  present  for  acceptance,  see  ACCEPTANCE. 
of  indorser  or  drawer  by  failure  to  demand,  see  DEMAND. 
of  indorser  or  drawer  by  failure  to  give  notice,  see  NOTICE  OF  NON- 
PAYMENT. 
of  parties  to  accepted  bill,  see  ACCEPTANCE. 

DISCOUNT  — 

power  to  discount  includes  power  to  purchase,  69, 197. 
person  discounting  paper  at  bank  warrants  signature,  340. 
bank  discount  not  usury,  333. 
statute  as  to  national  banks,  686. 
bank  may  rescind  fraudulent  discount,  339. 
and  even  where  not  fraudulent,  339. 

DISSOLUTION  — 

though  statute  declares  dissolution,  receiver  may  enforce  bank's, 

rights,  125. 
of  bank  by  surrender  of  charter,  565. 

voluntary  dissolution  of  national  banks,  692. 
notice  of,  692. 

deposit  of  money  to  redeem  notes,  692. 
retransf  er  of  bonds,  692. 
by  expiration  of  charter,  566. 
by  statute  dissolving,  566,  572. 
by  action  to  forfeit  charter,  571. 
waiver  of  forfeiture  by  state,  570,  571. 
decree  of  dissolution  and  forfeiture,  566,  5681 
declaration  of  forfeiture,  572. 
effect  of  dissolution,  572,  573. 
of  savings  bank,  650. 

DIVIDENDS  (see  DIRECTORS;  LIEN;  STOCK). 

DOMESTIC  PAPER  — 

for  demand  upon,  see  DEMAND. 

supplementing  notarial  certificate  of  protest  by  parol  evidence, 
552,  553. 

E. 

EQUITY— 

for  remedy  of  stockholders  in,  see  STOCKHOLDERS. 

for  remedy  of  creditors  in,  see  CREDITORS. 

for  remedy  in,  upon  statutory  liability,  see  STOCKHOLDERS. 

ESTOPPEL— 

for  agent  by  estoppel,  see  AGENCY. 

for  stockholder  by  estoppel,  see  STOCKHOLDERS. 


INDEX.  823 

References  are  to  pages. 

EVIDENCE  — 

statute  making  failure  of  bank  within  certain  time,  evidence  of  in- 
tent to  defraud,  128. 

for  books  of  bank  as  evidence,  see  BOOKS  OF  BANE. 
for  evidence  of  insolvency,  see  INSOLVENCY. 
in  suits  upon  collections,  see  COLLECTIONS. 
in  suits  upon  deposits,  see  DEPOSITS. 

for  dishonoring  check,  see  DEPOSITS. 
for  certificate  of  protest  as,  see  PROTEST. 

EXAMINERS  — 

for  examiners  of  state  banks,  see  STATE  BANKS. 

national  banks,  see  NATIONAL  BANKS. 

EXCHANGE  DEALER  — 

savings  bank  not  an  exchange  dealer,  29. 

EXCHANGES  (see  COLLECTIONS;  FORGED  PAPER). 

EXCUSES  — 

for  failure  to  present  for  acceptance  or  payment,  see  DEMAND. 
for  failure  to  give  notice  of  non-payment,  see  NOTICE  OF  NON-PAY- 
MENT. 

EXECUTORS  (see  PERSONAL  REPRESENTATIVE)  — 

for  liability  upon  decedent's  stock,  see  STOCKHOLDERS. 

for  demand  upon,  see  DEMAND. 

for  notice  of  non-payment  to,  see  NOTICE  OF  NON-PAYMENT. 

F. 

FALSE  ENTRIES  (see  CRIMES). 
FALSE  REPORTS  (see  CRIMES). 
FALSE  RETURNS  (see  CRIMES). 

FICTITIOUS  PAYEES  (see  FORGED  PAPER)  — 

check  payable  to  fictitious  payee  is  payable  to  bearer,  259. 
payment  upon  indorsement  of  fictitious  payee,  259,  260,  845. 
certification  to,  is  good  in  hands  of  bona  fide  holder,  260. 
but  real  person  intended  is  not  a  fictitious  payee,  260. 
not  person  believed  to  be  in  existence,  260. 
indorsement  by  person  intended  not  a  forgery,  260,  345. 

FOREIGN  BILLS  (see  DEMAND)  — 

certificate  of  protest  upon,  cannot  be  supplemented,  553. 

FOREIGN  COIN  — 

taken  by  weight,  560. 

FORFEITURE  (see  DISSOLUTION)  — 
of  charter  of  savings  bank,  650. 

FORGED  PAPER  (see  CERTIFIED  CHECKS)  — 

bank  liable  for  permitting  transfer  of  stock  on  forged  power,  85. 
certification  or  payment  of  forged  checks  or  notes,  262-271. 
certification  of  check  forged  as  to  drawer's  name  revocable,  262. 
except  as  to  holder  for  value,  263. 
nor  where  bank  can  charge  check  to  drawer,  264 
payment  of  check  or  note,  maker's  or  drawer's  name  forged  is  final, 

264. 
unless  person  to  whom  paid  was  at  fault,  264 


824  INDEX. 

References  are  to  pages. 

FORGED  PAPER  (continued)  — 

bank  cannot  charge  check  forged  as  to  drawer's  name  against  de- 
positor, 265. 

unless  depositor  misled  the  bank,  265. 
or  was  guilty  of  negligence  after  payment  in  not  examining  the 

returned  checks  or  notes,  265. 

in  latter  case  depositor  responsible  to  extent  of  bank's  loss,  265. 
certification  of  check,  indorser's  name  forged,  266. 
on  certificate  of  deposit,  266,  280. 
bank  may  recover  from  person  to  whom  it  paid,  266. 
certification  of  check  altered  in  amount,  267-270. 
bank  not  liable  except  on  original  check  where  alteration  was  be- 
fore certification,  268. 
unless  its  conduct  is  an  estoppel,  268. 
check  altered  after  certification,  bank  not  liable,  268. 

unless  it  was  negligent  in  drawing  check,  269. 
bank  may  recover  from  person  to  whom  it  pays  altered  check,  269. 

unless  it  can  charge  check  to  depositor,  270. 
bank  paying  negligently  cannot  complain  of  depositor's  negligence, 

270,  271. 

forged  paper  as  between  banks,  270,  271. 
rule  as  to  forgery  of  drawer's  signature  between  banks,  270. 
bank  paying  may  recover  from  bank  indorsing,  271. 

effect  of  clearing-house  rule,  271,  656. 
lost  checks  not  negotiable  in  form  governed  by  rule  as  to  forgery, 

272. 

fictitious  payee  not  person  believed  to  be  in  existence,  260,  345. 
indorsement  by  person  intended  is  not  a  forgery,  345. 
payment  upon  indorsement  of  fictitious  payee,  see  FICTITIOUS  PAY- 
EES. 
payment  of  certificate  of  deposit  upon  forged  indorsement  is  not 

payment,  280. 

payment  of  forged  exchanges,  345,  346. 
payment  of  draft  to  fictitious  payee,  see  FICTITIOUS  PAYEES. 
indorsement  of  person  intended  not  a  forgery,  345. 

but  in  some  jurisdictions  rule  seems  to  be  different,  260. 
negligence  of  drawer  where  draft  raised,  345. 
bank  must  repay  money  obtained  on  a  forged  signature,  346. 
bank  may  recover  money  paid  on  forged  signature,  346. 

unless  it  be  drawer's  signature  to  paper  upon  that  bank,  346. 
payee  to  whom  paid  liable  only  for  amount  actually  received  upon 

forged  paper.  346. 

upon  forged  paper  no  demand  is  necessary,  406. 
demand  upon  altered  paper,  406. 

FRAUD  — 

liability  of  officers  for,  see  OFFICERS. 
as  an  excuse  for  failure  to  demand,  see  DEMAND. 
fraudulent  discount,  see  DISCOUNT. 
keeping  open  insolvent  bank,  see  OFFICERS. 
fraudulent  representations  by  officers,  see  OFFICERS 
statute  making  failure  within  thirty  days  evidence  of  intent  to  de- 
fraud, 12a 

G. 

GARNISHMENT  (see  ATTACHMENT)  — 
may  be  served  on  cashier,  620. 
misnomer  of  depositor  in  garnishment,  222. 
whether  garnishment  lies  upon  statutory  liability,  99. 


INDEX.  825 

References  are  to  pageat 

GARNISHMENT  (continued)  — 
of  stock  subscription,  97. 
of  deposits,  220-223. 
does  not  reach  assigned  deposit,  644. 
of  proceeds  of  collection  or  collectible  paper,  318,  819. 

GENERAL  REPUTATION  — 

as  impeaching  proof  against  notary  or  his  certificate,  552,  note  2. . 

as  proof  of  insolvency,  312. 

as  proof  of  corporate  existence,  49. 

GOLD  — 

state  cannot  make  anything  but  gold  and  silver  a  legal  tender,  42. 

GOLD  BANKS  — 

under  national  bank  act,  681. 

conversion  of,  into  national  banks,  675,  676. 

GOLD  NOTES  — 

under  national  bank  act,  670. 

GOLD  RESERVE  — 

under  national  bank  act,  670. 

GUARANTY  — 

of  commercial  paper,  consideration  for,  328. 

who  are  guarantors,  see  DEMAND. 

endorsers  of  non-negotiable  paper,  404. 

whether  continuing  or  not,  328. 

of  negotiable  paper  by  irregular  indorsement,  394,  395,  402,  403. 

express  guaranties,  400. 

by  waiver  of  demand  and  notice,  see  WAIVER. 

blank  regular  indorsement  as  a  guaranty,  531,  532,  533. 

GUARDIAN  (see  TRUSTEE)  — 

liability  upon  stock  of  ward,  see  STOCKHOLDERS. 

bank  transferring  stock  by  guardian's  fraud,  85,  note  3. 


H. 

HOTEL  — 

demand  at,  as  residence,  see  DEMAND. 
service  of  notice  on  non-payment  at,  480. 

HOUR  OF  DEMAND  (see  DEMAND). 

HOUR  OP  SERVICE  (see  NOTICE  OF  NON-PAYMENT). 

HUSBAND  AND  WIFE  — 

for  deposits  by,  see  DEPOSITS. 

by,  in  savings  bank,  see  SAVINGS  BANK. 

demand  and  notice  of  non-payment  upon  paper  belonging  to  wife, 
412. 


ILLEGAL  BANKING  (see  UNLAWFUL  BANKING). 
ILLEGAL  DEPOSITS  (see  SAVINGS  BANK). 
ILLEGAL  LOANS  (see  LOANS). 


826  INDEX. 

References  are  to  pages. 

ILLEGAL  NOTES  (see  CIRCULATING  NOTES). 
IN  PARI  DELICTO  (see  UNLAWFUL  BANKING). 
INCREASE  OF  STOCK  (see  STOCK). 

INDORSEMENT,  REGULAR  — 

form  of,  where  notice  of  owner's  rights,  see  COLLECTIONS. 
whether  blank  regular  indorsement  may  be  shown  a  waiver,  53L 

532,  533. 

parol  waiver  at  time  of  indorsement,  532,  533. 
parol  waiver  after  indorsement,  532,  533. 
by  bank  upon  note  of  admission,  621. 

INDORSEMENT,  IRREGULAR  (see  ACCOMMODATED  PARTIES;  ACCOM- 
MODATION PARTIES). — 
in  blank,  is  guaranty,  402. 

effect  of  the  indorsement,  394,  396.  402,  531,  532,  533. 
varying  rules  as  to,  402,  532,  533,  534. 
parol  evidence  to  show  contract,  402,  533,  534. 
irregular  indorser  stipulating  for  demand  and  notice,  403. 
as  a  waiver,  531,  532,  533. 
parol  evidence  to  show  waiver,  533,  534, 

INJUNCTION  — 

against  use  of  corporate  name,  46. 

against  transfers  of  stock,  84 

payments  of  deposit  in  violation  of,  221,  note  4. 

power  to  .collect  revoked  by  injunction,  296. 

correspondent  bank  bound  by  injunction    against  primary,  821r 

note  8. 

state  cannot  grant  injunction  against  national  bank,  628. 
federal  court  may  grant  injunction.  628. 

may  continue  injunction  improperly  granted  by  state 
court,  62a 

INSOLVENCY  (see  OFFICERS;  RECEIVERS;  STOCKHOLDERS)  — 
as  ground  of  enforcing  statutory  liability,  see  STOCKHOLDERS. 
when  bank  insolvent,  129,  574,  579. 
proof  of  insolvency,  113,  574. 
general  reputation  as  proof  of  insolvency,  312. 
return  of  nulla  bona,  312. 

as  ground  for  making  officers  liable  to  depositors  in  bank,  127,  128. 
knowledge  of  insolvency  necessary,  128. 
neglect  of  means  of  knowledge  is  knowledge,  128,  note  4, 
of  depositor,  effect  on  checks,  229,  230. 
power  to  collect  not  granted  when  bank  insolvent,  297. 

revoked  by  insolvency,  297,  322. 
power  of  correspondent  bank  to  remit  revoked  by  primary  bank's 

insolvency,  322. 

insolvency  of  drawer  must  be  shown  in  suit  for  negligence  in  col- 
lecting check,  312. 
insolvency  of  maker,  drawee  or  acceptor  no  excuse  for  demand,  457, 

458. 

insolvency  of  drawer  of  check  as  excuse,  458,  461. 
insolvency  of  bank  on  which  check  drawn  as  excuse  for  demand, 

458,  461. 

assignments  for  creditors  by  bank,  574.    See  BANKING  POWERS. 
power  to  make  preferences,  574.    See  ASSIGNMENTS  FOR  CRED- 
ITORS. 


INDEX.  827 

References  are  to  pages. 

INSOLVENCY  (continued)  — 

when  assignment  prevails  over  receivership,  575,  576k 
general  assignment  transfers  all  bank's  property,  576. 

effect  upon  checks  outstanding,  576,  note  9. 
of  savings  banks,  650. 
preferences  by  banks,  see  PREFERENCES. 
receivers  and  assignees  of  banks,  see  RECEIVERS. 
payment  of  claims,  see  RECEIVERS. 
priorities  upon  assets,  see  PRIORITIES. 

INTEREST  AND  USURY  — 

national  bank  act  exclusive,  75,  336,  337. 

decree  or  assessment  for  statutory  liability  draws  interest,  114 
general  deposits  do  not  draw  interest  except  by  agreement,  274. 
overdrafts  do  not  draw  interest  except  by  agreement  or  custom,  278. 

except  from  date  of  demand,  278. 

certificates  of  deposit  drawing  interest,  see  CERTIFICATE  OF  DEPOSIT. 
banks  are  governed  by  general  law,  329. 

unless  barred  by  special  charter  or  statute,  330. 
reservation  of  greater  rate  than  law  allows  is  unlawful,  330,  335. 
law  governing  performance  of  contract  governs  rate,  330. 

rate  lawful  where  contract  to  be  performed,  lawful  everywhere, 

330. 

exceptional  rule  in  some  jurisdictions,  331. 
attempt  in  Illinois  to  extend  usury  laws  over  other  states,  331, 

note  4. 

under  state  statutes  usurious  discounts  not  always  forbidden,  334 
usury  statutes  sometimes  apply  only  to  discounts,  331. 
national-bank  statute  applies  to  discounts,  purchases  and  loans,  334. 
must  be  an  intent  to  take  more  than  legal  rate,  331,  338. 
lending  by  bank  of  its  own  depreciated  bills  not  usury,  332. 

another  bank's  depreciated  bills  is  usury,  332. 
commissions  of  agent  as  usuiy,  332. 
usurious  transactions,  what  are,  332,  333. 
rate  for  national  banks,  333. 
statute  as  to  national  banks,  686. 

whether,  where  no  rate,  national  bank  can  charge  more  than 

seven  per  centum,  334,  note  26. 

renewal  notes,  whether  within  statutes,  332,  333, 334. 
parties  affected  by  usurious  transaction  depends  upon  statute,  334. 

statutes  usually  affect  only  immediate  parties,  337,  338. 
borrower  may  recover  interest  overpaid  without  statute,  335. 
statutes  give  right  to  recover,  335. 
so  national  bank  act,  335,  686. 
statutes  sometimes  make  loan  void,  335. 
forfeit  interest,  335. 
forfeit  excess  over  legal  rate,  335. 
national  bank  statutes  impose  penalty  of  twice  the  interest  paid, 

335. 

whether  this  means  twice  the  interest  or  twice  the  excess,  335. 
make  whole  interest  void  before  payment,  335. 
loan  or  deposit  of  collaterals  not  void,  336. 
interest-bearing  quality  of  paper  destroyed,  838. 
applies  to  overdrafts,  336. 
negotiability  of  note  not  destroyed,  336. 
state  statutes  may  makf   usurious  act  of  national  bank  officers  an 

offense  against  the  state,  75,  notes  4  and  5,  142,  836. 
two  years'  limitation  in  national  bank  act  begins  to  run  from  the 
date  of  payment  of  interest,  337. 


S2S  INDEX. 

References  are  to  pages. 

INTEREST  AND  USURY  (continued)  — 

penalty  recoverable  does  not  draw  interest,  337,  note  16. 

usurious  interest  paid  cannot  be  made  set-off,  337. 

no  set-off  to  the  penalty,  337. 

corporation  forbidden  by  state  statute  to  set  up  usury  may  set  it  up 

under  national  bank  act,  338. 
legal  representative,  indorsee,  assignee,  but  not  judgment  creditor, 

may  set  up  usury,  339. 
for  jurisdiction  of  courts  over  national  bank's  usurious  transactions, 

see  JURISDICTION. 

INTEREST  COUPONS  — 

may  be  demanded  without  having  note,  418. 

INTERPLEADER  (see  DEPOSITS)  — 
by  savings  bank,  649,  650. 

J. 

JOINT  OBLIGORS  OR  OBLIGEES  — 

officers  jointly  liable  in  tort,  release  to  one  releases  all,  126,  135. 

stockholders  jointly  liable,  see  STOCKHOLDERS. 

presentment  for  acceptance  must  be  to  each,  414 

presentment  for  payment  must  be  to  each,  414,  462. 

service  of  notice  of  non-payment  must  be  upon  each,  483. 

joint  deposit  must  be  sued  for  in  name  of  both  depositors,  289. 

joint  deposit  of  collaterals  individually  owned  does  not  give  a  joint 

right  of  action,  289. 
admission  of  liability  by  one  binds  all  as  waiver,  542. 

JOINT-STOCK  COMPANY  — 
as  a  bank,  40. 
if  not  lawful  is  a  general  partnership,  40,  56. 

whether  a  corporation,  queer e,  40. 
no  de  facto  joint-stock  companies,  40. 

JURISDICTION  — 

in  cases  brought  by  creditors  of  banks,  federal  courts  are  governed 

by  ninety-fourth  equity  rule,  93. 

except  in  winding  up  national  banks,  112,  622,  623,  628,  note  3. 
over  suits  for  usury  in  national  banks,  state  courts  as  well  as  fed- 
eral courts  have  jui-isdiction,  339. 

in  suit  in  state  court,  right  of  national  bank  under  federal  law  must 
be  specially  claimed  in  order  to  obtain  review  in  supreme  court, 
339,  623. 
national  bank  now  citizen  of  state  where  located,  622,  623. 

statutes  as  to  jurisdiction  over,  664,  665. 
usury  suits  governed  by  this  rule,  622. 
no  attachment  can  be  issued  by  any  court  against  national  bank, 

628. 

no  injunction  by  state  court,  628. 
federal  court  may  grant  injunction,  628. 
in  jurisdiction  of  federal  courts  of  suits  over  national  banks,  juris- 

dictional  amount  governs,  623. 
and  where  federal  question  involved,  623. 
receiver  of  national  bank  may  sue  in  federal  court,  624. 

may  remove  suit,  624. 

agent  of  stockholders  may  sue  in  federal  court,  624. 
method  of  alleging  residence  of  bank,  625. 


INDEX.  829- 

References  are  to  pages. 

JURISDICTION  (continued)  — 

national  bank  having  right  to  sue  in  federal  court  may  sue  either 

where  located  or  where  defendant  lives,  625. 
in  local  actions  must  sue  where  property  located,  626. 
if  defendants  live  in  different  districts  suit  may  be  in  either  dis- 
trict, 626. 

in  usury  suits  jurisdiction  is  in  state  court  where  the  bank  is  lo- 
cated, 626. 
same  rule  applies  to  other  suits  against  bank,  626,  627. 

unless  the  action  is  local,  when  it  must  be  brought  where  prop- 
erty located,  628. 


LACHES  — 

stockholder  may  lose  right  to  object  to  increase  of  stock  by,  79, 

note  10. 

of  bank  as  a  defense  in  creditors'  suits  against  officers,  134. 
no  defense  where  officers  control  the  bank,  134, 135. 

LEGAL  REPRESENTATIVE  — 
not  liable  on  stock  personally,  83. 

only  by  estoppel,  84. 

stock  bequeathed  estate  liable  until  transfer  to  legatee,  84. 
estate  of  persons  who  have  reached  majority  cannot  be  held  in  suit 

against  guardian,  84. 

executor's  failure  to  transfer  to  himself,  84,  note  6. 
usury  suits  by,  see  INTEREST. 
demand  upon,  see  DEMAND. 
notice  to,  see  NOTICE  OF  NON-PAYMENT. 

LEGAL  TENDER  — 

custom  cannot  create,  238,  note  22. 

payment  must  be  in  legal  tender  or  current  money,  341,  342. 

bank  notes,  how  far  a  legal  tender,  342  and  note  6. 

national  bank  notes  how  far  a  legal  tender,  343,  note  15.  680.  686. 

are  legal  tender  to  every  other  national  bank^ 

686. 

treasury  notes,  how  far  legal  tender,  238,  note  22,  560,  note  24. 
silver  coin  as  a  legal  tender,  560. 
foreign  coin  as  a  legal  tender,  560. 

LEGISLATIVE  REGULATION  (see  CONFLICT  OF  LAWS)  — 
legislature  has  power  to  regulate  banking.  71. 
has  power  to  forbid  foreign  banks  doing  business  in  state,  75,  76, 
foreign  bank  notes  may  be  prohibited,  76. 
may  prohibit  private  banking,  33-39. 
cannot  prohibit  all  banking,  71. 
state  regulations  of  national  banks,  71,  74,  93. 

prohibited  conveyances,  74 

filing  of  agent's  name.  75. 

defining  act  of  national  bank  officer  as  crime,  75,  notes  4  and  5,. 

142,  336. 

deposit  of  funds  by  state  banks  of  issue,  73. 
requirement  of  reports,  73. 

federal  statutes  will  not  apply  state  law  as  to  filing  reports,  73,  620. 
bank  examiners,  74. 
lawful  money  reserves,  74. 
usurious  rates  of  interest,  74. 


830  INDEX. 

References  are  to  pages. 

LEGISLATIVE  REGULATION  (continued)  — 

federal  usury  statute  exclusive  of  state  legislation,  75,  335,  336. 
federal  courts  not  bound  by  state  statutes  in  usury  suits  against  na- 
tional banks,  338. 
or  as  to  preferences,  618. 

LENDING  CREDIT  — 

banks  cannot  lend  credit,  see  BANKING  POWERS. 

LICENSE  TAXES  — 

must  be  reasonable,  72. 

LIEN— 

lien  on  shares  by  bank,  national  banks  can  have  none,  89,  189. 

in  other  banks,  permissible  if  not  forbidden, 

89,  91,  189. 
forbidden  by  denial  of  power  to  hold  its 

stock,  49.  89. 

does  not  extend  to  dividends,  90,  92. 
all  parties  have  notice  where  lien  given  by 

charter,  90. 

covers  all  kinds  of  liabilities,  90. 
does  not  give  power  to  sell,  90. 
may  be  waived  by  taking  security,  90,  91. 
by  by-law  binds  stockholders.  91. 
by  by-law  does  not  bind  creditors  of  stock- 
holder, 91. 

sureties  are  subrogated  to  bank's  lien,  90. 
when  lien  cannot  be  created  by  by-law,  49. 
upon  deposit,  bank  must  protect,  215,  221. 
bank's  lien  upon  dividends  for  claims  due  bank.  114. 
lien  by  bank  upon  proceeds  of  collection,  297,  316. 
correspondent  bank's  lien,  297,  298,  316. 
extends  only  to  credit  given  on  paper  or  by  agreement,  316. 
lien  by  bank  upon  bill  of  lading  for  advances,  328  and  note  8. 
general  lien  by  bank  upon  collaterals,  329. 
no  lien  upon  note  it  refuses  to  discount,  329. 
clearing-house  lien,  see  CLEARING-HOUSE. 

LIMITATIONS  (see  STATUTE  OF  LIMITATIONS). 
LIMITED  PARTNERSHIP  (see  PARTNERSHIP). 

LOAN  COMPANY  — 
is  not  a  bank,  29-31. 

LOANS  (see  NATIONAL  BANKS)  — 

joint  deposit  of  collaterals  upon,  289. 
right  to  iaan  upon  collaterals  incident  to  banking,  328. 
deposits  may  be  collateral  even  when  general,  328. 
loans  contrary  to  law  may  be  recovered,  327,  341. 

collateral  may  be  enforced,  327. 

indorser's  collateral  may  be  enforced  though  indorser  released,  535. 
loans  permitted  only  to  particular  persons,  326,  note  2. 
loans  compelled  to  stockholders,  326. 
guaranty  of  a  loan,  328.    See  GUARANTY. 
lieu  upon  bill  of  lading,  328.    See  Addendum. 

bank  has  lien  whether  it  may  charge  back  draft  or  not,  328,  note  8. 
president's  collaterals  deposited  on  bank's  loan  to  him  cannot  be  sold 

without  notice,  329. 
bank's  general  lien  upon  collaterals,  329. 


INDEX.  831 

References  are  to  pages. 

LOANS  (continued)  — 

no  lien  on  paper  bank  refuses  to  discount,  329. 

interest  upon  loans,  see  INTEREST. 

usurious  loans,  see  INTEREST. 

creditor  may  have  dividend  upon  debt  and  upon  collaterals,  589. 

payment  of  loans  must  be  in  legal  tender  or  current  money,  341, 342. 

in  state  bonds,  342. 

in  hank's  own  bills,  342. 

not  allowed  if  bank  assigns  note,  345. 

but  not  a  good  tender,  342. 

national  bank  notes,  343. 

in  treasury  notes.  238,  note  22,  560,  note  24 

LOST  PAPER  — 

lost  or  stolen  bank  notes,  redemption  of,  680. 

if  paper  lost,  negligence  of  collecting  bank  presumed,  311* 

measure  of  recovery,  313. 
delays  in  demand  through  loss  of  paper  excused,  430. 

loss  of  check,  434. 

lost  bank  notes  of  state  banks,  recovery  upon,  558. 
half  of  note  lost,  recovery  without  indemnity,  558,  559. 
worn  out  and  mutilated  notes,  539. 
worn  out  and  mutilated  national  bank  notes,  680. 
loss  in  postoffice  excusing  want  of  notice,  see  NOTICE  OF  NON-PAY- 
MENT. 
non-receipt  of  notice  sent  by  mail,  see  NOTICE  OF  NON-PAYMENT. 


M. 

MANDAMUS  — 

to  compel  transfer  of  stock,  84 

to  compel  call  for  stock  subscription,  97. 

MISNOMER  — 

in  garnishment,  see  GARNISHMENT. 

of  depositor,  see  DEPOSITS. 

in  certificate  of  protest,  see  PROTEST. 

MISTAKE  — 

in  payment  of  deposits,  see  DEPOSITS. 

in  payment  of  collections,  see  COLLECTIONS. 

MONEY  CHANGER  — 
bank  is  a,  29. 

MONEY  HAD  AND  RECEIVED  — 

lies  for  money  misappropriated  by  officer  except  against  a  bonafide 
holder,  119,  120. 

MORTGAGES  (see  BANKING  POWERS). 

MUNICIPAL  CORPORATIONS  — 
no  power  to  issue  notes,  555. 

MUNICIPAL  ORDERS  (see  DEMAND). 
MUTILATED  PAPER  (see  LOST  PAPER). 


832  INDEX. 

References  are  to  pages. 


NATIONAL   BANKS  (see  BANKS;    BANKING    POWERS;    CORPORATE 

BANKS;  LEGISLATIVE  REGULATION)  — 
classification  of  banks  into,  26. 
organization  of,  665. 
congress  power  to  charter,  41. 
conversion  of  state  into  national  banks,  47,  675,  676. 
conversion  of  gold  banks  into  national  banks,  675,  676. 
conversion  of  banks  in  District  of  Columbia,  48. 
only  national  banks  can  use  word  "  national,"  46,  note  4,  703. 
certificate  of  organization,  665,  666. 
copy  as  evidence,  665. 

until  certificate  issued,  can  do  no  business,  59,  667. 

acts  done  in  its  name  not  binding  before  certificate,  60,  68. 

corporators  liable  as  partners,  56,  note  7,  58,  69. 
powers  of  national  banks  under  statute,  666,  667. 
as  to  real  estate,  671. 
as  to  purchasing  its  own  stock,  687. 
as  to  loaning  upon  its  own  stock,  687. 
as  to  purchasing  stock  in  another  bank, 

64,  190,  191. 

bank  cannot  be  held  liable  upon  stock,  64. 
real-estate  security  may  be  enforced,  64 
cannot  have  lien  on  their  own  stock,  189. 
cannot   engage    in    buying   and   selling 

stocks,  190. 
may  loan  on  stocks  and  purchase  at  sale, 

191. 
may  sell  its  own  stock  lawfully  acquired, 

189. 
cannot  ratify  purchase  of  its  own  shares, 

189,  190. 
cannot  be  sued  for  conversion  of  its  own 

shares,  190. 

may  take  personal  property  on  claim,  192. 
take  chattel  mortgage,  192. 
deal  in  government  securities,  193. 
receive  special  deposits,  199,  287. 
contract  to  recover  them,  199. 
cannot  make  donation  to  manufactory. 

192. 

may  make  its  property  productive,  192. 
sell  or  exchange  its  property,  193. 
assign  judgment,  193. 
hold  escrows  and  securities,  193. 
protect  its  own  buildings  by  erecting 

others,  194,  note  3. 
purchase  real  property  at  its  own 

sale,  194. 

as  to  office  buildings,  194 
may  take  land  in  payment  of  debt,  194 
as  to  mortgages,  196. 
may  mortgage  its  real  property,  197. 
borrow  money,  199. 
issue  certificates  of  deposit,  199,  279.. 


INDEX.  833 

References  are  to  pages. 

NATIONAL  BANKS  (continued)  — 

powers  of  national  banks,  may  purchase  negotiable  paper,  197,  198. 

transfer  and  sell  it,  198. 
issue  its  promissory  note,  198. 

cannot  lend  its  credit,  199,  200. 

has  power  to  make  collections,  200. 

may  have  savings  department,  193. 
jurisdiction  of  courts  over,  see  JURISDICTION. 
comptroller's  power  over,  see  COMPTROLLER  OF  CURRENCY. 
place  of  business  (statute),  682. 
must  transact  business  at  banking  house,  74 
removal  of  place  of  business,  666. 
extension  of  period  of  existence  (statute),  667,  668. 
deposit  of  bonds.  669,  670,  676. 
certifying  checks  without  credit,  as  an  offense,  670,  671,  689. 

checks  valid  against  bank,  689. 
amount  of  capital,  671. 
shares,  how  transferable,  671,  672. 
payment  of  shares,  671,  672. 
sale  of  shares  for  failure  to  pay,  672. 
increase  of  capital  stock,  77,  672. 
certificate  of  comptroller  conclusive,  78  and  note  7. 
comptroller  cannot  grant  increase  after  insolvency,  78,  note  7. 
no  increase  until  certificate,  78. 
bank  trustee  for  increase  until  certificate  issued,  78. 
if  certificate  not  issued  there  is  no  increase,  79. 
stockholder  loses  right  to  object  by  laches,  79,  note  10. 
decrease  of  capital  stock,  673. 

when  reduced,  bank  cannot  retain  surplus  of  capital,  79. 
stockholders'  right  to  vote,  673. 
right  of  stockholders  to  inspect  books,  93. 
directors,  how  elected,  673. 
qualifications  of  directors,  673. 
oath  of  directors,  673. 
filling  vacancies  in  board,  674, 
calling  elections,  674 
president,  674 

statutory  liability  of  stockholders,  674 
liability  of  executors,  trustees,  guardians,  etc.,  674 
as  public  depositories,  674 
registered  bonds,  676. 
annual  examination  of  bonds,  677. 
transferring  bonds,  677. 
-  custody  of  bonds,  678. 
bank  notes,  679,  680. 

how  far  a  legal  tender.  343,  note  15,  680,  686. 
redemption  of  lost  or  stolen  notes,  680. 
post-notes  and  other  notes  prohibited,  680. 
worn  out  and  mutilated  notes,  680. 
lawful  money  reserve,  74,  681,  682,  683. 
no  reserve  for  notes  except  five  per  centum,  683,  684 
mutilation  of  notes  forbidden,  682. 
imitation  of  notes  for  advertising,  681. 
withdrawal  of  circulating  notes,  669,  670,  684 
dividends,  687. 
dividend  report,  690. 

power  of  directors  to  declare  dividends,  114 
controllable  by  courts  for  abuse,  114 
53 


834  INDEX. 

References  are  to  pages. 

NATIONAL  BANKS  (continued)  — 
extent  of  loans  to  any  borrower,  687. 
limit  upon  indebtedness,  687. 
pledge  of  notes,  687,  689. 

withdrawal  of  capital  except  by  reduction  forbidden,  687, 688. 
impairment  of  capital  stock,  assessment  for,  688. 
uncurrent  notes  not  receivable.  688. 
reports  to  comptroller,  690. 
oath  to  reports,  690. 
power  of  state  to  tax  (statute),  692. 
cannot  be  taxed  except  as  permitted  by  congress,  52. 
discrimination  against  national  banks  forbidden,  52. 
meaning  and  purpose  of  statute,  51,  53,  note  9. 
dissolution,  voluntary,  692. 
effect  of  dissolution,  see  RECEIVERS. 

consolidation  of  banks,  692.    See  REORGANIZATION  AND  CONSOLIDA- 
TION. 

protesting  notes  for  non-payment,  693. 
business  after  failure  to  redeem  notes,  694. 
forreiture  and  sale  of  bonds  deposited,  694,  695. 
notes  a  paramount  lien  upon  assets,  694. 
counterfeit  notes,  697. 
appointment  of  receivers,  695. 
for  failure  to  redeem  notes  or  insolvency,  74. 
management  of  property  by  receiver.  700.  701. 
must  manage  according  to  laws  of  state,  701. 
preserving  bank's  equities  in  property,  700,  701. 
receiver  suable  without  leave,  701. 
forfeiture  of  charter,  702. 
bank  examiners,  702. 
preferences,  703. 

national  banks  not  foreign  in  state,  75. 

for  state  regulations  of  national  banks,  see  CONFLICT  OF  LAWS. 
for  stool; holders  in  national  banks,  see  STOCKHOLDERS. 
for  officers  of  national  banks,  see  OFFICERS. 
for  directors  of,  see  DIRECTORS. 
for  president  of,  see  PRESIDENT. 
for  cashier  of,  see  CASHIER. 

for  other  officers,  see  BOOK-KEEPERS;  TELLERS;  VICE-PRESIDENT. 
for  crimes  in  national  banks,  see  CRIMES. 
for  overdrafts,  see  OVERDRAFTS. 
for  deposits  in,  see  DEPOSITS. 
for  collections  by,  see  COLLECTIONS. 
for  preferences  by  national  banks,  see  PREFERENCES. 
for  priorities  in  assets  of  national  banks,  see  PRIORITIES. 
for  suits  for  usury  penalty,  see  INTEREST. 
for  defense  of  usury,  see  INTEREST. 
for  insolvency  of  national  banks,  see  INSOLVENCY. 
for  settlement  of  affairs  of  insolvent  or  dissolved  bank,  see  Rn- 

CEIVERS. 

NEGLIGENCE  — 

negligence  of  directors,  how  differs  from  fraud,  20,  127. 

liability  of  officers  for,  see  OFFICERS. 

in  paying  checks,  see  DEPOSITS. 

in  paying  deposits  in  savings  banks,  see  SAVINGS  BANKS. 

of  depositor,  see  DEPOSITS;  SAVINGS  BANKS. 

in  making  collection,  see  COLLECTIONS. 


INDEX.  835 

References  are  to  pages. 

NOTARY  — 

for  bank's  liability  for,  see  COLLECTIONS. 

for  evidence  impeaching,  see  GENERAL  REPUTATION;  PROTEST. 

for  demand  by,  see  DEMAND. 

for  notice  of  non-payment  by,  see  NOTICE  OF  NON-PAYMENT. 

for  certificate  of  protest  by,  see  PROTEST. 

NOTICE  — 

for  notice  of  directors'  meetings,  see  DIRECTORS. 

for  notice  to  bank  by  indorsement,  see  COLLECTIONS. 

importance  of  notice  in  banking  law,  19,  20. 

mistakes  of  courts  as  to,  19,  20. 

basis  of  the  legal  rules,  19,  20. 

to  bank  through  agent,  see  AGENCY. 

to  bank  through  officer,  171-188. 

to  officer  whose  duty  it  is  to  act,  172. 

private  knowledge  of  officer  not  binding,  172,  173,  176,  488. 

unless  officer  acted  in  transaction,  173. 

there  must  appear  knowledge  was  in  his  mind,  176. 
to  officer  performing  a  continuous  course  of  duty,  174. 
once  received  is  always  binding,  175. 
to  bank  through  officer  with  adverse  interest,  177-183. 
rule  where  officer  acts  for  bank,  178. 
to  third  parties  by  form  of  paper,  166,  183. 
officer  how  far  charged  with  bank's  knowledge,  183. 
president  not  charged  with  notice  so  that  his  collaterals  may  be  sold 

without  notice  to  him,  329. 

of  non-payment  by  mail,  see  NOTICE  OF  NON-PAYMENT. 
of  non-payment  to  bank  may  be  directed  to  president,  479,  note  23. 

or  cashier,  479,  note  23. 
of  officer's  lack  of  authority,  see  OFFICERS. 

ratification  of  officer's  unauthorized  act  as  notice,  see  RATIFICATION. 
notice  to  bank  as  to  ownership  of  deposit,  see  DEPOSIT. 
notice  to  savings  bank  of  drawing  deposit,  649. 

NOTICE  OF  NON-PAYMENT  (see  WAIVER)  — 

duty  of  bank  collecting  to  notify  drawers  and  indorsers,  see  COL- 
LECTION. 

acceptance  waived  does  not  waive  notice,  388. 

if  acceptance  refused  notice  must  be  given,  even  on  paper  not  re- 
quiring acceptance,  374,  389,  466,  472. 

notice  necessary  whenever  demand  is  necessary,  391,  466. 

parties  entitled  to  notice,  508,  509. 

guarantor  not  entitled  to  notice,  403. 

drawer  and  indorser  of  non-negotiable  paper,  whether  entitled,  404, 
472. 

if  due  diligence  used  and  no  demand  made,  notice  necessary,  453, 
466. 

demand  excused  as  to  drawer,  notice  necessary  to  indorser,  460,  note 
12,  461. 

where  indorser  or  drawer  entitled  to  notice,  465,  466. 

to  indorser  of  certificate  of  deposit,  466. 

discharge  from  want  of  notice  absolute,  466,  524 

if  paper  taken  in  payment  debt  is  paid,  525. 

but  if  rights  of  indorser  are  claimed,  party  must  have  indorsed,  525, 
note  5. 

i  f  paper  was  security  party  is  entitled  to  credit  on  the  debt,  525. 

if  new  security  given  But  reserving  rights,  the  security  is  unenforce- 
able, 525,  note  1. 


836  INDEX. 

References  are  to  pages. 

NOTICE  OF  NON-PAYMENT  (continued)  — 

exchanges  of  checks,  release  of  one  does  not  release  other,  525,  note  2. 

parties  who  cannot  claim  notice,  466. 

form  of  notice,  467-472. 

sufficiency  of  form,  467,  468. 

sufficiency  of  recitals,  469,  470.    See  PROTEST. 

necessary  to  notify  upon  first  dishonor,  471. 

whether  notice  necessary  of  clearing-house  dishonor,  471,  note  47. 
modes  of  serving  notice,  472. 

service  by  mail,  when  permitted,  472. 
by  free  delivery  system,  473. 

notice  must  be  mailed  so  as  to  be  delivered  by  next 

day  after  demand,  473,  510. 
by  banking  custom,  476,  note  13. 
residence  of  either  holder  or  agent  determines  propriety  of  mailing, 

474,  475,  note  19. 
rule  where  parties  have  some  postoffice,  but  person  to  be  notified 

lives  out  of  town,  473,  474,  493,  494. 
notice  by  drop-letter  prima  facie  bad,  474,  506. 
notice  properly  mailed  is  notice  whether  received  or  not,  475. 

must  be  addressed  to  a  place  with  a  post- 
office,  476. 

when  letter  is  properly  mailed,  476. 
notice  received  in  time  good  whether  mail  was  proper  service  or 

not,  473. 
personal  service  of  notice,  476-480. 

service  actually  personal,  hour  and  place  immaterial,  477. 
constructive  service  at  either  residence  or  place  of  business,  477. 

at  place  of  business  must  be  in  business  hours, 

477. 

at  residence  hour  not  material,  477. 
at  place  of  business  by  leaving  notice,  478. 
service  on  bank  at  banking  house,  479. 

notice  directed  either  to  president  or  cashier,  479, 

note  23. 

corporation  at  its  place  of  business,  479. 
partnership  either  at  place  of  business  or  residence 

of  one  partner,  479. 

rules  to  determine  place  of  business,  478,  479. 
residence  may  be  hotel,  boarding-house  or  dwelling,  480. 
rules  for  serving  at  residence,  480. 
place  of  service  designated  by  person  to  be  served,  481. 
agreement  as  to  service,  481. 
service  upon  agent,  481-483. 

upon  joint  obligors  on  each,  483. 

upon  partnership  upon  any  partner,  484. 

even  if  firm  dissolved,  484. 
upon  assignee,  485. 
notice  by  or  to  successive  obligors,  485-488. 

holder  may  serve  upon  any  or  all  prior  parties,  486. 
each  indorser  must  protect  himself,  486. 
party  notified  held  to  all  subsequent  to  notifier,  486,  490. 
all  indorsements  for  collection  or  value  the  same,  487. 
rule  seems  to  exclude  agent  to  serve  as  holder,  487,  515. 
needs  not  give  agent  his  information  unless  he  directs 

agent  to  serve,  488. 

may  send  notice  to  agent  to  serve,  488. 
statutes  requiring  holder  to  serve  all  indorsers,  488. 


INDEX.  837 

References  are  to  pages. 

N.OTICE  OF  NON-PAYMENT  (continued)  — 
by  whom  notice  given,  489. 

by  party  to  paper  or  his  agent,  489. 
holder  includes  assignor,  489. 
eacli  holder  may  notify  prior  parties,  486,  489. 
notice  by  stranger  nugatory,  491. 
place  to  direct  by  mail,  491-508. 

mail  not  compulsory;  may  use  messenger,  491, 
post-office  with  two  names,  491. 
notice  directed  to  county,  491,  note  5,  506. 
notice  to  city  not  by  street  and  number,  492. 
place  to  direct  is  place  of  actual  residence,  492. 

person  with  different  residence  with  season,  492. 
temporary  absence  from  home  does  not  change  rule,  492,  496- 

498. 

if  person  does  not  reside  at  post  town,  notice  to  nearest  post- 
office.  493. 

or  to  place  where  he  receives  mail,  494. 
or  to  place  directed  by  him.  495. 

if  notice  received  in  time,  place  sent  immaterial,  496,  503. 
members  of  legislatures,  rule  as  to  service,  498-500. 
if  residence  changed,  notice  to  new  residence.  500. 
unless  changed  into  another  state,  500,  508. 
or  person  absconded,  508. 

if  residence  not  known,  presumption,  501,  502. 
residence  changed,  place  of  business  retained,  502. 
service  upon  agent  at  former  place  of  residence,  503. 
if  residence  not  known  due  diligence  to  ascertain,  503. 

inquiries  to  be  made,  503-507. 
where  residence  changed,  due  diligence,  507. 

inquiries  to  be  made,  507,  508. 
if  due  diligence,  no  notice  necessary  if  residence  afterwards 

found,  508. 
day  of  giving  notice,  509-515. 

notice  before  demand  nugatory,  509. 

premature  notice,  509. 
notice  upon  same  day  as  demand,  509. 
needs  not  be  given  until  next  day  after  demand,  509,  511. 
time  given  for  reasonable  inquiries,  510. 
time  that  is  reasonable  for  personal  service,  510,  511. 
notice  by  mail  next  day  after  dishonor  by  first  mail  of  day,  512. 
unless  mail  leaves  at  unreasonable  hour,  512. 

what  is  reasonable  hour,  513. 
successive  obligors  each  one  day  to  give  notice,  514. 

rule  applies  to  holder  receiving  notice  from  agent,  515. 
whether  rule  applies  to  notices  sent  to  agent,  quere,  417, 515. 
holder  must  give  notice  of  his  first  notice,  514.          / 
holidays  and  Sundays,  515,  517. 

service  upon  next  day  after  holiday,  516. 

or  upon  day  of  demand,  516. 

whether  notice  can  be  given  on  holiday,  516,  note  7. 
death  of  holder  excuses  delay,  517. 

service  upon  personal  representative  of  the  deceased,  517-519. 
sickness  as  affecting  service,  519. 
customs  and  usages  of  banks  as  to  service,  519,  520. 

as  to  demand  on  first  day  of  grace,  520. 
as  to  service  after  last  day  of  grace,  520. 
as  to  mailing  notices  to  same  place,  520. 


838  INDEX. 

References  are  to  pagea 

NOTICE  OF  NON-PAYMENT  (continued)  — 

actual  knowledge  is  not  equivalent  to  notice,  530. 

what  amounts  to  estoppel  as  to  notice,  521. 

partner  drawing  on  his  firm  entitled  to  no  notice,  521. 
excuses  for  failure  to  notify,  521-525. 

due  diligence,  521. 

miscarriage  in  mail,  522. 

nature  of  the  paper,  522. 

agreement  postponing  maturity,  522. 

absconding,  522. 

departure  without  leaving  ascertainable  address,  522* 

failure  to  provide  funds  as  to  drawer,  522. 

not  as  to  indorser  unless  accommodated,  522. 

insolvency  not  an  excuse,  522,  523. 

fraud  as  an  excuse,  523. 

war  or  pestilence,  523. 

excuses  only  during  prevalence,  523,  524. 

waiver  as  an  excuse,  see  WAIVER. 

protest  by  notary,  see  PROTEST. 


o. 

OFFICERS  (see  CASHIER;  DIRECTORS;  PRESIDENT;  TELLERS;  VICE-PRES- 
IDENT) — 

the  relation  of  an  officer  to  his  bank  is  a  part  of  the  law  of  principal 
and  agent,  119. 

importance  of  the  matter  in  banking  law,  19,  20. 

confusion  of  the  courts  as  to,  20,  123, 126, 127, 130,  131,  notes  3  and  4. 

distinction  between  negligence  and  fraud,  20. 

torts  of  officers,  bank  liable  for.  64,  148, 149. 

for  salaries  of  officers,  see  SALARIES. 

liability  of  officers  to  bank,  119-123. 

funds  misappropriated  by  officer  may  be  followed  until  they  reach 
a  bona  fide  holder,  119. 

all  officers  who  assisted  misappropriation  liable,  120. 

all  officers  who  failed  in  duty  to  prevent,  120. 

all  who  failed  in  proper  supervision,  121. 

statute  not  necessary  to  give  action,  121. 

action  may  be  money  had  and  received,  or  bill  in  equity,  119,  120. 

president  fraudulently  issuing  drafts  to  himself,  120. 

officers  liable  for  failure  to  use  ordinary  care,  121,  122. 
for  fraud,  120. 

allowing  security  to  be  taken  from  bank,  121. 

liable  for  subordinates,  when,  121. 
for  disobeying  instruction,  122. 

remedy  at  law  for  negligence,  122. 

creditors  suing  must  sue  in  equity  by  creditor's  bill,  130, 131. 

joint  or  several  suits,  122. 

action  against  officer  survives,  123. 

liability  of  directors  for  negligence,  122. 

different  tests  of  this  liability.  122. 

bank  may  set  off  this  claim  againt  officer's  claim  upon  bank,  126. 

lack  of  meaning  in  term  "  gross  negligence,"  122,  note  20. 

liability  of  officers  to  stockholders,  123. 

liability  for  frauds  against  stockholder,  123. 

not  liable  as  directors  to  stockholders  as  stockholders,  123. 


INDEX.  839 

References  are  to  pages. 

OFFICERS  (continued)  — 

stockholders  may  bring  suit  in  equity  in  right  of  bank,  124 
fruits  of  litigation  belong  to  bank,  124. 
bank  a  necessary  party,  124 
stockholder  may  mingle  his  private  claims,  124 
suits  by  assignees  and  receivers  of  banks  against  officers,  125. 
creditors  not  proper  parties,  125. 
statutory  liability  of  officers  for  debt,  125,  126. 
will  be  enforced  in  another  state,  126. 
is  a  ^wast-contract,  125. 
is  joint,  126. 

release  of  one  releases  all,  126. 
no  right  of  set-off,  126. 
liability  to  creditors,  126-134 

as  to  creditors  there  is  none,  127. 
liable  for  torts  against  creditor,  126,  127. 
false  representations.  127. 
falsely  representing  bank  to  be  solvent,  127. 
published  reports,  127. 

keeping  insolvent  bank  open  as  representation,  127. 
knowledge  of  insolvency  necessary,  128. 
negligence  of  means  of  knowledge,  128,  note  4 
corporation  not  a  party  nor  its  receiver,  129. 
rules  apply  to  national  Juank  officers,  130. 

neither  bank  nor  receiver  can  release  this  action,  130,  note  12. 
liable  for  negligence  in  managing  bank's  affairs  only  to  bank, 

130. 
creditors  may  pursue  this  liability  as  equitable  assets,  130,  131. 

mistakes  of  courts,  131,  notes  3,  4 
suit  as  creditor's  bill  lies  only  in  equity,  132. 
fruits  of  litigation  belong  to  bank  as  assets,  132,  133. 
but  creditor  may  mingle  his  private  claims,  133. 
corporation  or  its  receiver  or  assignee  necessary  party,  133. 
no  demand  upon  bank  to  bring  suit  necessary,  133. 
laches  of  bank  as  a  defense,  134  135. 
national  bank  directors  responsible  for  false  reports,  134 

keeping  insolvent  bank  open, 

130. 

stockholders  may  sue  for  mismanagement  if  bank  will  not,  134 
creditors  may  sue  by  creditors'  bill,  134 
withdrawal  of  deposit,  134  note  1. 
for  violations  of  banking  act  creditors  may  sue,  134 
receiver  may  sue  without  comptroller's  order,  134    N 

forfeiture  of  charter,  134 
laches  as  a  defense,  134  135. 

release  to  one  director  jointly  liable,  releases  all,  135. 
compromises  of  this  liability,  135. 
criminal  offenses  by  officers,  see  CRIMES. 
authority  of  officers  and  agents,  145,  170. 

extent  of  authority,  how  defined,  145,  146. 

modified  by  bank,  146. 

officer's  act  within  scope  of  his  authority  binds  bank,  146. 

error  on  guo  warranto,  146,  note  3. 

persons  dealing  with  bank  what  presumed  to  know,  147. 
persons  with  notice  of  lack  of  authority,  146. 

without  such  notice,  147. 

where  lack  of  authority,  recovery  is  upon  estoppel  or  in  quasi- 
contract,  147. 


840  INDEX. 

References  are  to  pages. 

OFFICERS  (continued)  — 

authority  of  officers  and  agents  (continued)  — 
acts  prohibited  by  law  cannot  be  ratified,  148. 
authority  of  directors,  see  DIRECTORS. 

of  president,  see  PRESIDENT. 
of  cashier,  see  CASHIER. 
of  vice-president,  see  VICE-PRESIDENT. 
of  treasurer  of  saving  bank,  see  SAVINGS  BANK. 
of  manager  of  branch  bank,  155. 
of  tellers,  see  TELLERS. 
must  act  at  place  of  business,  157. 
authority  as  to  surrendering  bank's  rights,  158. 
is  part  of  parol  evidence  rule,  158. 
fraudulent  representations  for  bank,  159. 
authority  as  affected  by  course  of  dealing,  159, 160. 
ratification  of  officers'  act,  see  RATIFICATION. 
admissions  by,  see  ADMISSIONS. 
notice  to  bank  through  officer,  see  NOTICE. 
officer's  authority  where  he  has  an  adverse  interest,  162-168. 
as  varied  by  ratification,  see  RATIFICATION. 

OVERDRAFTS  — 

only  board  of  directors  can  allow,  275. 

overdrawing  by  officers  as  a  crime.  138. 

overdrafts  in  national  banks,  when  returnable  as  loans,  140,  276. 

board  of  directors  may  authorize  officer  to  allow,  275. 

is  overpayment  of  deposit,  276. 

if  depositor  given  credit  to  a  certain  amount  so  that  bank  is  liable 

for  dishonoring  check,  it  is  not  an  overdraft,  140-142,  276. 
secured  overdraft  is  money  on  deposit,  145. 
payment  of  checks  does  not  prove  overdraft,  277. 
wrongfully  obtained,  is  fraudulent,  277. 

bank  may  recover  money  even  if  credited  in  another  bank,  277. 
depositor  overdrawing  bound  to  repay  on  demand,  277,  278. 
does  not  draw  interest  except  by  agreement  or  custom,  278. 

until  demand  made,  278. 

overdraft  once  allowed  irrevocable  as  to  money  paid,  278. 
usury  statutes  in  national  banks  applies  to  overdrafts,  336. 

P. 

PARTNERSHIP  — 
for  banking.  39. 
limited  partnership,  40. 

limited  partnership  where  not  lawful  becomes  general,  40,  56. 
joint-stock  company  where  not  lawful  becomes  general,  40,  56. 
illegal  corporation's  corporators  may  be  sued  as  partners,  56,  note  7, 

58,  69. 
liability  of  corporators  as  partners  where  corporation  formed.  69. 

where  no  corporation  formed,  69. 
statutory  liability  misnamed  that  of  partnership,  102. 
bank  cannot  pay  out  partnership  deposit  on  check  of  partner,  217. 

except  where  money  went  to  partnership,  217,  note  15. 
bank  cannot  apply  individual  deposit  upon  partnership  debt,  231. 
demand  of  payment  upon  partnership  made  upon  any  partner  either 

before  or  after  dissolution,  414,  415. 
notice  of  non-payment  served  upon  partnership  at  place  of  business 

or  at  residence  of  any  partner,  479,  484. 
served  upon  assignee  of  firm,  485. 
even  if  firm  dissolved,  484. 


INDEX.  841 

References  are  to  pages. 

PARTNERSHIP  (continued)  — 

bill  drawn  by  one  partner  on  his  firm,  demand  and  notice  not  nec- 
essary to  him,  521. 

partner  may  waive  demand  and  notice  for  firm  after  dissolution, 
527. 

liability  of  partners  upon  bank  notes,  561. 

is  clearing-house  a  partnership,  654,  note  1,  655,  note  1. 

PAYMENT  — 

of  capital  stock,  see  STOCKHOLDERS;  NATIONAL  BANKS. 

in  legal  tender,  see  LEGAL  TENDER. 

of  forged  paper,  see  FORGED  PAPER. 

of  deposit,  see  DEPOSITS. 

of  deposit  in  savings  banks,  see  SAVINGS  BANK. 

overpayment  of  check  or  payment  to  wrong  person  recoverable,  273. 

payment  of  checks  and  certified  checks,  when  final,  see  CERTIFIED 

CHECKS:  CHECKS:  DEPOSITS. 

certification  of  check  to  payee  is  payment,  295,  note  3. 
of  collections,  see  COLLECTIONS. 
delivery  of  note  by  mistake  not  payment,  340. 
for  payment  of  loans,  see  LOANS. 
circulating  notes  must  be  paid  in  specie,  559. 
to  bank  in  its  own  notes,  see  CIRCULATING  NOTES. 
of  claims  in  insolvency,  see  RECEIVERS. 

PERSONAL  REPRESENTATIVE  (see  LEGAL  REPRESENTATIVE). 

PLACE  — 

of  demand,  see  DEMAND. 

giving  notice  of  non-payment,  see  NOTICE  OF  NON-PAYMENT. 

bank's  business,  see  BANKS;  NATIONAL  BANKS. 

PLEDGE  — 

for  pledgee  of  shares,  see  STOCKHOLDERS. 
for  deposit  of  collaterals,  see  LOANS. 

POST-DATED  CHECKS  — 

as  bills  of  exchange,  see  CHECKS. 

POWERS  OF  BANK  (see  BANKING  POWERS;  NATIONAL  BANKS). 

PREFERENCES  — 

assignments  with  preferences,  see  ASSIGNMENTS  FOR  CREDITORS 

result  where  check  held  to  be  an  assignment,  576,  note  7. 

forbidden  by  statutes,  577. 

forbidden  by  national  bank  act,  577,  703. 

by  banks,  what  acts  are.  577. 

payments  in  regular  course  of  business,  578. 

payments  in  case  of  "  runs  "  upon  bank,  578. 

by  withdrawing  deposit,  134,  note  1,  578,  579. 

by  national  banks,  what  acts  are,  580,  581. 

"  runs  "  upon  the  bank,  580. 

when  clearing-house  lien  a  preference,  660,  661. 

given  to  depositors  over  other  creditors,  617,  618. 

state  statute  does  not  govern  national  bank,  619. 

PRESIDENT  — 

liability  as  officer,  see  OFFICERS. 
issuing  drafts  to  himself,  notice  to  third  parties,  120. 
selling  his  own  stock  to  bank,  giving  purchaser  overdraft  for  price, 
120. 


842  INDEX. 

References  are  to  pages. 

PRESIDENT  (continued)  — 

allowing  security  to  be  taken  from  bank,  121. 
power  to  control  litigation,  150. 
as  to  deeds,  150. 
as  to  transfers,  150. 
as  to  mortgages,  150. 
as  to  releasing  claims,  150,  151. 
as  to  cashier's  powers,  151. 
may  recover  deposit,  205, 206. 

certify  checks,  258. 
make  answer  to  garnishment,  620. 
his  collateral  deposited  upon  loan  cannot  be  sold  by  bank  without 

notice,  329. 
notice  of  non-payment  to  bank  may  be  directed  to  president,  479, 

note  23. 
of  savings  bank,  powers,  637. 

PRIORITIES  — 

when  stockholder  has  a  priority  over  creditors  his  claim  is  a  set-off 

to  his  statutory  liability,  113. 
no  priority  by  attachment  of  national  banks,  see  ATTACHMENT. 

upon  any  insolvent  bank,  598. 
gained  by  set-off.  599. 
who  are  general  creditors,  599-602. 
advance  by  directors  to  bank,  600. 
deposits  by  trustee,  600. 
public  funds  rightfully  deposited,  600. 
certificates  of  deposit,  600. 
certified  or  accepted  checks.  600. 
collections  after  collection  and  rightful  credit,  600. 
banks  with  mutual  credits,  601. 

•wherever  deposit  goes  rightfully  into  general  funds  of  bank,  de- 
positor is  general  creditor,  601. 
trust  funds  properly  deposited  give  no  priority,  602. 
if  bank  rightfully  recovers  trust  funds,  but  pays  out  wrong- 
fully, beneficiary  is  general  creditor,  603  and  note  10. 
trust  funds  wrongfully  deposited  to  knowledge  of  bank  give  a  pri- 
ority over  general  creditors,  603-607. 
varying  holdings  of  courts,  603-609. 
special  deposit  gives  a  priority,  608. 

varying  holdings  of  courts,  608,  609. 
proceeds  of  collections  before  crediting  or  improperly  credited  give 

a  priority,  609. 

varying  holdings  of  courts,  609-614 

when  holder  may  claim  priority  in  primary  bank,  610,  611. 
when  holder  may  claim  priority  in  secondary  bank,  611,  612. 
deposit  in  insolvent  bank  gives  priority,  614,  615. 

fraudulent  representation  must  cause  deposit,  614. 

nature  of  deposit,  whether  of  money  or  paper  for  collection,  not 

material,  615. 

varying  holdings  of  courts.  615,  616. 

public  funds  wrongfully  deposited  give  a  priority,  616,  617. 
liens  existing  not  affected  by  insolvency,  617. 

statutory  preferences  of  depositors  over  creditors,  617,  618,  651,  652. 
state  statute  does  not  affect  national  bank,  618. 
in  savings  banks,  651,  652. 

PRIVATE  BANKING  (see  PARTNERSHIP)  — 
as  a  term  of  classification  of  banks,  26,  28. 
right  of,  33-39. 


INDEX.  843 

References  are  to  pages. 

PRIVATE  BANKING  (continued)—' 

right  of  legislature  or  constitution  to  prohibit,  83-39. 

not  a  nuisance,  36. 

formation  of  private  bank,  39. 
of  partnership,  39,  40. 
of  limited  partnership,  40. 
of  joint-stock  company,  40. 

limited  partnership  or  joint-stock  company  illegal  is  general  part- 
nership, 40,  56. 

illegal  private  banking,  see  UNLAWFUL  BANKING. 

officers  of  private  bank  have  same  powers  as  similar  officers  in  cor- 
porate bank,  115. 

crimes  of  private  banker,  see  CRIMES. 

for  deposits  with  private  banker,  see  DEPOSITS. 

for  collections  by  private  banker,  see  COLLECTIONS. 

for  legislative  regulation,  see  LEGISLATIVE  REGULATION. 

for  circulating  notes  of  private  banker,  see  CIRCULATING  NOTES. 

paper  payable  at  any  bank  does  not  include  private  banker,  443, 
note  3. 

for  loans  by  private  banker,  see  LOANS. 

PROTEST  — 

meanings  of  term,  545. 

form  of  certificate  governed  by  place  of  protest,  545. 
admissibility  of  certificate  as  evidence  governed  by  lexfori,  546. 
time  and  place  of  execution  of  certificate,  546. 
certificate  as  evidence,  statutes  as  to,  547,  548. 

certificate  or  books  of  deceased  notary  as  evidence,  548,  551,  note  1, 
form  of  certificate  and  recitals,  546,  548-551. 
what  certificate  must  contain,  548-551. 
facts  of  which  certificate  evidence,  551.  552. 
certificate  not  conclusive  may  be  rebutted,  552. 
may  be  supplemented  by  parol  evidence  if  on  domestic  paper,  552, 553, 
cannot  be  supplemented  if  on  foreign  bill,  553. 
necessity  of  notarial  protest  of  foreign  bill,  see  DEMAND. 
customs  as  to  protest,  see  CUSTOMS. 

PUBLIC  FUNDS  — 

as  a  priority,  see  PRIORITIES. 

Q. 

QU  ASI-CONTR  ACT — 

statutory  liability  of  officers  for  debts  is,  125. 

duty  of  bank  to  honor  checks  of  depositor  as,  see  DEPOSITS. 

duty  of  bank  in  collecting  as,  see  COLLECTIONS. 

statutory  liability  as,  see  STOCKHOLDERS. 

recovery  in  cases  of  illegal  banking  upon,  see  UNLAWFUL  BANKING, 

QUO  WARRANTO  (see  DISSOLUTION)  — 

bill  in  equity  by  stockholder  as,  49,  note  1. 

officer's  act  binds  bank  in  quo  warranto  if  within  scope  of  his  au- 
thority, 146,  note  3. 

in  national  banks  acts  must  have  been  with  knowledge  of  the  board 
of  directors,  570,  702. 

for  proceedings  in,  see  DISSOLUTION. 

QUORUM  (see  DIRECTORS). 


INDEX. 
Eeferences  are  to  pages. 

E. 

RATIFICATION  (see  UNLAWFUL  BANKING)  — 

banking  act  forbidden  by  express  rule  of  law  cannot  be  ratified,  60, 

62.  63,  148. 
agent's  or  officer's  act  purely  ultra  vires  may  be  ratified,  63, 154, 160, 

notes  2  and  3,  167. 
of  salary,  117. 

powers  of  officers  varied  by  ratification,  154,  160,  notes  2  and  3,  287. 
of  unauthorized  acts  of  officers  binds  bank,  167,  287. 
of  unauthorized  act  by  savings  bank,  637. 
may  be  express  or  implied,  167. 

implied  by  delay,  reception  of  benefit  or  reten- 
tion of  consideration,  167-169. 
binds  bank  by  adopting  agent's  act  where  he  has  adverse  interest, 

163-166. 
may  bind  bank  as  to  notice  through  an  officer,  171,  180. 

RECEIVERS  AND  ASSIGNEES  — 
number  of,  583. 
compensation  of.  583. 
power  to  enforce  statutory  liability,  103,  585. 

in  national  banks,  103,  112,  113,  593.  594. 

either  at  law  or  in  equity,  103,  108,  110,  113. 

in  equity  must  sue  all  stockholders,  113. 
cannot  compound  statutory  liability,  113. 
courts  may  allow  compromise,  113. 
suing  for  officers'  liability,  see  OFFICERS. 
suing  for  officers'  liability  in  national  banks,  134. 

without  order  of  comptroller,  134,  594. 

when  assignment  for  creditors  prevails  over  receivership,  575,  576. 
take  bank's  title,  584. 
powers  as  to  bank's  property,  584 

may  sue  to  set  aside  preferences,  584,  597. 

creditor  may  sue  if  receiver  refuses,  597. 
allowance  and  payment  of  claims,  588,  589. 

only  one  claim  allowable  for  one  debt,  588. 

creditor  entitled  to  dividends  on  collateral,  589. 

suit  upon  disallowed  claim,  589. 

in  savings  banks,  651. 
of  national  banks,  591-597. 

appointment  by  comptroller,  591.    See  COMPTROLLER. 

powers  as  to  preserving  bank's  equities,  700,  701. 

voluntary  assessment,  591. 
statute  as  to,  688. 

reduction  in  capital  stock,  591. 

courts  may  appoint  receiver,  592. 

appointment  ex  parte,  592,  note  7. 
effect  of  appointment,  592,  593. 

does  not  dissolve  corporation,  592. 

bank  may  be  sued,  592. 

cannot  release  creditor's  claim  for  fraud,  593. 
creditor  may  sue  on  bank's  claims  if  receiver  refuses,  593. 
may  sue  in  United  States  courts,  594    See  JURISDICTION. 
of  savings  banks,  650,  651. 


INDEX.  845 

References  are  to  pages. 

REORGANIZATION  AND  CONSOLIDATION— 

for  conversion  of  banks  into  national  banks,  see  CONVERSION. 
national  bank  succeeds  to  all  property  of  state  bank,  48. 

may  be  sued,  48. 

old  board  of  directors  may  continue  to  act,  47. 
non-voting  stock  cannot  vote,  47. 
consolidation  of  national  banks  (statute),  692. 
liability  of  former  corporation  after  consolidation  or  reorganization.. 

566,  567. 
liability  of  new  corporation,  567,  568. 

REVOCATION  — 

of  checks,  see  CHECKS. 

of  power  to  collect,  see  COLLECTION. 

s. 

SALARIES  — 

fixed  by  board  of  directors,  117. 

directors  cannot  fix  their  own,  117. 

director  may  be  paid  for  special  services,  118. 

officer  cannot  recover  on  quantum  meruit,  118. 

stipulated  salary  covers  officer's  whole  service,  118, 

ratification  of  salary,  117. 

SAVINGS  BANKS  — 

power  of  commercial  bank  to  have  savings  department,  193. 
kinds  of  savings  banks,  629,  630. 

claim  of  depositor  is  a  chose  in  action,  not  a  bailment,  204,  630. 
officers  of,  630-633. 

qualifications  of  officers,  631. 

election  cf  officers,  631. 

liability  to  bank,  631-634 
stockholders,  depositors  are  not,  in  some  kinds  of,  630. 

liability  upon  subscription,  634. 

upon  statutory  liability,  634,  635. 
•     powers  of  savings  banks  — 

to  loan  on  real  estate,  635. 

cannot  purchase  real  property,  635. 

sometimes  to  deny  power  to  discount,  635. 

in  subscribing  to  stock,  635. 

to  become  surety,  635. 

to  borrow  money,  636. 

to  agree  to  pay  interest,  636. 
illegal  and  ultra  vires  contracts,  636. 

may  be  enforced  by  bank,  636. 

bank  must  pay  illegal  deposit,  636. 
powers  of  officers,  637-639. 

of  treasurer,  155,  637.  638. 

cashier  of  savings  bank  as  compared  with  ordinary  cashier,  639. 

of  president,  637. 

of  clerks  in  bank,  637,  638. 
ratification  of  unauthorized  act,  637. 
deposit  contract,  639-641. 

bank's  by-laws  a  part  of,  639. 

bank  cannot  change  by-laws  as  to  prior  depositor,  639,  640. 
order  from  depositor.  640. 

bank  liable  for  negligence  regardless  of  by-law,  640. 
active  vigilance  required,  640. 


84:6  INDEX. 

References  are  to  pages. 

SAVINGS  BANKS  (continued)  — 

ownership  of  deposit,  641-643.    See  DEPOSITS. 

deposit  in  names  of  more  than  person,  641,  640. 

husband  and  wife's  joint  deposit,  641. 

survivorship  in  regard  to  deposit,  641. 

declaration  of  trust  in  deposit,  642. 
transfer  of  deposit  by  delivery  of  book,  643. 

does  not  transfer  legal  title.  643. 

assignment  of  deposit  noticed  to  bank,  644 
garnishment  does  not  reach  assigned  deposit,  644 
gifts  of  deposit  not  controlled  by  rules  of  bank,  644 
fact  of  pass-book  being  among  deceased's  effects,  293. 
payment  of  deposit,  645-649. 

rules  of  bank  do  not  release  it  from -negligence,  640,  645i 

antecedent  negligence  of  depositor  no  defense,  646,  647. 
unless  an  estoppel,  647. 

appointee  of  depositor,  647. 

indemnity  to  the  bank,  648. 
notice  for  drawing  money,  649. 

•waiver  of  notice,  649. 
actions  against  bank,  649,  650. 

interpleader,  649,  650. 
forfeiture  of  charter,  650. 
insolvency  of  savings  banks,  650. 
receivers  of  savings  banks,  650,  651. 
claims  upon  insolvency,  651. 
priorities  among  depositors,  651,  653. 
statutory  priorities,  652. 
set-off  by  depositor,  652,  653. 
savings  banks  in  District  of  Columbia,  697. 

SECESSIpN  ORDINANCE  — 

amusing  holdings  as  to,  523,  note  2,  524,  note  8. 

SET-OFF  — 

for  depositor's  right  of  set-off,  see  DEPOSITS. 

bank's  right  against  depositor,  see  DEPOSITS. 

depositor's  right  of  set-off  in  savings  bank,  652,  653L 

to  stock  subscription,  see  STOCKHOLDERS. 

to  statutory  liability,  see  STOCKHOLDERS. 

by  bank  for  its  claim  against  officer  for  negligence,  126. 

no  set-off  to  usury  penalty.  337. 

usurious  interest  paid  cannot  be  set  off,  337. 

depositor's  right  of  set-off  against  insolvent  bank,  585,  586. 

other  cases  of  set-off,  as  unpaid  draft,  cashier's  check,  accepted 

check,  586. 

presented  check  in  some  jurisdictions,  586. 
results  of  this  rule,  536,  note  13. 
unaccepted  checks  not,  587. 
rules  as  to,  apply  to  national  banks,  589. 
priority  gained  by,  599. 

SHARES  (see  STOCKHOLDERS). 

SILVER  — 

state  cannot  make  anything  but  gold  or  silver  legal  tender,  42. 
coin  must  be  legal  tender  to  be  good  tender,  560. 
notes,  how  kept  at  par,  341. 


INDEX.  8i7 

References  are  to  pages. 

SPECIAL  DEPOSITS  — 

power  of  banks  to  receive,  see  BANKING  POWERS;  NATIONAL  BANES. 
are  returnable  in  kind,  239. 

common-law  trusts  creating  special  deposits,  205. 
two  kinds  of  special  deposits,  231. 
certifying  check  does  not  create,  282. 
money  deposited  to  pay  a  certain  claim  creates,  283. 
paid  to  bank  for  transmission  creates,  282. 

for  specific  purpose  creates,  282. 

paper  deposited  in  insolvent  bank  as  special  deposit,  319,  614,  615. 
paper  deposited  for  collection.  282,  283,  301,  609-614. 
property  deposited  to  be  returned,  283. 

for  safe-keeping,  282. 
books  not  conclusive  as  to,  283. 

every  deposit  of  money  general  unless  made  special,  283. 
money  deposited  to  indemnify,  283. 
collectible  paper  when  collected  and  credited  rightfully  not,  284, 319, 

when  proceeds  are  a  special  deposit,  319, 610-613. 
bank  liable  as  bailee,  284. 

for  ordinary  negligence,  284 
for  gross  negligence,  284. 
for  care  it  shows  for  its  own  property,  285. 
for  its  agents'  and  servants'  defaults,  285. 
for  ordinary  care  in  employing  agents.  285. 
for  loss  when  notice  of  officer's  unreliability,  285. 
bank  not  liable  for  burglary  or  theft  if  not  negligent,  286. 
liable  at  all  events  for  wrong  delivery,  286. 

burden  on  bank  to  show  due  diligence,  286. 

statute  of  limitations  runs  from  demand  or  discovery  of  fraud.  286. 
if  special  deposit  wrongly  mingled,  depositor  may  hold  bank  as 

debtor,  282,  note  4.  287. 

liable  for  special  deposit  even  if  no  power  to  receive,  287. 
if  bank  receives  a  benefit,  287. 
or  if  it  ratifies  officer's  act,  287. 
as  a  claim  against  receiver,  595. 
as  priority  in  assets  of  insolvent  bank,  608,  609. 

SPECIAL  REMEDY  — 

upon  stockholders'  liability  not  enforced  in  another  state,  100. 

STATE     BANKS    (see    BANKS;     CIRCULATING    NOTES;     CORPORATE 

BANKS)  — 
whether  subject  to  statute  of  limitations,  623. 

STATE  BANK  TAX  (see  CIRCULATING  NOTES)— 
suppresses  state  bank  of  issue,  43. 
validity  of,  44. 

STATUTE  OF  LIMITATIONS  — 
banks  are  subject  to,  621. 
as  to  statutory  liability,  see  STOCKHOLDERS. 
upon  stock  subscription,  98. 
on  special  deposits,  286. 
on  deposits,  290,  291. 
on  suits  for  usurious  interest,  336. 
where  the  bank  is  the  bank  of  the  state,  622. 

STOCKHOLDERS  (see  NATIONAL  BANKS;  RECEIVERS)— 

original  capital  can  be  increased  or  decreased  only  by  authority,  77. 
increase  of  national  bank  capital,  77,  672. 
comptroller's  certificate  conclusive.  78.  note  4. 


84:8  INDEX. 

References  are  to  pages. 

STOCKHOLDERS  (continued)  — 

,  comptroller  cannot  grant  increase  after  insolvency,  78,  note  7. 
no  increase  until  comptroller's  certificate  issued,  78. 
bank  is  a  trustee  for  the  increase  until  issuance,  78. 
if  certificate  not  issued  there  is  no  increase,  79. 
stockholder  loses  right  to  object  to  illegal  increase  by  laches,  79r 

note  10. 

decrease  of  capital  stock,  79,  95,  591. 
statute  as  to  national  banks.  673. 
when  reduced,  bank  cannot  retain  surplus  capital,  79. 
are  created  by  original  subscription,  77. 
by  transfer  of  shares,  77. 
by  estoppel,  77. 

married  woman  as  stockholder,  77. 
subscription  may  be  informal,  79. 

sometimes  be  oral.  79. 
avoidance  for  fraud,  79. 

be  rescinded  for  fraud  after  insolvency,  79,  note  4. 
receiver  cannot  grant  rescission,  79,  note  4. 
directors  cannot  release,  79,  note  1. 
state  must  pay,  80,  note  7,  95,  note  9. 
liability  of,  upon  subscription.  93. 

to  pay  full  amount  subscribed,  93. 
no  other  liability  except  by  statute,  93,  94. 
binding  as  soon  as  corporation  formed,  95. 
payment  may  be  made  in  what  law  permits,  95. 
cannot  be  diminished  or  released,  95. 
cannot  be  divided  among  stockholders,  95. 
paying  debts  of  bank  is  no  set-off,  95. 
may  be  defended  against  if  bank  illegal,  95. 
stockholder  selling  to  bank  remains  liable,  96. 
valid  transfer  releases  transferror,  96. 
statute  may  provide  otherwise.  96. 
original  subscriber  sometimes  made  guarantor,  96. 
remedies  upon  subscription  — 
calls,  97. 

creditor's  bill  if  no  call  made,  97. 
right  accrues  when  legal  remedy  exhausted,  98. 
barred  when  remedy  of  corporation  barred,  98. 
mandamus,  97. 
garnishment,  97. 

assignee  or  receiver  may  collect,  97. 
remedy  may  be  at  law,  97. 
transfer  of  shares,  80,  81, 

transferee  becomes  stockholder,  transferror  released,  80,  96. 
statutes  prescribe  a  different  rule,  80,  note  1,  81. 
books  of  corporation  as  evidence  of  ownership,  80. 
but  if  transferror  orders  entry,  he  is  released,  80. 
collusive  transfers,  80,  81. 

pledgees  of  shares  liable  only  by  estoppel,  81,  83,  note  1. 
real  owner  liable  though  not  shown  on  books,  82. 
right  to  transfer.  84,  85. 

prohibited  by  law  or  injunction,  84,  85. 

by  stock  not  being  transferable,  84,  92. 
bank  has  right  to  examine  its  books.  85. 
bank  liable  for  wrong  transfer,  85. 
transfer  complete  when  made  on  books,  85. 
certificate  need  not  be  issued,  85. 
national  banks  not  governed  by  state  statute,  85. 


INDEX.  849 

References  are  to  pages. 

STOCKHOLDERS  (continued)  — 
transfer  of  shares  (continued)  — 
unrecorded  transfers.  85-89. 
transfer  after  levy,  87. 

unrecorded  transfer  as  against  levy  without  notice,  801 
transfer  without  delivery  of  certificate,  89. 

under  order  of  court,  88,  89. 
lien  on  shares  by  bank,  see  LIEN. 
transfers  prohibited  by  law,  92. 

by  agreement,  93. 
whether  valid,  93. 
prohibition  in  articles,  93. 
cannot  be  prohibited  by  by-laws,  92. 
voting  trust  for  stock,  93. 
right  to  inspect  books,  93. 

state  statute  governs  national  banks,  93. 
estoppel  creating,  83. 

those  who  allow  themselves  to  be  held  out  as,  83. 
cashier  holding  stock  not  personally  liable,  83,  note  & 
receiving  dividends,  82. 
acting  as  stockholders,  82. 
holders  of  improperly  issued  stock.  83. 

executors,  guardians,  administrators  and  trustees  not  personally  lia- 
ble, 83. 

liable  only  by  estoppel,  84 
estate  liable,  84 

not  liable  after  distribution,  84 
executor's  failure  to  transfer  to  himself,  84,  note  6. 
statutory  liability  for  debts,  93. 

applies  only  to  banking  part  of  business,  94 
sometimes  for  deposits  alone,  94 
stockholders  who  are  liable,  94,  103,  104 
it  is  a  ^wast-contract,  98,  notes  1  and  3. 

mistakenly  held  to  be  a  contract,  20,  99. 
whether  attachment  lies  upon  it,  99. 
not  penal,  is  enforced  in  another  state,  100. 
includes  all  claims  except  torts  or  judgments  for  torts,  100. 
special  remedy  not  enforced  in  another  state,  100. 
liability  sometimes  held  to  be  penal,  100. 
may  be  imposed  after  bank  formed,  100. 
statutes,  how  construed,  101. 
nature  of  liability,  101. 

is  single,  can  be  enforced  but  once,  113. 
creditor  may  waive  it,  101. 
may  be  created  by  estoppel,  101. 
but  not  by  by-law  or  form  of  certificate,  101. 
whether  joint  or  several,  101-103. 
not  that  of  partners,  102. 
survives  against  personal  representative,  597. 
who  may  enforce,  whether  creditor  or  receiver,  103,  583,  588L 
remedy  when  at  law,  104-107. 
in  case  of  national  banks,  107,  110. 
voluntary  assessment,  591,  688. 
remedy  when  in  equity,  108,  109. 
no  set-off  to  this  liability,  108,  lia 

exceptions,  109,  113. 
receiver  cannot  compound,  113. 
court  may  permit  it,  113. 
64 


850  INDEX. 

References  are  to  pages. 

STOCKHOLDERS  (continued)  — 

statutory  liability  for  debts  (continued)  — 

proof  of  insolvency,  113. 

when  barred,  114. 

interest  upon  liability,  114 

jurisdiction  of  suits  as  to  national  banks,  see  JURISDICTION. 
for  dividends,  see  DIVIDENDS. 
for  stockholders  in  savings  banks,  see  SAVINGS  BANKS. 

SUBORDINATE  OFFICERS  (see  CLERKS;  TELLERS)  — 
liability  of  officer  for  subordinates,  121. 

SUMMARY  REMEDY  — 
of  banks,  619. 

SURETIES  — 

whether  entitled  to  have  bank  apply  deposits,  see  DEPOSITS. 
drawer  and  indorser,  when  discharged  by  time  to  acceptor,  see  AC- 

CEPTANCE. 

statutory  liability  of  stockholders  not  that  of  sureties,  101, 
subrogated  to  bank's  lien,  90. 

SURVIVAL  OF  ACTIONS  — 

survival  of  officers'  liability,  see  OFFICERS. 

of  stockholders'  liability,  597.    See  STOCKHOLDERS, 
after  dissolution,  561. 

SURVIVORSHIP  (see  DEPOSITS;  SAVINGS  BANKS). 

T. 

TAXATION  — 

of  national  banks,  see  NATIONAL  BANKS. 
taxes  as  set-off,  see  SET-OFF. 

TELLERS  — 

may  receive  deposits,  205,  206. 

powers  of,  155-157,  258. 

certifying  checks  when  no  funds,  156,  157. 

TORTS  — 

of  banks,  see  OFFICERS. 

not  included  in  statutory  liability  for  debts,  see  STOCKHOLDERS. 

by  officer  against  creditor,  see  OFFICERS. 

TRANSFER  OF  SHARES  (see  STOCKHOLDERS). 
TREASURER  OF  SAVINGS  BANK  (see  SAVINGS 


TRUST  COMPANY  — 
as  bank,  26. 

receiving  deposits  not  a  bank  (wrongly  held),  32. 
bank  with  trust  powers  as  to  constitutional  restriction,  41,  note  4 
as  a  trustee,  effect  upon  assets  in  insolvency,  606-608. 
is  not  a  bank  when  paper  is  made  payable  at  any  bank  in  city,  442, 

note  3. 

no  priority  of  one  trust  claimant  over  another,  607. 
trust  claimant's  priority  over  general  creditors,  607. 

TRUST  FUNDS  — 

as  a  deposit,  215-220. 
as  a  priority.  600,  602. 

if  trust  funds  come  into  bank  rightfully  and  bank  pays  wrongfully, 
beneficiary  is  a  general  creditor,  603,  note  10. 


INDEX.  851 

References  are  to  pages. 

TRUST  FUNDS  (continued)  — 

wrongfully  to  bank's  knowledge,  there  is  a  priority,  603-609, 
common-law  trusts  creating  special  deposits,  205, 
proceeds  of  collections  as  a  trust,  609-614. 
deposits  in  insolvent  bank  as  a  trust,  614,  615. 
public  funds  as  a  trust,  616,  617. 
declaration  of  trust  in  deposit,  642. 

TRUSTEE  — 

may  sue  for  deposit  without  joining  beneficiary,  289. 

power  over  trust  deposits,  215-220. 

liability  upon  stock,  83, 84. 

bank  as  a  trustee,  606-608. 

no  priority  of  one  trust  claimant  over  another,  607. 


u. 

ULTRA  VIRES  (see  UNLAWFUL  BANKING). 

UNLAWFUL  BANKING  — 

illegal  limited  partnership  or  joint-stock  company  becomes  general 

partnership,  56. 

if  authorized  where  formed,  their  acts  are  valid  everywhere,  57. 
private  banking  declared  unlawful  creates  no  contract,  55. 
if  contract  not  illegal  where  made,  it  is  legal  everywhere,  57. 

unless  forbidden  by  public  policy,  57. 
when  recovery  on  illegal  contract  may  be  had,  55. 
money  deposited  for  illegal  certificate  recoverable  as  a  loan,  279. 
parties  not  in  pari  delicto,  55. 

penalty  on  one  and  not  on  other,  55. 

illegal  corporations,  corporators  suable  as  partners.  56,  note  7,  58,  59. 
contract  illegal  where  to  be  performed,  illegal  everywhere.  57. 
corporation  under  unconstitutional  law  cannot  contract,  58. 
corporators  suable  as  partners,  58. 
de  facto  corporations  are  corporations  except  as  to  state,  59. 

unless  act  not  done  a  condition  precedent,  59. 
illegal  loans  may  be  recovered,  56,  note  11,  57,  60,  327,  341. 
banking  act  forbidden  by  express  rule  of  law,  not  a  contract,  GO,  62. 
cannot  be  ratified  or  made  basis  of  estoppel,  60,  62. 
conflict  of  laws  as  to  private  banking,  56,  57. 
banking  act  forbidden,  recovery  is  in  qwm'-contract,  60.  62. 
ultra  vires  acts,  meaning  of  term,  61,  65,  note  12. 

not  acts  done  in  violation  of  express  rules  of  law.  61. 
may  be  enforced  as  contracts,  62.  66. 
differ  from  illegal  acts,  63,  66. 

acts  of  agent  may  be  ratified,  63,  66.    See  RATIFICATION. 
national  bank's  real-estate  security  enforceable,  64. 
forbidden  loan  to  director  recoverable,  62,  note  3. 
but  rule  different  as  to  national  bank's  purchase  of  stock,  64, 65, 

66. 

rule  to  follow  as  to  ultra  vires  acts  sued  upon,  67. 
presumption  that  all  acts  of  bank  are  intra  vires,  68. 
usurious  transactions  as  unlawful  banking,  see  INTEREST. 

USAGES  (see  CUSTOMS). 
USURY  (see  INTEREST). 


852  INDEX. 

References  are  to  pages. 

y. 

VICE-PRESIDENT  — 

has  powers  of  president  when  president  not  acting,  151. 

w. 

WAIVER  — 

of  acceptance,  see  ACCEPTANCE. 

of  forfeiture  by  state,  see  DISSOLUTION;  FORFEITURE. 

of  statutory  liability  by  creditor,  101. 

of  bank's  negligence  by  holder,  309. 

of  savings  bank's  right  to  claim  notice,  649. 

laches  as  a  waiver,  see  LACHES. 

of  demand  and  notice,  525-545. 

acceptance  waived  does  not  waive  demand  and  notice,  520. 
must  be  made  by  party  to  be  charged  or  his  agent,  527. 

by  person  sui  generis,  527. 

partner  may  waive  for  his  firm  after  dissolution,  527. 
agent  to  make,  527,  540. 

express  authority  by  ratification,  527. 
implied  authority  to  agent,  527. 

must  be  given  to  holder  or  to  some  one  for  holder,  528. 
made  to  maker,  whether  inures  to  holder,  528. 
made  to  one  about  to  become  holder,  528. 
express  waiver  in  writing,  529. 
form  of,  529. 
modified  by  parol,  529. 
construction  of,  530. 

implied  waiver  by  extension  of  time,  530,  534,  535. 
whether  blank  regular  indorsement  may  be  shown  waiver  by 

parol,  531,  532,  533. 

blank  regular  indorsement  may  be,  532,  533,  534. 
parol  waivers  legal  except  where  forbidden  by  statute,  532,  534. 
at  time  of  regular  indorsement,  532,  533. 
at  time  of  irregular  indorsement,  533,  534, 
after  indorsement,  534. 
by  conduct,  534. 
promise  to  pay  before  maturity,  535-537. 

parol  promise  at  time  of  indorsement,  535. 

after  indorsement,  535. 
promise  express  or  implied,  536. 
is  binding  if  acted  upon,  536. 
promise  to  pay  with  extension  granted,  537. 
promise  must  be  unqualified,  537,  544,  545. 
indemnity  as  waiver,  538,  539. 
waiver  after  maturity,  when  enforceable,  539,  540. 
promise  to  pay  after  maturity,  540-542. 
must  be  with  full  knowledge  of  release,  541. 

burden  upon  indorser  to  show  lack  of  knowledge,  54& 
new  promise  must  be  to  party  to  paper,  542. 
.  partial  payment  after  maturity,  542,  543. 
must  be  with  knowledge,  543. 
presumptive  proof  of  demand  and  notice,  543. 
absolute  if  with  knowledge,  543. 
unconditional  acknowledgment  of  liability  with  knowledge,  548, 544, 

545. 

by  one  joint  contractor  binds  all,  542. 
giving  of  security  after  release,  544 
acknowledgment  must  be  unconditional,  544,  545. 


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